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Old 01-12-2021, 08:08 AM   #1
AVANTI R5
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Default Chip shortage forces Ford, Toyota, Nissan, FCA to Cut Production

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Chip shortage forces Ford, Toyota, Nissan, FCA to cut vehicle production
Reuters Staff
TOKYO/DETROIT (Reuters) - Ford Motor Co, Toyota Motor Corp 7203.T, Fiat Chrysler Automobiles and Nissan Motor Co Ltd said on Friday they would cut vehicle production this month due to a shortage of semiconductors, becoming the latest automakers hit by a chip crunch as demand rebounds from the coronavirus crisis.

FILE PHOTO: A Nissan car dealership is pictured in Northwich, following the outbreak of the coronavirus disease (COVID-19), Northwich, Britain, May 30, 2020. REUTERS/Jason Cairnduff
Honda Motor Co also said Friday its output in Japan could be affected by a shortage of semiconductors.

Automakers and electronic makers are facing a global shortage of chips as consumer demand has been bouncing back from the coronavirus pandemic, causing manufacturing delays.

Credit Suisse analyst Daniel Levy said in a research note that the chip supply issues may limit near-term auto production for the industry, but industry officials said they are prioritizing production of higher-profit vehicles.

Major auto chip suppliers such as NXP Semiconductor said auto production rebounded faster than expected from the pandemic, leaving them struggling to catch up.

Meantime, chip manufacturing capacity has been stretched thin globally as laptops fly off shelves for working from home, and PCs and gaming consoles sell heavily, leading chip firms such as Nvidia Corp to warn of supply constraints.

And a move by U.S. regulators to blacklist China’s Semiconductor Manufacturing International Corp, that country’s largest contract chipmaker, has sent chip firms around the world scrambling to find new partners.

U.S. automaker Ford said it would idle its Louisville, Kentucky, assembly plant, which builds the Ford Escape and Lincoln Corsair SUVs, pulling ahead a scheduled week-off from later in the year.

Fiat Chrysler said it will delay the restart of production at its Toluca, Mexico plant, where it builds the Jeep Compass, and idle its Brampton, Ontario plant that builds the Chrysler 300, Dodge Charger and Dodge Challenger cars.

The Mexican plant had been due to restart production next week, but now both plants will be shut through the end of the month, FCA said.

Toyota will cut production of its Tundra full-size pickup truck at its San Antonio, Texas, plant, but spokesman Scott Vazin did not immediately know how many units would be lost. “We’ll throttle back production,” he said, adding no other U.S. vehicles were affected.

Ford declined to identify the chip supplier and spokeswoman Kelli Felker said the company hopes to have the plant operating again the following week. “We are working closely with suppliers to address potential production constraints tied to the global semiconductor shortage,” she said.

Nissan said it planned to reduce production of the Note, a hybrid electric car, at its Oppama Plant in Kanagawa prefecture, Japan but did not give details of the scale of the output cut.

The Nikkei newspaper reported that Nissan would slash its Note production at Oppama to about 5,000 units in January, from an initially planned 15,000 units.

Germany’s Volkswagen said last month it faced a shortage in the supply of semiconductors and would adjust production at facilities in China, North America and Europe.

Honda has also begun “seeing some impact in the parts supply,” a company spokesman said. It will first shrink its production by about 4,000 units this month, mainly affecting the Fit subcompact made at a plant in the city of Suzuka in Mie prefecture, the Nikkei newspaper said Friday.

A massive fire at a chip plant owned by Asahi Kasei Microdevices Corp (AKM), a unit of Asahi Kasei Corp, in southern Japan in October has also damaged semiconductor supply.

Separately, China’s GAC said its joint venture with Honda had received warnings on supply of certain models but gave no details.

China’s Dongfeng Motor, which also has a partnership with Honda, did not immediately respond to a request for comment.

General Motors Co and BMW AG said on Friday that they have not been affected yet by the chip shortage but are monitoring the situation closely.

Reporting by Noriyuki Hirata and Eimi Yamamitsu; additional reporting by Yilei Sun, Ju-min Park, Ben Klayman and Paul Lienert in Detroit, and Stephen Nellis in San Francisco; Editing by Susan Fenton and Steve Orlofsky
https://www.reuters.com/article/us-h...-idUSKBN29D1NF
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Old 03-10-2021, 07:27 AM   #2
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Default Continental expects chip shortage to drag on for months


An employee assembles a DC/DC converter component for hybrid and electric vehicles inside the Continental automotive powertrain factory in Nuremberg, Germany.

Quote:
BERLIN -- Continental expects the auto industry's microchip shortage to drag on for months, CEO Nikolai Setzer said on Tuesday.

The negative impact will be felt especially in the first quarter, Setzer said in a video call on Tuesday.

He said the general situation will ease in the course of the second quarter. However, in some areas he expects the shortage to drag on for the entire year.

Continental said it expects 2021 sales and profit margin to grow despite expected additional costs due to chip shortages.

The company expects sales to reach 40.5 billion to 42.5 billion euros ($48 billion to $50.4 billion) and its margin on adjusted earnings before interest and tax (EBIT) to hit 5 to 6 percent this year, the supplier said in a statement. That compares with analysts' average estimate of 6.3 percent.

The outlook incorporated additional logistics expenses of around 200 million euros from supply chain constraints related to semiconductor components and additional research and development expenses of 200 million to 250 million euros in its autonomous mobility and safety unit, the group said.

Continental said it will adjust the outlook depending on the outcome of the spin-off of its powertrain unit Vitesco which is planned in the second half of the year.

Stellantis: Scale Creates Opportunity

FCA and PSA announced plans to explore a merger in October 2019, with the deal closing on 16 January. A new company called Stellantis has been created, with stock traded on the Milan, Paris and New York Stock Exchanges.

Continental swung to a 718 million euro operating loss last year, while the adjusted result more than halved to 1.3 billion euros. The adjusted EBIT margin slumped to 3.5 percent.

The company reported a 13 percent drop in group sales to 37.7 billion euros in 2020, in part due to falling revenue in the automotive, rubber and powertrain divisions.

It posted a free cash flow of 1.109 billion euros in 2020 before acquisitions and carve-out effects for the group, down from 1.343 billion euros a year earlier.

Continental said its profitability will be reduced this year because of the shortage of semiconductors and economic fallout from the coronavirus pandemic.

The start of the year "has been subdued so far due to the shortage of semiconductors," CFO Wolfgang Schaefer said on Tuesday. "The effects of the ongoing coronavirus pandemic remain a source of uncertainty too. All in all, 2021 will therefore remain challenging."

Volkswagen Group last month said bad planning on the part of its suppliers has compounded a computer chip shortage blighting the global auto industry, claiming it gave ample notice that the coronavirus hit to car production would be limited.

Schaefer said, however, that Continental had informed clients about a potential chip shortage right away.

"I don't think we informed our clients too late. We started very early, as far as I know we were the first, to talk to the OEMs and inform them about the situation," Schaefer told Reuters.

Schaefer said since 2017 the automotive industry had consistently ordered more from chip and wafer makers than it actually bought. Semiconductor makers have learned their lessons and allotted capacity to other industries as a result, Schaefer said.


Bloomberg
Industry rebound
Continental has been hard hit by the dramatic industry slump last year as it accelerates a plan to cut or transfer some 30,000 jobs. A steady decline in returns culminated in the abrupt departure late last year of CEO Elmar Degenhart. Since then, the chip supply chain troubles have disrupted manufacturing plans across the industry.

There are some signs of moving past the pandemic, and Continental expects a rebound in global passenger-car output of between 9 percent and 12 percent after the health crisis shut factories last year and demand slumped.

Setzer, 49, must reverse an erosion in profits gripping the company over the past five years. Continental is seeking to roughly triple profitability to reach an 8 percent to 11 percent margin in the medium term.

Setzer pledged in December to sharpen the group's focus on growth areas -- investments in automated driving functions will rise by as much as 250 million euros this year -- as the auto industry adds electric models and software-based functions. This will potentially lead to acquisitions or divestments of legacy operations. Continental is exploring a sale of its turbocharger unit, Bloomberg reported in October.

Continental has some catching up to do. Suppliers including Aptiv, Denso and Valeo "are best positioned to master the transition" while the EV shift will boost overall demand for powertrain components from suppliers, UBS Group analysts said in a report last week. Suppliers such as Continental might benefit as well but have more work to do to adjust their legacy combustion business, UBS said.

The company plans to spin off its powertrain unit Vitesco Technologies in the second half of the year. Completing the separation of the operations that span EV and combustion-powertrain components as well as sensors would go a long way to show Continental can push through structural changes. The project has faced several changes and delays in the past.

Continental, of Hanover, Germany, ranks No. 4 on the Automotive News list of top 100 global suppliers, with 2019 sales to automakers of $35.3 billion.

Bloomberg contributed to this report.
https://www.autonews.com/suppliers/c...ge-drag-months
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