A global malfunction cripples the car and home appliances market due to a lack of chips

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date of publication:
05 Apr 2021 18:14 GMT

Update date: 05 Apr 2021 21:18 GMT

Major industries like cars, video games and home appliances have been hit by a widespread global disruption due to chip shortages leading to delays in major manufacturing facilities.

International companies began to close their factories for this reason. Kia announced the closure of its plant in Georgia for two days, noting that this plant produces more than 3 million cars annually, including the main models of the company, such as: K5 and Sorrento.

Hyundai also plans to discontinue the SUV plant in Ulsan that manufactures the Kona car and the newly released IONIQ 5 electric vehicle, from April 7-14.

This is in contrast to what the companies previously announced that they had stockpiled enough chipsets to maintain their normal operations at a time when other global automakers were shutting down production.

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The chip shortage has been affected by natural disasters, including heavy snowfall in Texas that shut down Samsung’s semiconductor manufacturing plant there and an earthquake in Japan, which temporarily shut down a semiconductor plant in the region.

The shutdown is expected to cause a production loss of 6,000 Kona vehicles and 6,500 IONIQ 5 vehicles.

This coincides with a recovery in demand for cars despite the Coronavirus crisis, as it is reported that demand for cars is rising, but chip makers are unable to meet the demand, causing a shortage.

Susquehanna Financial Group, in a report, stated that the deadline for February, which is the time between the time of application of the chip and the actual time of packing, was 15 weeks on average, marking its highest levels ever.

The auto sector chip shortage began to expand into the IT and home appliances markets as the temporary shutdown of semiconductor factories delayed the production of PMIC and DDI chips, which are widely used in home appliances and IT products.

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Industry observers believe that the global carmakers will have no choice but to raise prices as they must take into account the soaring prices of chips.

Some experts expect that the slide crisis is unlikely to be resolved in the near future because it was caused by the growing state of trade tension between the United States and China, which prompted some companies to double orders.

At the end of March, China announced tax breaks to stimulate the growth of the semiconductor industry, after the US sanctions, which raised the concern of the ruling Communist Party by preventing the technology giant Huawei and some other companies from accessing American processor chips.

Beijing has spent heavily over the past two decades building a Chinese chip industry, but makers of smartphones and other technologies still rely on the United States, Europe and Taiwan for the most advanced components.





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