The continuing global auto chip supply shortage will impact vehicle production at General Motors, starting on Monday with shift downtime for at least a week at four plants in Kansas, Canada, Mexico and Korea, the company announced Wednesday.
There will be downtime on all shifts for the week starting Monday at the Fairfax assembly plant in Kansas, as well as CAMI in Ingersoll, Ontario, and San Luis Potosi in Mexico. The Bupyeong 2 assembly plant in Korea will operate at half capacity the week of Feb. 8.
However, the carmaker said it plans to keep producing its most in-demand vehicles, including full-size trucks, SUVs and Corvettes.
GM said it will update production at the plants each week. “Our intent is to make up as much production lost at these plants as possible,” the company said in a statement.
GM provided an explanation of the downtime: “Semiconductor supply for the global auto industry remains very fluid. Our supply chain organization is working closely with our supply base to find solutions for our suppliers’ semiconductor requirements and to mitigate the impacts on GM. Despite our mitigation efforts, the semiconductor shortage will impact GM production in 2021.”
The Fairfax plant builds the Chevrolet Malibu and Cadillac XT4; CAMI builds the Chevrolet Equinox; San Luis Potosi builds the Chevrolet Equinox, Trax, Onix and the GMC Terrain; Bupyeong 2 builds the Chevrolet Malibu, Trax and Buick Encore. GM would not disclose the names of its chip suppliers.
The company concluded its short statement saying the supply issue “will not impact our commitment to an all-electric future” and said it will provide more details on the issue when it reports earnings Feb. 10.
GM made news recently for committing to all EV vehicles by 2035 and announced in January that will have 30 EV models on the market over the next four years.
Other carmakers have been hit by the auto chip shortage, including Ford Motor Co. in early January, which idled a Louisville, Kentucky, SUV assembly facility for a week.
RELATED: Chip shortages hit even as auto chip sales climb
The auto chip supply problem became severe in the fourth quarter of 2020 when carmakers saw a big increase in sales and production after some spring 2020 assembly plant shutdowns due to the pandemic.
Chip companies in earnings reports over the past two weeks have said the chip supply shortage is real but will be resolved in coming weeks and months. A few auto chipmakers have reported the uptick in orders in the fourth quarter led to strong revenues. Texas Instruments even reported it had built up a sufficient inventory before the demand increased so that it was able to keep up.
Auto IC sales at TI grew by 25% in the fourth quarter year-over-year, even though TI’s total inventory for all chips was down 15%, executives said on an earnings call last week.
RELATED: TI reports blowout fourth quarter, driven by auto, industrial demand
Analysts said the auto chip shortage has at times been severe, but also appears to be irregular. There are dozens of semiconductor companies that sell in volume to carmakers and the supply problems vary around the globe.
Some of the newest vehicles have hundreds of semiconductors to control automated systems. When orders for auto chips dropped to near zero in March and April, semiconductor makers shifted to making chips for other purposes, including personal computers and servers. When automakers came back into the chip market in the fall, the pipeline was empty. It can take four months for a chipmaker to get an order and start making wafers until a final chip makes it into a car or other product.
For that reason, VLSI Research and others have said normal auto chip supplies will return to normal levels in the April-May timeframe after reaching an “extreme” level of shortage in early January. Auto chip provider Renesas said in mid-January that the long lead time developed after carmakers increased orders in the fourth quarter.
VLSI analyst Dan Hutcheson said automakers in Korea have not seen a chip shortage as experienced in North America. "Korea's auto makers have not seen a shortage and are going strong, as they continued to take parts through the spring downturn and treated their chip suppliers as partners, not commodity suppliers," he said in an email to Fierce Electronics.
He said the shortages could last into June unless the slowing economy impacts automakers.
RELATED: Extreme auto chip shortage won’t return to normal until April-May, analyst says