Automotive Microchips To Be In Short Supply Following Earthquake

Automotive Microchips To Be In Short Supply Following Earthquake
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While much of the automotive industry is watching what car manufacturers have to say about production shortages in Japan, a key supplier of microchips is transferring production from their battered facility in Japan’s earthquake zone, to seperate facilities in Japan and Singapore – but the move could cause months long delays of crucial components, halting production for a number of vehicles in the process.

Renesas Electronics Corp controls 41 percent of the marketplace, and their chips are used in everything from engine control units, parking brake systems, stability control programs, in-car entertainment and power steering systems. Even one missing part can cause production lines to shut down, and these crucial parts may not ship for as long as 4 months from now. Replacing these components is especially difficult, since they are often designed to work with specific vehicles from the outset. Furthermore, bureaucracy and other administrative processes involved with changing suppliers adds even more time and complexity to the task, wasting precious time.

Automotive News cited the Lexus LS460, a technology intensive vehicle, as one of Renesas’ biggest projects, with 80 percent of its microchips coming from the firm. A shortage of these chips would cripple production of the car, and this phenomenon is not isolated to Toyota alone. While Toyota refused to comment specifically, it is known that they have compiled an inventory, and found 150 crucial parts that did not have a guaranteed supply.

The result of this situation, as well as other manufacturers and suppliers facing similar problems could spell chaos for an industry already prone to feeling the effects of secondary events like rising gas prices or a lack of consumer credit. In the same way that these factors torpedoed the American car industry on the demand side in 2008, these issues could pose a similar problem on the supply side for Japan’s own auto industry.

[Source: Automotive News]