Mazda Warns It May Cut Production Due To Silicon Shortage

Japanese car maker Mazda has become the latest manufacturer to issue a production warning because of a lack of silicon chips.

Mazda is considering cutting its global output by a 34,000 vehicles in February and March, two sources familiar with the matter told Reuters.

The warning comes after Samsung earlier this week warned that a global shortage in semiconductors for cars could have a knock-on effect on the memory chips used in smartphones.

Silicon shortage

But it seems to be car industry most badly impacted by the silicon shortage.

Mazda last week was considering cutting output of models that include its CX-5 and CX-30 SUVs, as well as the Mazda 3 salon, due to a shortage in supplies of chips used for brake systems and safety components, the sources told Reuters.

Indeed, the sources said Mazda plans to reduce its domestic output of the CX-5 by around 3,900 vehicles this month.

As of last week, the car maker was considering reducing production of the SUV by about 6,000 vehicles in March, the sources said.

Mazda is also considering an output cut in Japan, China and Mexico for the Mazda 3 and the CX-30 models, the sources told Reuters.

A Mazda spokesman confirmed the company expected to see an impact on its output in February.

“We are expecting a (global) impact on our output in February,” a Mazda spokesman reportedly said. “We continue to do our best to minimise the impact.”

He did not specify how many fewer cars will be made, adding the situation changes on a daily basis as the company continues to make adjustments with its suppliers.

Mazda will drop its production pace and is not planning to halt the lines at its plants, he said.

Political issue

The shortage of silicon chips is fast becoming a political issue amid the global Coronavirus pandemic, as it is slowing the manufacturing of everyday items that require advanced chips.

Last month it was reported that Audi (part of the Volkswagen group) was having to slow production because of the computer-chip shortage, forcing it to make 10,000 fewer cars in the first quarter of the year and putting more than 10,000 workers on furlough.

The previous week to that Volkswagen had also slowed production due to a lack of chips; and Daimler (which makes Mercedes), Fiat, Honda, Ford, Nissan, Subaru and Toyota also all reportedly had to suspend production for days or weeks at a time.

Taiwan’s economics minister Wang Mei-hua met with executives of major Taiwanese chipmakers, after Germany’s Economy Minister Peter Altmaier wrote to Wang to ask her for help in addressing the shortage.

Wang reportedly also said the United States, European Union and Japan had also been in contact.

The chipmakers, which are at working at full capacity at the moment, said they are prepared to negotiate with clients of other products to see which clients are willing to delay or cut orders and will try to boost production.

Booming demand

The issue for car makers comes after they had scaled back their silicon orders with Chinese factories making the computer chips because of poor sales of new cars in early 2020, when the Coronavirus pandemic began to fully impact in countries around the world.

But by the end of 2020, it seems car makers were surprised by the strength of the car market, but ordering new chips is not that easy because of the limited number of firms manufacturing the silicon.

Car makers are also having to contend with the consequences of booming demand for CPUs from other industries, as the world embraces home working during the Covid-19 pandemic.

This has led to increased demand for laptops and desktop PCs (most notably Chromebooks and gaming PCs), coupled with the usual demand from the smartphone sector, plus the arrival of new gaming consoles such as the PlayStation 5.

This has meant there is now a real supply chain issue that is only set to continue in 2021.