Chip Shortage Forces Toyota To Cut Production By 40 Percent

Toyota has become the latest car manufacturer to face the problems caused by the ongoing semiconductor shortage.

The world’s largest car maker announced that worldwide vehicle production will be slashed by 40 percent in September because of the global chip shortage.

Unlike other car makers, Toyota has been one of the last big name car makers to be impacted by the chip shortage, as it was able to keep its factories up and running for longer thanks to its larger stockpile of chips, unlike other manufacturers who tended to keep more limited stockpiles.

Production cut

Indeed, most car makers issued their production cut warnings from February this year, including Ford, General Motors, Volkswagen, Renault, Mazda and others.

“Adjustments will be made to production operations of plants for completed vehicles in Japan as follows, such as parts shortage resulting from the spread of Covid-19 in Southeast Asia,” said Toyota.

“This is in addition to the adjustment of domestic production operations in August 2021 announced on July 22 and July 27,” it said.

“We sincerely apologise for the inconvenience caused to our customers and suppliers due to these changes,” the Japanese car marker said.

Toyota had planned to make approximately 900,000 cars in September, but now has reduced its production goal down to just 540,000 vehicles.

It comes after Volkswagen, which had already cut production earlier this year, warned it may also be forced to cut output further.

The Covid pandemic boosted demand for appliances that use chips, such as phones, TVs and games consoles.

“We currently expect supply of chips in the third quarter to be very volatile and tight,” it told Reuters. “We can’t rule out further changes to production.”

Ongoing issue

The outlook for a speedy resolution to the chip shortage is bleak at the moment.

In July Intel’s CEO Pat Gelsinger warned that despite the ecosystem being back to shipping over a million PCs a day, strong and sustained demand for devices continues to stress the supply chain, and shortages are likely to continue until 2023.

Forrester Research warned earlier this year that it expects chip supply issues to extend through next year and into 2023.

Last month Apple posted another blowout quarter of financial results, but warned that “supply constraints” will affect sales the iPhone as well as the iPad going forward.

In May Cook said he expected global chip shortage to constrain supply of the new iPad Pro and iMac.