Tech

Toyota needs more than its Cheer Squad to deal with chip shortages, as five more home factories forced into idleness

Toyota said it would cut car production by up to 150,000 vehicles due to ongoing semiconductor shortages and restrictions associated with the Covid-19 pandemic.

The car maker is idling five factories in home country Japan on some days in November, which affects the production of popular brands that include Corolla and Camry.

Toyota started cutting production in August due to chip shortages and said, “we expect the shortage of semiconductors to continue in the long-term.”

The company in May celebrated its business philosophy, generally known as “The Toyota Way,” for helping the company sidestep struggles like chip shortages and earthquakes in the past.

But reality soon came crashing down, and Toyota issued notices in August and September about production cuts.

The company could use its unique Toyota Cheer Squad about now with the chips down. But cheerleading doesn’t create chips.

Toyota said it was expecting to ramp up production in November to make up for initial shortfalls after production was cut in previous months, also due to chip shortages. Efforts are also underway to strengthen the supply chain to deliver cars to customers.

Chip supply chain struggles also affected India-based Tata Motors, which owns the Jaguar Land Rover brand. The company earlier this month reported that 92,710 Jaguar Land Rover vehicles sold for the quarter ending Sept. 2021, an 18.4 per cent decline from the same quarter a year ago.

The company noted strong demand for its cars, but chip shortages affected operations, the company said in a filing with the U.S. Securities and Exchange Commission.

“The global semiconductor supply issue represents a significant near-term challenge for the industry which will take time to work through,” said Lennard Hoornik, Jaguar Land Rover Chief Commercial Officer, in the filing.

Car makers are now designing their own chips to give them better control over the supply of parts. It’s similar to what Apple did for its devices by moving chip design in-house, and cutting reliance on Intel for CPUs and Imagination Technologies for GPUs.

Tesla, which designed its own chips, is a hardware and software company making technology products, not just a car company, Elon Musk said during a shareholder meeting earlier this month.

Hyundai reportedly said it would design chips internally and cut reliance on chip makers.

Intel, Qualcomm and Nvidia are among the companies supplying chips to car makers. ®


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