Car manufacturers in race to bag chips

Car manufacturers in race to bag chips

Semiconductors in very short supply

In this file photo, workers inspect cars at a manufacturing plant in Prachin Buri. A shortage of semiconductors has implications for many industries, such as automotive and electronics manufacturing. (Photo by Pattanapong Hirunard)
In this file photo, workers inspect cars at a manufacturing plant in Prachin Buri. A shortage of semiconductors has implications for many industries, such as automotive and electronics manufacturing. (Photo by Pattanapong Hirunard)

Domestic car manufacturers are racing to increase purchase orders for semiconductors to avoid cutting their production capacity as a result of a global shortage of chips for cars.

Representing the control centre of modern cars and electrical appliances, these semiconductors are now in short supply, intensifying the competition to obtain them.

The global chip shortage results from a combination of factors ranging from increasing demand for electronic equipment as more people work from home during the pandemic, the growth in electric vehicles, as well as the US-China trade war, which led to restrictions on chip imports from China.

"The automotive industry is concerned it will encounter a similar situation as the one that took place in the US as chip supplies in Thailand have nearly run out," said Suparat Sirisuwanangkura, vice-chairman of the Federation of Thai Industries' (FTI) economic and academic data analytics unit.

Some car manufacturers in the US have already shut down or reduced their production, according to the FTI.

Mr Suparat said automakers in Thailand are in talks with chip producers, requesting they increase their production capacity to meet the rapid growth in demand.

The chip shortage comes as importers and exporters are struggling to deal with a lack of containers.

The problem is especially vexing for companies producing electrical appliances, said FTI vice-chairwoman Kanit Muangkrachang, who also chairs the FTI's Electrical, Electronics, Telecommunications and Allied Industry Club.

The semiconductor shortage means more delays in the delivery time for microchips, which has risen from four to six months, according to the club.

Ms Kanit expects the chip shortage will only cause a short-term impact because chip manufacturers will eventually increase their production capacity.

The other serious problem concerning container shortages at major ports requires urgent solutions as it not only causes shipping delays but also increases freight rates.

"Thai exporters are seeing their costs triple," she said.

"Large firms may manage to handle the burden, but small and medium-sized companies cannot afford to pay the additional expense."

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