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| Hyundai IONIQ 5 / Courtesy of Hyundai Motor |
By Nam Hyun-woo
Hyundai Motor is enjoying brisk preorders for its new electric vehicle (EV), the IONIQ 5, but facing production concerns due to the prolonged global chip shortage for cars.
Hyundai Motor was confident over its vehicle semiconductor inventories when the global shortage began to affect carmakers around the world in January, but is now paying closer attention to the situations of chipmakers, as the COVID-19 pandemic continues to distort the overall supply chain.
Hyundai Mobis, a parts affiliate of Hyundai Motor, is now closely monitoring the supply status of vehicle semiconductors from low-tier suppliers, as its inventories for chip-requiring components are reaching "an emergency level."
"We are categorizing components into different categories depending on their inventory level, and monitoring some of those categories in real time," a Hyundai Mobis official said. "Though we cannot reveal the exact details, some parts' inventory levels are at an emergency level and may run out of stock in weeks."
This is in contrast to Hyundai Motor Group's projection on its chip supply. In a conference call last month, Kia said it is not expecting any short-term production setbacks due to chip shortages.
As the situation has not improved during the past month, however, the group said "there are difficulties in the supply of some semiconductor-using components, though we are adjusting production plans and negotiating with chipmakers." Analysts are also expecting further difficulties in securing chips.
In a Feb. 17 report, market tracker IHS Markit expected the situation "to hit bottom around the end of March, although the supply chain will still be constrained into the third quarter."
"It will get worse before it gets better," said Phil Amsrud, principal senior analyst at IHS Markit. "Short term all that can be done is juggling priorities in the foundries to make more automotive microcontroller units instead of products for other markets."
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| Hyundai Motor Group headquarters in Yangjae-dong, Seoul / Courtesy of Hyundai Motor Group |
This negative outlook is coming as a concern for the IONIQ 5, which was revealed earlier this week as the first model of Hyundai's E-GMP-based EVs.
Hyundai Motor said Friday that it has received a record 23,760 preorders in Korea just a day after the window opened. A Hyundai Motor plant in Ulsan will begin mass-producing the IONIQ 5 heading to the European market in March and domestic volume in April. This means that the EVs' production period is clashing with the downcycle anticipated by analysts.
"Compared to internal combustion engine vehicles, EVs need more chips, as they have more electrically controlled units," an industry official said. "The problem is it is difficult to channel the limited number of chips to EVs, because they are assembled as units and modules designed for specific vehicles."
Casting greater concerns for Hyundai is that Hyundai Motor Group is preparing to roll out a series of EV models based on the E-GMP platform later this year. Kia will reveal a new EV, codenamed CV, next month, and Genesis will also roll out a full EV in the second half of this year. This means chip demand will remain high while supply is swinging.
Hyundai Motor Group has been striving to incorporate the whole vehicle supply chain ― from steel to complete cars ― under its wings, but has yet to secure the capability to produce semiconductors for its own demand.
Last month, Hyundai Mobis acquired the semiconductor business from its affiliate Hyundai Autron, but is unable to use the business to address its current chip shortage because Hyundai Autron's chip business was fabless, only designing semiconductors and outsourcing their manufacturing to foundry companies.
"Since it is almost impossible for Hyundai to establish its own chip-producing capability immediately, the situation seems to be depending on how to juggle foundries' capacity," another industry official said.
