Why Toyota had a big pile of chips when semiconductor shortage dealt others a bad hand

[Sulu]

Why Toyota had a big pile of chips when semiconductor shortage dealt others a bad hand - Autoblog

Toyota's good fortune in the global semiconductor shortage and is stockpile of key components in cars goes back a decade to the Fukushima disaster.

www.autoblog.com

Toyota has not been affected by the worldwide automotive electronics chip shortage that has slowed or stopped assembly lines at VW, GM, Ford, Honda, Stellantis and others.

The automotive electronics chip shortage came about when semiconductor manufacturers switched their production to produce consumer products (like electronics gamesets) following the automotive production slowdown last year. The pandemic caused a slowing of automotive production last year as demand dropped and automakers switched production to medical devices. But demand for consumer electronics products is now so great that semiconductor manufacturers have no capacity to make consumer and automotive electronics.

Toyota learned from the impact that the 2011 earthquake had on its supply lines -- and subsequently the long delay before getting back to normal production. In the aftermath of that devastating earthquake (remember that Toyota lost money that year) Toyota came up with a business continuity plan to ensure that it would continue to have supplies during times of crisis.

This is a good example of how to properly do business,

However, Toyota changed the way it buys MCUs and other microchips after the 2011 earthquake, which caused a tsunami that killed more than 22,000 people and triggered a deadly meltdown at Fukushima's nuclear power plant.

In the aftermath of the quake, Toyota estimated its procurement of more than 1,200 parts and materials might be affected and it drew up a list of 500 priority items that would need secure supply in the future, including semiconductors made by key Japanese chip supplier Renesas Electronics.

The sources said Toyota has another advantage over some rivals when it comes to chips thanks to its longstanding policy of ensuring it understands all the technology used in its cars, rather than relying on suppliers to provide "black boxes."

"This basic approach sets us apart," said one of the sources, a Toyota engineer.

"From what causes flaws in semiconductors to gory details about production processes like what gases and chemicals you use to make the process work, we understand the technology inside and out. It's a different level of knowledge that you can't simply gain if you're just buying those technologies."

 

[Tragic Bronson]

Hyundai did the same

Hyundai avoided automotive chip shortage with early purchases

Hyundai got out ahead of other automakers thanks to a lingering stockpile acquired before demand spiked.

www.autoblog.com

 

[ssun30]

Also Renesas is extremely close to Toyota, and right before this year Renesas expanded its in-house production capacity due to predicted shortages in Taiwan. Auto makers knew this since mid last year (surge of chip demand due to work at home) and they should have been prepared but did nothing. The chip shortage exposes a lot of companies for their ineffective supply chain.

 

[fodalo]

there is nothing perfect about supply chain management. technology is changing every six months and is tough to keep what customers see as cutting edge in there market place vs the greatest and newest product on the block. Excess one year, technology changes and your caught holding unwanted inventory and the broker market takes it and then turns it into gold as orders continue to come in for trailing edge products.

 

[Sulu]

there is nothing perfect about supply chain management. technology is changing every six months and is tough to keep what customers see as cutting edge in there market place vs the greatest and newest product on the block. Excess one year, technology changes and your caught holding unwanted inventory and the broker market takes it and then turns it into gold as orders continue to come in for trailing edge products.

Yes, technology changes at a fast pace. Device (smartphones, tablets, laptop computers) makers can afford to keep up with technology but makers of products, like cars, trucks and airplanes that use the display products, cannot afford to be constantly changing their displays. To do so would mean continually working on new displays and then the displays must be wired in and fitted to the dashboard. To do so continually would mean rushing development of the new hardware and software, and as a result, quality would suffer.

There is also reliability to think about. The latest technology -- chips, displays -- may not be the most reliable. The aircraft industry is especially concerned about reliability; a cockpit display must work for a given number of hours without fail. Could you imagine your cockpit displays suddenly going blank while trying to take off or land the aircraft?

So the aircraft industry (and probably the same for automakers also) pick older, established, proven-reliable technology and then sign contracts with their suppliers for large quantities. This guarantees supply, but also makes the suppliers happy and also has the benefit of increasing quality. Suppliers like to large-quantity contracts. And with large-quantity contracts, there is the time and the incentive to work out all the bugs.

It is known in the industry that automotive parts suppliers like working with Toyota (and the Japanese automakers in general) because Toyota is very good at planning their production far in advance. Suppliers are guaranteed demand and know when they have to deliver. Happy supplier, happy automaker and happy customer.

 

[ssun30]

there is nothing perfect about supply chain management. technology is changing every six months and is tough to keep what customers see as cutting edge in there market place vs the greatest and newest product on the block. Excess one year, technology changes and your caught holding unwanted inventory and the broker market takes it and then turns it into gold as orders continue to come in for trailing edge products.

The global automotive chip shortage has nothing to do with leading edge nodes based on 12-inch wafers. There is actually an excess of 12-inch capacity world-wide. Most microcontrollers in cars are low transistor density, small die-size chips based on 8-inch wafers. The production lines for 8-inch wafers are stable, long-term investments because yield, cost, reliability outweigh performance. You don't need to make an ESP controller or seatbelt pretensioner on 7nm EUV.

Unfortunately, most current 8-inch lines were approaching equipment EOL by late 2020 so there is a sudden surge in equipment demand. Equipment manufacturers have mostly focused on the very lucrative 12-inch market because the pandemic means more computers chips. Fabs who buy those equipment also had a very pessimistic estimation of automotive demand so they did not prepare accordingly.

The auto industry actually saw this coming by late 2018, a full year before the pandemic, yet many companies mismanaged the situation with the exception of Toyota.

 

[mikeavelli]

Chip shortage: Toyota to cut global production by 40%

The world's biggest carmaker will cut output in September, while VW warns it may have to make further cuts.

www.bbc.com

Not good at all

 

[Tragic Bronson]

Chip shortage: Toyota to cut global production by 40%

The world's biggest carmaker will cut output in September, while VW warns it may have to make further cuts.

www.bbc.com

Not good at all

Its going to hurt especially for Toyota car buyers the most; you're better off buying a Taco or new Tundra since that is where the chips are going.

Huge Factory Shut Downs At Toyota Over Covid

Toyota Tacoma and Tundra spared, because nothing will keep us from our trucks

jalopnik.com

 

[Will1991]

Lexus will take a huge hit!

Adjustments to Domestic Production in August and September | Corporate | Global Newsroom | Toyota Motor Corporation Official Global Website

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. This is in addition to the adjustment of domestic production operations in August 2021 announced on July 22 and...

global.toyota

No LC’s for a whole month...

 

[Tragic Bronson]

Toyota Plunges as Chip Shortage Forces September Output Cut

Toyota Motor Corp. slumped as much as 4.7% as the worsening chip shortage saw the world’s No. 1 automaker suspend output for several days at almost all its plants in Japan next month, forcing a 40% cut in production plans.

www.bloomberg.com

 

[ssun30]

Their Japan plants are able to hold on for much longer than industry average thanks to Renesas relocating back to Japan.

In China they ran out of chips since April and are at 90% capacity since then. Their US situation could be worse because of Tundra ramp up.

 

[Tragic Bronson]

http://www.carsdirect.com/automotive-news/industry-news/toyota-s-inventory-problems-just-got-worse

In the U.S., shoppers looking for a Toyota have had a hard time finding a new model on sale. The Japanese automaker has some of the lowest inventory of any major automaker and the situation is only going to get worse.

According to a report by Automotive News, Toyota will reportedly be slashing its global output by roughly 40% in September as the brand has suddenly been hit really hard by the chip shortage.

In a statement where Toyota announced the news, the automaker blamed the global shortage of chips and the recent outbreak of the COVID-19 delta variant in Southeast Asia as the reasons for the latest delay in vehicle production.

As the outlet points out, Toyota plans to shut down a few of its factories from August to September. The plan will affect new vehicle availability in nearly every major market globally. In the U.S., Toyota believes the shutdowns will result in a loss of 80,000 vehicles. The figure will be a part of the global loss of 360,000 vehicles. The affected factories include the Takaoka and Tsutsumi plant where the RAV4, Corolla, Camry, and Prius are built.

Despite the projected loss of vehicle manufacturing, Toyota still expects to build a total of 9.3 million vehicles globally over the current fiscal year, which ends on March 31, 2022. Toyota is really banking on the shutdowns ending in September and is currently looking to October to be a month where it attempts to recover from the closures as much as possible.

“We have factored in risk factors in our annual plan. But as for September, the impact came sooner and deeper than expected,” Chief Communications Officer Jun Nagata said.

At the beginning of the month, Toyota claimed that its vehicle inventory isn’t expected to return back to normal until the second quarter of 2022. The lack of inventory first forced Toyota to stop advertising lease deals and saw prices for new cars skyrocket as demand went through the roof. With Toyota cutting global output, the issue will only get worse as the year progresses.