Chip shortage is still a problem that most car manufacturers, including Toyota, are facing

Chip shortage is still a problem that most car manufacturers, including Toyota, are facing

Toyota Motor decreased its Toyota and Lexus production target on Tuesday from a previous goal of 9.7 million units to 9.2 million units for the current fiscal year through March, citing the possibility of problems with chip supply.

Despite expecting record output, the Japanese automaker cuts its full-year production goal by 500,000 vehicles. The world’s largest vehicle manufacturer claims that despite a general decline in semiconductor demand, it is still unable to obtain enough of the components.

Toyota Motor Corp. cited the possibility of problems with chip supply when it reduced its Toyota and Lexus production target for the remainder of the current fiscal year through March from a previous aim of 9.7 million units to 9.2 million. 

The predicament reflects long-term underinvestment in a few older chip types that automakers particularly require. There are still some areas of constricted supply despite the fact that demand for smartphones and personal computers has decreased, alleviating memory and other chip shortages as well as fears of a glut. 

The supply-demand imbalance, according to analysts and chip executives, may persist for years.

Since late 2020, when a comeback in vehicle sales caught corporations off guard after they had previously planned to limit chip purchases, auto producers worldwide have been struggling with a shortage of semiconductors. Electronics manufacturers competed for a limited supply of customers with auto producers, whose demand was boosted by consumers who stayed at home.

Now that the demand has subsided, fewer smartphones are being sold. Meanwhile, the automobile industry has continued to be very robust. 

Analysts claim that some of the issues facing the auto sector may even intensify as time goes on. 

Analog chips, which employ older technology and process information using gradations as opposed to digital chips, which merely distinguish between on and off signals, are particularly problematic. Other Japanese automakers’ executives have stated that they are having trouble finding enough vintage chips.

Numerous analog semiconductors are used in cars to control things like how much electricity is extracted from the battery, but much recent funding has gone into creating more sophisticated processors. 

Although manufacturers are attempting to squeeze out an additional output of the legacy chips, a McKinsey & Co. analysis in October stated that it is unlikely that they will be able to meet demand through 2026. According to McKinsey, this is partially attributable to the advent of hybrid and electric cars, which are increasingly dependent on chips.

STMicroelectronics NV, one of the largest manufacturers of analog chips, declared late last month that its backlog of automotive orders will continue to exceed existing and anticipated manufacturing capacity through 2023. 

The Dallas-based business has been singled out by certain Japanese auto industry officials as the cause of the present supply shortages. According to a Texas Instruments official, the company has a road map to expand semiconductor capacity for decades to come and is working closely with clients to bring them the parts they require.

Toyota announced last month that, for a limited time, it would only provide one smart key instead of two to owners of certain vehicles in Japan.

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