A scarcity of chips disrupts production in critical industries
A scarcity of chips disrupts production in critical industries

A global shortage of chips is disrupting production in key industries, from cars and video games to home appliances, and is delaying large manufacturing facilities.

On Sunday, Kia said it will shut down its Georgia facilities for two days this week for the same reason.

The plant produces more than 3 million cars annually, including flagship models from companies such as K5 and Sorrento.

Hyundai is also planning to stop production at the SUV plant in Ulsan from April 7-14, which will manufacture the Kona Motors and the newly released IONIQ 5 electric vehicle.

Although the company showed confidence, when other global automakers stopped manufacturing, the company stockpiled enough chips to keep normal operations running.

The chip shortage is also affected by natural disasters, including heavy snowfall in Texas that shut down the country's semiconductor plant and the earthquake in Japan caused the temporary shutdown of the region's semiconductor plant.

The shutdown is expected to result in production losses of up to 6,000 Kona vehicles and 6,500 IONIQ 5 vehicles.

When the Coronavirus began, global demand for cars decreased, so chip makers turned to manufacturing chips for computing and consumer goods, and sales rose during the pandemic.

The Coronavirus crisis appears to be recovering and demand for cars is on the rise, but chip makers are unable to meet demand, causing shortages.

According to a report by Susquehanna Financial Group, the average end date of February (the time between submission of the chip application and its actual time to fill out) was 15 weeks, the highest ever.

Due to the temporary shutdown of semiconductor factories, production of PMIC and DDI chips was delayed, and chip shortages in the automotive industry spread to the market for computers and home appliances. PMIC and DDI chips are widely used in home appliances and computer products.

With continued supply and demand asymmetries, it appears that chip prices are bound to rise, placing a heavy burden on companies that need chips.

Tesla recently raised the price of the Model Y, and many people think this is due to the high cost of the chip.

Industry observers believe that the global automakers have no choice but to raise prices as they have to take into account the soaring prices of chips.

Some experts believe that the economic downturn is unlikely to be resolved in the near future because it stems from escalating trade tensions between China and the United States, which has prompted some companies to double their demands.

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