Toyota Honda's North American plant cuts production in response to raw material supply shortages

Toyota Motor Corp. TM 2.65% , Honda Motor Co. and Samsung Electronics Co. said supply-chain problems were complicating their businesses, as freak weather, port blockages and the continued impact of Covid-19 combine to disrupt global supply chains.

Toyota and Honda said Wednesday that they would halt production at plants in North America because of a squeeze in crucial supplies, including plastic components, petrochemicals and semiconductors. Honda also blamed port backlogs and severe winter weather that has frozen plants and pipes across the central U.S. for the disruption.

Separately, Samsung, the world’s largest maker of smartphones, said a severe global shortage in chips would hurt its business into the next quarter. The South Korean company also said it might withhold launching a new model of one of its most popular handsets, though it said the move was aimed at keeping it from competing with an existing handset.

The disruptions underscore how a number of forces are coming together to squeeze the world’s supply chains: from the pandemic-driven rise in consumer demand for tech goods to a backlog of imports at clogged California ports and U.S. factory outages caused by severe weather. The timing is particularly concerning for manufacturers because the U.S. and some other economies are beginning to reopen thanks to vaccination campaigns.

“Automotive companies initially had to bear the brunt of these shortages, but now it has spread to pretty much all parts of the consumer-electronics sector,” said Sanjeev Rana, senior analyst at investment bank CLSA in Seoul.

Semiconductors have been in short supply for months after makers of smartphones, PCs, tablets and TVs underestimated expectations during the pandemic, before ramping up orders that caught chip manufacturers unprepared.

Amplifying the shortfall was last month’s severe winter weather across the central U.S. Samsung, also one of the world’s largest chip makers, was forced to idle two chip factories in Austin, Texas, last month. The facilities represent about 28% of Samsung’s total output, according to Citi analysts, and remained shut as of Wednesday. Dutch chip maker NXP Semiconductors NV also scaled back work at two facilities in Austin because of severe weather, though production resumed last week.

Toyota said Wednesday that a shortage of petrochemicals was to blame for a shutdown in output at its factory in Kentucky, where it builds the Camry and Avalon sedans and the hybrid version of its RAV4 sport-utility vehicle. The shortage would also lead to cuts in production of its Tacoma pickup truck built in Mexico. The company didn’t expect to furlough any workers for now.


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