Taiwan says chipmakers to prioritise auto chips amid global shortage

Four major Taiwanese chip makers met the island's economics minister on Wednesday and told her they were willing to prioritise supplies for auto makers amid a global shortage of chips for the industry, the minister said.

File photo of a semiconductor chip and board designed to speed up servers that cater to a growing number of mobile devices - from drones to self-driving vehicles - that perform better with AI. (Bloomberg)
File photo of a semiconductor chip and board designed to speed up servers that cater to a growing number of mobile devices - from drones to self-driving vehicles - that perform better with AI.

Automakers around the world are shutting assembly lines due to problems in the delivery of semiconductors, which in some cases have been exacerbated by the former US administration's action against key Chinese chip factories.

The shortage has affected Volkswagen, Ford Motor Co, Subaru Corp, Toyota Motor Corp, Nissan Motor Co Ltd, Fiat Chrysler Automobiles and other car makers.

Also Read : China's car-chip shortage could persist for as long as a decade

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Economics Minister Wang Mei-hua said she had met executives from Taiwan Semiconductor Manufacturing Co Ltd (TSMC), United Microelectronics Corp (UMC), Powerchip Semiconductor Manufacturing Corp and Vanguard International Semiconductor Corp.

The companies had agreed to give priority to auto chips to meet demand even as they were also trying to fill orders from the electronics sector, Wang said.

"Chipmakers are willing to follow the government's request and try to support auto chips as much as they can to support their production in the US, Europe and Japan," Wang told reporters.

Three of the companies did not immediately respond to requests for comment.

Vanguard declined comment ahead of their quarterly earnings next week, referring Reuters to comments their chairman made earlier this month in which he referred to an expected 15% increase in demand for auto chips this year.

The chip firms told Wang that they were in a very difficult position given rising chip demand for electronics amid the Covid-19 pandemic, with a work-from-home trend boosting demand for laptops, tablets and smartphones, she said.

"All four chipmakers mentioned that at the moment their capacity is fully loaded and demand is bigger than supply, and even their capacity is overloaded," Wang said.

Also Read : After chip woes, auto recovery may soon be in China's hands

"They are willing to try to negotiate with clients of other products to see which clients are willing to delay orders or cut orders," she said.

"They will try to optimise their production lines. For example, if their capacity is at 100% now, they will try to raise it to 102% or 103%, with the extra capacity going to make auto chips."

Wang, citing the chipmakers, said they had warned auto companies early last year that it would be dangerous if they cut orders during rising chip demand for electronics.

"They did raise related warnings: if you are to cut orders, it will be very difficult to resume orders," Wang told reporters.

First Published Date: 27 Jan 2021, 14:11 PM IST
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