Toyota to announce financial result, remains safe from chip shortage

Advanced supply chain planning may have saved Toyota a lot of blushes even as several automakers struggle due to crisis resulting from chip shortage.
By : HT Auto Desk
| Updated on: 11 May 2021, 11:45 AM
 A semiconductor chip. (File photo) (Bloomberg)
A semiconductor chip. (File photo) (Bloomberg)
 A semiconductor chip. (File photo) (Bloomberg)
A semiconductor chip. (File photo)

Toyota Motor Corp. which will announce its financial result on Wednesday, may come out unhurt from the semiconductor shortage that has hit almost every automaker around the globe. Thanks to the advanced supply chain planning, the Japanese automaker has sailed quite smoothly during the pandemic. The fire at the Renesas Electronics Corp., the automotive chip plant in Japan and snowstorms in Texas that has hit local chipmakers such as Samsung Electronics, Infineon and NXP Semiconductors are being cited as the major reasons for this crisis.

(Also read: US auto part makers brace for a bumpy ride as chip shortage to intensify)

“Renesas largely owes Toyota" because Toyota supported the chipmaker after Japan’s 2011 earthquake and recent fire, said an analyst as per a report by Bloomberg. Hence it is under obligation, he also added. Toyota owns around 3% of Renesas and is one of the company’s largest customers. The automaker also went ahead to send its workers to the Naka plant in eastern Japan in an effort to keep a consistent supply chain. However, amid this power play, it has become harder for smaller automakers to procure chips.

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General Motors and Ford endured about $2.5 billion cost due to the chip shortage. Europe's Volkswagen, too said that it is in a crisis mode and as the shortage intensify, it may hit its profits in the second quarter. It has been forecasted that global vehicle sales may rise by about 10% in 2021, it will remain below the pre-Covid level due to an inconsistent supply chain and the financial crisis which has set in due to the pandemic.

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Hence it won’t be a very satisfactory week for investors as a slew of conservative forecasts will mainly focus on the supply chain and ongoing virus risks, said another analyst according to the report. The semiconductor shortage has also badly hit electronic device sectors such as mobile phone, laptops and game consoles.

(With inputs from agencies)

First Published Date: 11 May 2021, 11:44 AM IST
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