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Toyota to Cut Output as Chip Shortage Finally Catches Up to It


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Auto assembly in Toyota's factory in Motomachi, Japan.

Toyotas Motomachi, Japan, plant is one of the factories set for suspension.

Credit: Yoshio Tsunoda/AFLO/Zuma Press

The global semiconductor shortage has finally started to bite at Toyota Motor Corp., highlighting how a resurgence in Covid-19 infections from the Delta variant is now stifling chip manufacturing in Southeast Asia, worsening a parts crisis for car companies.

Japan's largest car maker said Thursday it was cutting production in the country by 40% in September because of a shortage of semiconductors, highlighting how the scarcity is hitting even the best-prepared companies.

Ford Motor Co. and General Motors Co. also said this week they are scheduling more downtime at several North American factories, in part because virus-related restrictions overseas are further adding to chip-supply constraints.

For much of this year, the chip-shortage challenges in the auto industry have largely stemmed from car companies miscalculating how quickly auto sales would bounce back and not ordering enough semiconductors.

Now, the auto industry is confronting a new wrinkle with a resurgence in Covid-19 infections in Southeast Asia, particularly in Malaysia, denting output at computer-chip factories that are already straining to fill orders. This region is where semiconductors are assembled into small components that control everything from engines to headlights.

From The Wall Street Journal
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