Ford, Stellantis production cuts raise concerns chip shortage impact could worsen

(Reuters) - Production cuts by automakers Ford Motor Co and Stellantis NV due to the global semiconductor chip shortage and warnings from suppliers Robert Bosch and German chip maker Infineon on Thursday have raised concerns the problem will only get worse this year for the industry.

FILE PHOTO: View of the entrance of German automotive parts manufacturer Robert Bosch Belgian plant in Tienen April 21, 2009. REUTERS/Thierry Roge/File Photo

Ford said it is cutting shifts at two plants that build its highly profitable and top-selling F-150 pickup trucks next week. Meanwhile, union sources told Reuters Stellantis would slow production at its Melfi, Italy, plant next week and furlough 7,000 workers.

Global automakers have been caught off guard by the shortage of crucial semiconductors, used for everything for computer management of engines for better fuel economy to driver-assistance features such as emergency braking, highlighting the need to cut dependency on Asian manufacturers.

Automakers have largely curtailed production of less profitable vehicles as they manage the shortage, but Ford cutting output of its high-profit trucks will raise fears the impact is spreading.

Bosch and Infineon warned that more production headaches could lie ahead as the chip shortage complicates the recovery from last year’s pandemic-related shutdowns.

Volvo Cars also said that while it had so far avoided the chip shortages that have curtailed production at a growing number of automakers, there was still a risk it could be hit.

During a presentation of its 2020 annual results, Stuttgart-based car parts supplier Bosch said the ongoing COVID-19 crisis and the chip shortage would weigh on global automotive production growth in 2021.

Around 85 million vehicles will roll off assembly lines around the world this year, more than the 78 million produced in 2020 but still below the 92 million made in 2019, it said.

Global automotive production hit a high of 98 million vehicles in 2017.

“We are quite positive,” Bosch Chief Executive Volkmar Denner said, but he added “we still have a long way to go to catch up”.

Bosch said it had not been left unscathed by what it called a bottleneck in the global chip market.

U.S. automaker General Motors Co <GM.N > said on Wednesday it would cut production next week, joining other automakers that have been hit, including Volkswagen AG, Subaru Corp, Toyota Motor Corp and Nissan Motor Co.

Infineon said it was facing challenges in meeting auto industry demand for microcontrollers due to capacity constraints at the contract manufacturers it relies on.

“Semiconductor shortages are being felt in the overall automotive supply chain,” Chief Executive Reinhard Ploss said after Infineon reported quarterly results.

Volvo Cars CEO Hakan Samuelsson told Reuters his company, which is owned by China’s Geely Holding, could be affected soon.

“There is of course a big risk that it could come here during the first quarter,” Samuelsson said. “But it is very hard to forecast.”

Europe needs to stump up cash to boost its chip industry, a board member of the continent’s largest carmaker Volkswagen said, highlighting the dependence on foreign players.

On Tuesday, a group of 15 U.S. senators urged the White House to work with Congress to address the global semiconductor shortage hitting auto manufacturing.

Reporting by Nick Carey and Ilona Wissenbach. Additional reporting by David Shepardson in Washington, Ben Klayman in Detroit and Giulio Piovaccari in Milan. Editing by Kirsten Donovan and Mark Potter