Hyundai Thinks The Chip Shortage Won't Get Any Worse

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This is good news.

It's been a rough year for most automakers as the semiconductor chip shortage either eliminated some key features from new vehicles or halted production entirely. Hyundai hasn't been unaffected as production at its Ulsan plant in South Korea was stalled earlier this year. Both the Hyundai Ioniq 5 and Kona are manufactured there. But it seems there is reason to believe that the worst is behind us. At least, that's according to an unnamed Hyundai executive who believes that the chip shortage has bottomed out.

"We expect it will get better gradually from the third quarter, although some chips will do so from the fourth quarter," said the exec. Apparently, Hyundai has already ordered chips for both 2021 and 2022.

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In more good news, the Korean automaker's operating profit more than doubled in the second quarter of this year, reaching around $1.7 billion, an increase of 219.5 percent relative to the same period in 2020.

"Sales of SUV models and Genesis luxury brand models drove the momentum in sales volume and declining incentives helped lift revenue and profitability in the second quarter," said Hyundai.

Hyundai's momentum mirrors the general industry trend of recovering auto sales. With the worst of the pandemic behind us and the supply of semiconductor chips regaining some level of normality, other automakers are likely to report a similar sentiment to Hyundai.

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However, lessons were still learned over the last few months and Hyundai plans to strengthen its relationship with several semiconductor partners. By so doing, it can diversify its supply chains and reduce the likelihood of facing a similar shortage in the future.

Among other automakers, Nissan reported that the shortage would impact its production targets by 500,000 units. Earlier this month, several large SUVs from General Motors, including the Cadillac Escalade and Chevrolet Suburban, lost a key feature. While the industry isn't out of the woods just yet, Hyundai's latest statement indicates that things are moving in the right direction.

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Source Credits: Nikkei Asia

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