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29 Apr 2021


Chip shortage 2021: Thai vehicle production falls short by 40,000 units, while car manufacturers implement supply-side structural reform for automotive chips to support long-term demand (Current Issue No.3214)


Since late 2020, the global automotive industry has been experiencing a microprocessor chip shortage. The principal reason for this crisis is the fragile structure of the automotive chip manufacturing industry. Demand and supply volatility for these chips has been triggered by multiple factors, including COVID-19 outbreaks and a recent chip plant fire in Japan, which have led to the present car chip constraint. While the situation is expected to be temporarily resolved during 2H21, supply-side structural reform is needed for the automotive chip industry to solve this issue over the long term.

          Looking domestically, from late 2020 to the first quarter of 2021, the Thai automotive industry – which is dominated by Japanese carmakers – has seen fairly limited impact from the tightening of chip supply as Thailand is part of Japan's chip supply chain which produces its own automotive chips. Nevertheless, the chip plant fire in Japan will likely cause a slowdown in Thailand's motor vehicle production in 2Q21 although gradual improvement could be seen in 3Q21 once the fire-damaged factory is rebuilt and resumes operations. KResearch has assessed that the tightened chip supply in Thailand could prompt a revision of manufacturing plans with reduction of car production by 44,000 units in 2021, though such a setback is unlikely to affect Thailand's production forecast, which stands at 1.8 million vehicles.​