Kia dismisses concerns over automotive chip shortage

28-Jan-2021 Intellasia | KoreaTimes | 6:02 AM Print This Post

Kia has dismissed concerns of an automotive chip shortage, assuring consumers that it has not been affected by the scarcity that global automakers are currently experiencing due to the excessive demand for chips for IT devices which occurred after the coronavirus outbreak, the Hyundai Motor Group affiliate said Wednesday.

“The entire automotive industry has faced tight supply for automotive chips. We’ve acknowledged that the chip supply has been tight since October last year and have begun intensive management of items that have shown a limited supply,” a company official told investors during a conference call upon announcing its fourth quarter results.

The global automotive industry is struggling with an unprecedented shortage of chips for cars, which has caused carmakers to postpone their car production. The shortage has occurred as chip-making companies have given priority to chips for IT devices and home appliances, which have been in robust demand since the COVID-19 outbreak.

Due to the shortage issue, TSMC, the world’s largest foundry chip manufacturer, is considering charging automakers up to 15 percent more for automotive system chips with its chief rival Samsung Electronics taking similar steps. The move is a concern for carmakers as their profit margin will be severely affected.

However, Kia showed its confidence regarding the shortage issue saying the company hasn’t suffered any disruptions in securing automotive chips so far.

“In a tight supply situation, what we can do is stock up with more chips in our inventories, try to find replacements or carry out a specification change to use other components. By making these kinds of efforts, we are trying to ensure no disruptions at this moment,” the company official said.

Kia also said it will expand its electric vehicle (EV) lineup this year as it is slated to hold a world premiere to introduce its new EV model in March.

“We are scheduled to hold a world premier to showcase the new EV tentatively called the CV in March. The CV will be launched in the domestic market and Europe in July and in December in the United States.

The new EV model will be manufactured based on Hyundai Motor Group’s EV-only platform the Electric-Global Modular Platform (E-GMP). With Europe imposing stricter CO2 emissions regulations on carmakers since 2020, Kia expects its new EVs will help the company meet the carbon emissions standards more easily.

With regard to rumours that Kia may produce the EVs of iPhone maker Apple, Kia didn’t comment, saying the company will provide more detailed information about its EV business strategy at the upcoming CEO Investor Day in February.

Despite the impact of the COVID-19 pandemic, Kia displayed better-than-expected earnings in 2020 thanks to increased sales of high-end and recreational vehicles. Its operating profit in the fourth quarter of 2020 stood at 1.28 trillion won ($1.16 billion), almost double the 590.5 billion won achieved in the same period in 2019. Its full-year operating profit rose 2.8 percent to 2.07 trillion won in 2020 from 2 trillion won in 2019.


Category: Korea

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