Toyota says it will cut production in Japan by 40% in September due to the global chip shortage, after touting its ability to insulate itself
Car maker says it will cut production in Japan by 40% in September — TOKYO—The global semiconductor shortage has finally started to bite …
Context & Ripple Effects
Toyota’s production buffer had made it an exception as Volkswagen, Daimler, GM and Renault confronted chip-driven cuts early in the year. A subsequent Renesas plant fire that halted output added a Japan-based supply disruption to an already constrained automotive chip market.
TSMC had projected that the shortage of automotive chips would begin easing within months, even as the broader shortage persisted into 2022. Toyota’s reversal shows that expected relief had not yet restored dependable supply for Japanese assembly.
First-order effects
- Toyota will reduce Japanese production by 40% in September, directly lowering its near-term assembly output.
- Toyota loses the operational distinction it claimed from insulating itself against the semiconductor shortage, putting it alongside other automakers managing production around chip availability.
Second-order effects
- Toyota’s cut reinforces the production pressure already facing Volkswagen, Daimler, GM and Renault, making scarce automotive-chip supply a shared constraint rather than a problem confined to selected manufacturers.
- TSMC’s expected easing in automotive-chip supply becomes more consequential for automakers’ production planning, because a major Japanese producer is now also curtailing output.
Third-order effects
- The episode points to semiconductor capacity lag as a structural limit on auto manufacturing: even manufacturers with stronger buffers can be forced to alter assembly schedules when shortages persist.
- If the pattern holds, competitive advantage in autos will depend more on the reliability of chip procurement and supply buffers, not only on vehicle demand and factory capacity.
The trend: The auto industry is learning that semiconductors have become a binding production input whose supply cycles can override manufacturers’ own planning buffers.