How Hyundai Avoided The Chip Shortage Plaguing Tesla, Other Automakers

·2 min read

Hyundai Motor Company (OTC: HYMTF) has managed to evade a chip crunch that has affected other automakers worldwide.

What Happened: The South Korean automaker managed to avoid the shortage by stockpiling semiconductors last year and even purchasing more towards the end of 2020, people familiar with the matter told Reuters.

Like its peers, Hyundai too planned to cut production at the beginning of 2021 because of COVID-19. “But procurement read the trend of the semiconductor industry cutting auto chips production and said, ‘if we don’t buy them as well, we’ll be in trouble later on,” according to one of the people.

See also: How to Buy Stocks

Hyundai still purchased fewer chips last year than it did in 2020, but reportedly sharply increased purchases in the quarter ended December.

Why It Matters: The purchases also allowed the Korean automaker to buy the semiconductors at lower prices, according to Kim Jin-woo, an analyst at Korea Investment & Securities, Reuters reported.

Hyundai expects the chip shortage to lessen in the third quarter, while subsidiary Kia said it was prepared for the next three to six months and does not reportedly see any “immediate production disruption.”

Last month, Toyota Motor Corporation (NYSE: TM) said it has enough chip inventory to last for about four months, as per Reuters.

On Thursday, Tesla Inc (NASDAQ: TSLA) CEO Elon Musk acknowledged that the automaker’s Fremont factory halted production temporarily due to a parts shortages.

Chip shortages have eroded automotive earnings by one-third at both Ford Motors Company (NYSE: F) and General Motors Company (NYSE: GM), according to Bloomberg.

Price Action: On Thursday, Hyundai OTC shares closed 1.21% lower at $48.15.

Click here to check out Benzinga’s EV Hub for the latest electric vehicles news.

See more from Benzinga

© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting