Toyota cuts global output 40% as senators ask Taiwan for chip shortage help

WASHINGTON – A trio of Democratic U.S. senators has asked the Taiwanese government for more help to address an ongoing chip shortage that has left numerous American auto production lines standing idle at times, according to a letter reviewed by Reuters.

The letter, dated Aug. 18 and not previously made public, was sent by Michigan Senators Gary Peters and Debbie Stabenow and Ohio's Sherrod Brown to Taiwan's de facto ambassador in Washington, Hsiao Bi-khim, praising his "efforts to address the shortage."

But the senators added they were "hopeful you will continue to work with your government and foundries to do everything possible to mitigate the risk confronting our state economies."

The shortage has spurred production cuts and layoffs and rippled through the economies of states that are heavily dependent on the auto industry. Taiwan's Economy Ministry said on Thursday it was not able to immediately comment.

⋅ Toyota said it will slash global production for September by 40% from its previous plan, becoming the last major automaker to cut output due to a global chip crunch, but it maintained its annual sales and production targets. Toyota's success in navigating the chip shortage better than rivals has come down to its larger stockpile of chips under a business continuity plan adopted after the 2011 earthquake and the Fukushima nuclear disaster.

The world's largest automaker by sales volumes reiterated on Thursday its global production target of 9.3 million vehicles for the year ending in March, as well as its plan to sell 8.7 million cars in the period.

"The 9.3 million global production plan takes into account certain risks," executive Kazunari Kumakura told reporters. "We want to achieve the numbers."

Toyota said the September cuts included 14 factories in Japan and overseas plants, and that the company would reduce its planned global production that month by around 360,000 vehicles. Of these, 140,000 will be at Japanese plants, with the rest in the United States, China, Europe and other Asian countries.

⋅ Ford Motor Co said Wednesday it will temporarily shutter its Kansas City assembly plant that builds its best-selling F-150 pickup truck due to a semiconductor-related part shortage as a result of the COVID-19 pandemic in Malaysia. The one-week shutdown will begin Aug. 23, the second-largest U.S. automaker said, adding it will also cut a shift on Saturday. The global auto industry has been hit hard by chip shortages that have caused significant production cuts.

⋅ Volkswagen may need to cut production further due to a semiconductor supply crunch, the German carmaker said on Thursday, after a report that Toyota would slash output by 40% in September. 

The auto industry is facing renewed strains after a recovery in demand stretched supply chains earlier this year, with COVID-19 outbreaks in Asia hitting both chip production and operations at commercial ports.

"We currently expect supply of chips in the third quarter to be very volatile and tight," Volkswagen, the No.2 volume carmaker behind Toyota, said in answer to a request for comment by Reuters. "We can't rule out further changes to production."