Hyundai Motor expects first-half vehicle production to rebound
Hyundai Motor expects first-half vehicle production to rebound
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The worldwide semiconductor scarcity is projected to ease gradually from the second quarter onwards, according to Hyundai Motor Company, which forecasted a comeback in vehicle production in the first half of this year. Due to the spread of the Omicron form of coronavirus and its long-term impact in Southeast Asia, the scarcity is projected to remain in the first quarter.

This has caused the corporation to have chip sourcing issues, causing sales to fall short of the objective of 4 million cars in 2021. According to Reuters, the company's Executive Vice President Seo Gang Hyun remarked in a conference call that "the normalisation of auto chip supply and demand is expected in the third quarter."

The supply of basic chips to the automotive and electronic sectors is important in Southeast Asia, with Malaysia's chip assembly business accounting for more than a tenth of a global trade worth more than $200 billion. Due to semiconductor shortages, Hyundai and its sister business Kia Corp expect a 12.1 percent increase in combined global sales this year, after falling about 4% short of a target of 6.92 million cars last year. Hyundai reported a roughly 50% decline in earnings for the quarter ending December, which was far below than analysts' forecasts.

The company had a net profit of 547 billion won ($456 million), down from 1.1 trillion won the year before. This compares to a 1.5 trillion won average analyst projection compiled by Refinitiv SmartEstimate. According to economists, rising raw material prices, component shortages, and logistical delays caused by the epidemic would certainly drive up expenses even more in the current quarter.

"However, there will be other difficulties surrounding the proliferation of the Omicron variant," said Lee Jae-il, an analyst at Eugene Investment & Securities.

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