Taiwan says chipmakers to prioritise auto chips amid global shortage


A car body is moved in a production line at the Volkswagen plant in Wolfsburg, Germany March 1, 2019. Picture taken March 1, 2019. REUTERS/Fabian Bimmer/File Photo

TAIPEI (Reuters) - Major Taiwanese chipmakers are willing to prioritise supplies for auto makers amid a global shortage of chips for the industry, the island's economics minister said after meeting with company executives.

Automakers around the world are shutting assembly lines due to the shortages, which in some cases have been exacerbated by the former U.S. administration's actions against Chinese chip factories.

"Chipmakers are willing to follow the government's request and try to support auto chips as much as they can to support production in the U.S., Europe and Japan," Economics Minister Wang Mei-hua told reporters.

The issue has become a diplomatic one, with German Economy Minister Peter Altmaier writing to Wang to ask her for help in addressing it. Wang also said the United States, European Union and Japan had also been in contact.

The chipmakers are prepared to negotiate with clients of other products to see which clients are willing to delay or cut orders and will try to boost production, Wang said.

"For example, if their capacity is at 100% now, they will try to raise it to 102% or 103%, with the extra capacity going to make auto chips," she added.

She met executives from Taiwan Semiconductor Manufacturing Co Ltd (TSMC), United Microelectronics Corp (UMC), Powerchip Semiconductor Manufacturing Corp and Vanguard International Semiconductor Corp.

Vanguard declined comment ahead of quarterly earnings next week but noted the company's chairman had said this month he expects a 15% increase in demand for auto chips this year.

The other three companies did not immediately respond to requests for comment.

The chip firms told Wang that they were at working at full capacity. Business is booming for Taiwan's tech firms as the COVID-19 pandemic and the shift to remote work drive demand for laptops, tablets and smartphones.

She added chipmakers had said they had warned automakers early last year that they were taking a risky approach if they cut orders at time of strong growth in demand for chips for electronics.

The shortage has affected Volkswagen, Ford Motor Co, Subaru Corp, Toyota Motor Corp, Nissan Motor Co Ltd, Fiat Chrysler Automobiles and other car makers.

"This appears to be long-term demand so it will take some time to solve the problem," Wang added.

(Reporting by Jeanny Kao and Yimou Lee; Writing by Ben Blanchard; Editing by Robert Birsel and Edwina Gibbs)

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