Toyota closes Japanese plants due to chip shortage

Toyota is being forced to temporarily halt operations at two of its plants in Japan as the ongoing semiconductor shortage has caused it to run out of an essential component for production.

The semiconductor shortage has been ongoing since January and has affected a number of industries, and is related to an increased demand for electronics during the coronavirus pandemic.

Read more: VW expects further losses from chip shortage

Chips are needed for the construction of electric vehicles which are forming a key part of the green transition many nations and companies are undergoing owing to a sustainability push coming out of the crisis.

The automaker has announced it will be ceasing operations at its Iwate plant for at least eight days next month and its Ohire plant for three starting from June 7.

It will also be halting a single production line at a facility in the Miyagi Prefecture that produces the Yaris Cross, marking the first time the company has had to halt operations due to the shortage, in line with several other global players.

The company currently estimates these delays will result in 20,000 fewer vehicles being produced.

The chip shortage has affected more than just the automotive sector. While there were hopes it would resolve itself within a few months, current estimates believe it could last into 2022.

One estimate suggests as many as 3.9 million units could be lost over the course of the year owing to a lack of chips and parts, representing roughly $110 billion (€90 billion) in lost revenue.

Read more: EU's semiconductor plan "doomed to fail", says think tank

Both the EU and US have laid out plans to try to end the shortage, however, their plans have yet to come to fruition.

Many major automakers have seen reduced production or had to slash forecasts owing to the effects of the shortage.

It has also had significant effects on most major auto markets, including the US, UK, EU, and China.

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