Chips Shortage Eat into Toyota’s Profits.

Toyota reported that its profits fell by 21 % during the last three months of 2021. This, the giant automaker, attributed to global shortages of chips that hit into its production. The chip shortages further pushed the company to cut down on its annual production targets by 500, 000 units.

The automaker’s third-quarter operating profit was 6.8 billion dollars.

The issue of chip shortages doesn’t seem to affect Toyota only. Other major automobile companies as well reported within 2021 that they were struggling to meet their production targets as well.

The good news however is that Toyota, in a statement apologized to its customers over the production reduction and promised that they are working as hard as possible to restore things to normalcy. Production has been affected since last summer, something that is expected to be remedied soon.

The issue of chips shortages is expected to be handled better by Toyota compared to its peers due to capacity and resource muscle partly. This has made it possible for speculators to start projecting that Toyota may end up having a better year in 2022 than in 2021.

It has been reported that the pandemic made the demand for electronics increase. The working from home mantra made it possible for consumer electronics demand to increase relatively. Healthcare machinery demand increased drastically within the period.

All these products use chips in their manufacturing. It thus meant that the supply of semiconductors globally fell short compared to the demand. This went ahead to affect the automobile industry as was seen in the slashed annual production targets for almost all major manufacturers.

Toyota continues to rule supreme as the world’s largest/biggest car seller as the gap with its nearest rival Volkswagen continues to widen according to last month’s data.

Japan’s customers of Toyota’s legendary Landcruiser will however have to wait up to 4 years to have their orders met. The company doesn’t attribute this to the chip shortage as it kept mum on the very reason for such lengthened period into meeting customer orders.

Chipmakers now have work to meet the burgeoning demand for chips across the consumer electronics spectrum and most importantly the massive automobile industry. As we project to move into electric vehicles as one of the key technologies of the next decade, more and more demands for chips are expected to be experienced.

The industry of semiconductors and chips, in general, is the industry of the decade as it seems of now. We however hope that the demand for the chips will be met and manufacturers in the automobile sector will as such meet their production targets.