AUTO SECTOR HIT BY SEMICONDUCTOR SHORTAGE

[Anchor Lead]

A global shortage of semiconductors that go into making automobiles is also affecting the Korean auto sector. Hyundai Motor’s Ulsan plant has partially suspended operations from Wednesday while its Asan plant is also considering a suspension.

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Hyundai's No. 1 Ulsan plant. Electric vehicles, Kona and Ioniq 5 are produced here. The factory will shut down for a week starting Wednesday. This is due to global chip shortage. Ioniq 5 has logged 40-thousand units in advance orders alone, but securing key auto components is proving to be a challenge.

[Soundbite] (Labor union official): "It was decided during an emergency meeting. Workers will have time off and get 70% of their normal wage."

The Korean auto giant's Asan plant which manufactures other brands such as Sonata and Grandeur is also considering suspension. It’s hard to predict when they could resolve the issue of semiconductors supply shortage. Currently, it's due to a major failure in predicting global demand. To make matters worse, some chipmakers in the US and Japan are not operating as normal, affected by various challenges including fires and cold weather. Countries around the world are now solely relying on a Taiwanese firm, that's the global market leader in automobile chips. Industry watchers believe the shortage will continue through the third quarter, but some fear it could go on beyond that. The situation may impact Kia Motors as well. The company recently launched an EV model.

[Soundbite] Kim Joo-hong(Korea Automobile Manufacturers Association) : "Hyundai Motor is working hard overseas to secure supplies and our association is also providing support. But a short-term resolution doesn’t appear likely."

Hyundai’s plant suspension is expected to affect the production of some 6,000 Kona vehicles and 6,500 Ioniq 5s.