How Toyota thrives when the chips are down

#Toyota, the pioneer of #JIT manufacturing, surprised its rivals & investors when it announced recently that it’s minimally affected by #chip shortage – thanks to its learnings from the #Fukushima disaster. 2 things that set Toyota apart

  • 2-6 months’ chips stockpiling arrangement with suppliers
  • In-house understanding of designing & producing own #MCUs & chips till 2019 (transferred chipmaking to #Denso)

One of the solutions to tackle chip shortage is to expand more capacity though the risk of under-utilization/idle capacity & access to technical #talent are expensive propositions. Another solution for carmakers is inventory buildup (akin to Toyota). It’ll be interesting to see how do companies manage higher inventory throughout the supply chain & its cost implications? Also, curious to see how automakers will go about developing in-house #semiconductor capability.

#Automotive #technology seems to be at the cusp of an exciting #disruption, leading to a rethinking of relationships between carmakers & their tech suppliers. In fact, at #Carsem, we started seeing this trend ~1-1.5yrs back when #Covid began, as we were directly approached by 2 Chinese, 1 Japanese & 1 American automakers.