July 1, 2022
The Ministry of Economy, Trade and Industry (METI) launched the Automotive Semiconductor Supply Chain Working Group in May 2021 in cooperation with domestic automobile manufacturers. From its inception, it has been discussing how to guarantee a stable supply of semiconductors for use in automobiles.
Especially given that various supply chain risks have been surfacing since the latter half of 2021, the working group is now releasing an interim report on how to make automotive supply chains resilient. This report will cover automotive semiconductors and other components as well.
Outline of the Automotive Semiconductor Supply Chain Working Group
Due to concerns about the global semiconductor shortage that started in December 2020 affecting automotive supply chains, METI (Automobile and IT Industry Divisions) teamed up with domestic automobile manufacturers to launch the Automotive Semiconductor Supply Chain Working Group in May 2021 under the Automobile Industry Council for Studying Countermeasures against the Novel Coronavirus.* The group was formed to discuss measures to guarantee a stable supply of semiconductors used in cars.
In addition to the aforementioned measures, this working group has also made progress on discussions about efforts to make automotive supply chains resilient after risks to them surfaced in the latter half of 2021. These risks are not confined to automotive semiconductors, so the group’s discussions have also included other components.Working group participants
- Domestic automobile manufacturers: Isuzu Motors, Kawasaki Motors, Suzuki, SUBARU, Daihatsu Motor Corporation, Toyota Motor Corporation, Nissan Motor Corporation, Hino Motors, Honda Motor Corporation, Mazda, Mitsubishi Motors, Mitsubishi Fuso Truck and Bus, Yamaha Motor Corporation, UD Trucks
(Observer: Japan Automobile Manufacturers Association)
- METI: Automobile Division, Manufacturing Industries Bureau; IT Industry Division, Commerce and Information Policy Bureau
* In order to make every effort to prepare for the likelihood of COVID-19 spreading and affecting automotive supply chains, this group was originally established in February 2020 as a forum for automobile and parts manufacturers to work with the government and quickly share information related to and consider necessary measures for the entire industry.
Outline of the Efforts to Make Automotive Supply Chains Resilient interim report
(1) Efforts to guarantee a stable supply of automotive semiconductors
- Improving how production plans are presented
Production plans sent to suppliers from automobile manufacturers will be improved to increase predictability for semiconductor manufacturers (longer time periods, more details, and plans sent more often).
- Standardizing procedures for changing semiconductor products and processes
When changing materials used in semiconductors, each automobile manufacturer carries out a quality evaluation as part of the procedure to change a product or process. To make adding or changing suppliers more efficient, these quality evaluation processes will be standardized and made faster.
(2) Approaches to making automotive supply chains resilient
Automobile manufacturers will analyze supply chain risks during normal times and aim to build flexible, solid supply chains while considering the balance of costs and risks. When a company cannot solve a problem by itself, it will work on the problem through cross-industry initiatives or with government support.
- Evaluating supply chain risks
- The manufacturers will use internal and external databases and analysis tools to efficiently gain an understanding of supply chain structures.
- As some suppliers will not disclose client information when it gives them a competitive edge or for other reasons, the manufacturers will build stronger relationships with them in normal times so that they will assent to disclosing information.
- They will also consider how information should be distributed and focus on constructing a cross-industry data collaboration platform for the automobile industry based on social demand for carbon footprint calculations and other information.
- Responding to supply chain risks
- The manufacturers will consider how to increase stocks of high-risk parts as they evaluate alternative suppliers in advance and keep costs in mind.
- Keeping in mind the sophistication of electronic platforms in automobiles and the risks involved in stopping production of earlier generations of semiconductors, the manufacturers will develop a medium- to long-term strategy for semiconductors.
- They will maintain domestic production bases by helping the parts industry achieve carbon neutrality. If stopping production is inevitable, they will consider how to secure multiple suppliers in order to avoid becoming dependent on any specific country.