The South Chungcheong Province automobile industry has suffered losses of hundreds of billions of won due to a shortage of semiconductors for vehicles, but it has been suggested that the industry should use this as an opportunity to improve its constitution, as failure to respond to the future restructuring of vehicles such as electric and hydrogen vehicles could lead to even greater losses.

The Chungnam Research Institute recently published a report titled “The Impact of the Supply and Demand Imbalance of Automotive Semiconductors on the Chungnam Automobile Industry” in Chungnam Report Vol. 380.

According to this, if the shortage of automotive semiconductors continues, the direct damage to the South Chungcheong automobile industry is estimated at 321.5 billion won, and the economic ripple effect on automobile production and upstream and downstream industries is estimated to result in a production loss of approximately 1.0753 trillion won in the South Chungcheong region.

In particular, it was analyzed that if supply and demand instability continues until the fourth quarter of this year, additional damages may occur.

However, some analysts predict that the damage will fall short of the estimate due to high demand for automobiles and increased semiconductor supply in the second half of the year. If the supply of automotive semiconductors improves in the second half of the year, annual total production is expected to remain at the same level as before the COVID-19 pandemic or increase slightly due to the production delay effect.

South Chungcheong Province's automobile industry is a key industry that accounts for a significant portion of the local economy. However, its growth has recently stagnated and its added value has not increased compared to other major automotive industry hubs.

Dr. Lee In-jae and researcher Lee Jong-yoon of the Public Investment Management Center at the Chungnam Research Institute predicted, “As the shortage of automotive semiconductors has persisted since the end of last year, the scale of disruptions in domestic companies’ finished vehicle production has expanded in April and May of this year.” They added, “There are concerns that damage will be inflicted not only on finished vehicle production but also on the automotive parts industry and related upstream and downstream industries, but the damage will likely be short-term.”

On the other hand, he pointed out that the transition from internal combustion engine vehicles to future vehicles (electric and hydrogen vehicles) could lead to a restructuring of the entire automotive industry value chain, posing a long-term, structural threat different from the semiconductor shortage.

Accordingly, the research team suggested, “This issue of fragmented production disruption caused by the current semiconductor supply shortage should be taken as an opportunity to change the perception of the upcoming ‘future automobiles.’” They added, “Depending on the preparation for the reorganization of the value chain, the transition to future automobiles could function as a crisis or an opportunity for the automobile industry in South Chungcheong Province, so an active response from South Chungcheong Province is necessary.”