(Reuters) – Toyota could have pioneered the just-in-time manufacturing technique, however with regards to chips, its resolution to inventory what have turn into key parts in vehicles dates again a decade after the catastrophe of Fukushima.

FILE PHOTO: The brand new Toyota Corolla Sedan Hybrid is proven on the 89th Geneva Worldwide Motor Present in Geneva, Switzerland, March 5, 2019. REUTERS / Denis Balibouse / File Picture

After the catastrophe severed Toyota’s provide chains on March 11, 2011, the world’s largest automaker realized that semiconductor supply instances had been far too lengthy to deal with devastating shocks equivalent to pure disasters.

That is why Toyota got here up with a enterprise continuity plan (BCP) that required suppliers to stockpile between two and 6 months of chips for the Japanese automaker, relying on the time it takes between order and supply, 4 mentioned. sources.

And that is why Toyota has to this point been largely unscathed by a world semiconductor scarcity following a surge in demand for electrical merchandise underneath coronavirus lockouts that has pressured many rival automakers to droop the market. manufacturing, in keeping with sources.

“Toyota was, so far as we are able to inform, the one automaker correctly outfitted to take care of chip shortages,” mentioned an individual aware of Harman Worldwide, which focuses on audio methods, shows and audio know-how. ‘driving help.

Two of the sources who spoke to Reuters are engineers at Toyota and the others are from corporations concerned within the chip enterprise.

Final month, Toyota stunned rivals and traders by saying its manufacturing wouldn’t be considerably disrupted by chip shortages, at the same time as Volkswagen, Basic Motors, Ford, Honda and Stellantis, amongst others, had been pressured to decelerate. or to droop a part of the manufacturing.

Toyota, in the meantime, elevated car manufacturing for the fiscal 12 months ending this month and raised its full-year revenue forecast by 54%.


The supply near Harman mentioned the corporate, which is a part of Samsung Electronics in South Korea, was experiencing shortages of central processing items (CPUs) and energy administration built-in circuits as early as November of this 12 months. final.

Though Harman doesn’t make chips, as a result of its continuity settlement with Toyota, it was pressured to prioritize the automaker and guarantee it had sufficient semiconductors to keep up provide. of its digital methods for 4 months or extra, the supply mentioned.

Chips which might be at the moment significantly uncommon are microcontroller items (MCUs) that management an array of features equivalent to braking, acceleration, steering, ignition, combustion, tire strain gauges and strain sensors. rain, the 4 sources advised Reuters.

Nevertheless, Toyota modified the best way it buys microcontrollers and different microchips after the 2011 earthquake, which induced a tsunami that killed greater than 22,000 folks and triggered a lethal fusion on the Fukushima nuclear energy plant.

Within the aftermath of the earthquake, Toyota estimated that its provide of greater than 1,200 components and supplies might be affected and it drew up a listing of 500 precedence gadgets that might require safe provide sooner or later, together with semiconductors manufactured by the principle Japanese chip provider Renesas Electronics. .

The fallout from the catastrophe was so extreme that it took Toyota six months to deliver manufacturing outdoors Japan again to regular ranges, after doing so at house two months earlier.

This was a giant shock to Toyota’s just-in-time system as a gentle movement of parts from suppliers to factories to meeting traces – together with lean stock – was on the coronary heart of its emergence as a pacesetter within the business. business by way of effectivity and high quality.

At a time when provide chain danger is now on the forefront in virtually each business, the transfer exhibits how prepared Toyota was to desert its personal semiconductor rules – and is reaping the rewards.

A spokesperson for Toyota mentioned one of many targets of its lean stock technique is to turn into conscious of inefficiencies and dangers in provide chains, establish essentially the most probably damaging bottlenecks and to learn how to keep away from them.

“BCP was a basic lean resolution for us,” he mentioned.


Toyota pays for its storage settlement with chip distributors by reimbursing a portion of the associated fee reductions it calls for from them annually over the life cycle of any automobile mannequin underneath so-called annual value discount packages, have the sources mentioned.

MCU chip inventories – which regularly mix a number of applied sciences, processors, flash reminiscence, and different units – are held for Toyota by components suppliers equivalent to Denso, which is part-owned by the Toyota Group, chipmakers like Renesas and Taiwan Semiconductor. Manufacturing, and chip sellers. .

Whereas there are several types of microcontrollers, those at the moment in brief provide aren’t innovative chips, however extra standard chips with semiconductor nodes starting from 28 to 40 nanometers, relying on the sources.

Toyota’s continuity plans for chips have additionally cushioned it towards the affect of pure disasters exacerbated by local weather change, equivalent to extra extreme typhoons and rainstorms that always trigger flooding and landslides throughout. Japan, together with the manufacturing hub within the southern Kyushu area the place Renesas additionally manufactures chips.

One of many sources concerned within the semiconductor provide mentioned Toyota and its subsidiaries have turn into “extra danger averse and delicate” to the affect of local weather change. However pure disasters and aren’t the one menace on the horizon.

Automakers concern that the availability of chips will now not be disrupted as a result of rising demand as vehicles turn into extra digital and electrical, in addition to the fierce rivalry for chips from producers from smartphones to computer systems to computer systems. airplanes and industrial robots.

The sources mentioned Toyota has one other chip benefit over some opponents due to its long-standing coverage of constructing certain it understands all the know-how utilized in its vehicles, moderately than counting on suppliers to ship. “black bins”.

“This primary strategy units us aside,” mentioned one of many sources, a Toyota engineer.

“From what causes faults in semiconductors to the gory particulars about manufacturing processes such because the gases and chemical compounds you utilize to make the method work, we perceive the know-how inside and outside. outdoors. It is a totally different degree of data which you could’t simply purchase in case you solely purchase these applied sciences. “


There was an explosion in the usage of semiconductors and digital applied sciences by automobile producers throughout this century due to the rise of hybrid and totally electrical automobiles, in addition to autonomous driving and automobile features. related.

These improvements require much more computing energy, and partly use a brand new class of semiconductor known as a system-on-a-chip, or SoC, which principally combines a number of processors on a logic board.

The know-how is so new and specialised that many automakers have left the chance to giant components suppliers to handle.

Nevertheless, consistent with its no-blackbox strategy, Toyota developed a deep information of semiconductors in-house to arrange for the launch of its profitable Prius Hybrid in 1997.

Years earlier than, he had poached engineering abilities from the chip business and opened a semiconductor manufacturing facility in 1989 to assist design and manufacture microcontrollers used to manage Prius transmission methods.

Toyota designed and manufactured its personal microcontrollers and different chips for 3 a long time, till it moved its chip manufacturing plant to Denso in 2019 to consolidate the provider’s operations.

The 4 sources mentioned Toyota’s early drive to develop a deep understanding of semiconductor design and manufacturing processes was one of many major causes it was profitable in avoiding being hit by shortages, along with its continuity contracts.

Nevertheless, two of the sources mentioned they feared the Denso deal could point out that Toyota is lastly able to abandon its no-black field strategy, despite the fact that the provider is a part of the Toyota group as an entire.

“We had been superb this time round, however who is aware of what lies forward sooner or later?” mentioned a supply. “We could also be shedding our grip on know-how within the title of effectivity in know-how growth.”

Reporting by Norihiko Shirouzu from Beijing; Edited by David Clarke

Leave a Reply

Your email address will not be published.