Škoda Auto to halt production in Czechia due to a chip shortage

Halt of production could severely affect the Czech economy. Škoda Auto, a part of Volkswagen Group, contributes around 5% to Czech GDP and accounts for 9% of the country’s total exports. [EPA-EFE/MARTIN DIVISEK]

Czech automobile manufacturer Škoda Auto will limit or completely stop the production of cars in all three Czech factories from 18 October till the end of the year. The company took the decision due to global chip shortages.

Halt of production could severely affect the Czech economy. Škoda Auto, a part of Volkswagen Group, contributes around 5% to Czech GDP and accounts for 9% of the country’s total exports.

Manufacturing was previously suspended for one week in September for the same reason.

The semiconductor chip shortage is hitting the automotive sector globally. European manufacturers are dependent on Asian production, which has been declining due to the COVID-19 pandemic.

“We expect that the manufacturing of semiconductors will be gradually launched again in the second half of 2022. The whole situation regarding supplies should calm down,” said Tomáš Kotera, Škoda Auto’s head of communication.

According to Kotera, it is a priority for the company to secure jobs and compensation for factory workers. Employees are currently getting 85% of their standard wage.

Chips are strategic components of the current digitalised world. The global demand is rising while the production capacities of Asian countries are limited.

The European Commission has already announced that it will introduce the “European Chips Act”. The new law is intended to increase chip production capacity in Europe and boost international cooperation.

(Aneta Zachova, EURACTIV.cz)

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