Volvo’s semiconductor shortage

Luxury car giant Volvo has announced that it will suspend operations at its plant in Gothenburg in southern Sweden due to semiconductor shortages.

🟩 Volvo’s second-half results are attracting attention

Volvo also temporarily suspended its Ghent plant in Belgium in June 2021, citing a global shortage of semiconductor chips. In March 2021, the company suspended or adjusted some production in China and the United States. This time, production will be suspended at the local Swedish plant.

Volvo’s first half is strong

Volvo’s financial results for the first half of 2021 (January to June) show that global new vehicle sales were 380,757 units. The year-on-year increase was 41%, exceeding the previous year’s result for the first time in two years. Operating income turned into a surplus from a deficit of SEK 13,238 million (approximately JPY 168 billion) and SEK 989 million in the same period of the previous year.

Forecast for the second half of the year

On the other hand, assuming that the chip shortage does not improve in the second half of the year, the company expects sales and revenue growth to be flat compared to the second half of 2020.

🟩Stay tuned for IPO planned

Volvo is considering an initial public offering (IPO) in 2021 and listing on the Nasdaq Stockholm Stock Exchange in order to accelerate the transition to electric vehicles (EVs) with the funds obtained from the listing. Volvo’s enterprise value could be valued at around $20 billion. The results for the second half of the year are closely watched because they may also have an impact on the IPO.

🟩 Impact on corporate value

GEELY has become Volvo’s parent company in 2010 when Ford sold all of Volvo’s shares to China’s Zhejiang Geely Holding Group (GEELY) for $1.8 billion. GEELY aimed for Volvo’s IPO in 2018 and proposed a plan with an enterprise value of up to $30 billion, but failed because its investor valuation fell short of this. After this IPO, GEELY will remain Volvo’s major shareholder.


Semiconductor shortage affects Volvo’s performance and initial public offering

The shortage of semiconductors is likely to affect the business performance of automobile manufacturers, so it is necessary to pay attention.

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