And to further create issues, the chip shortage is predicted to last through the year. https://www.autoweek.com/news/indust...chip-shortage/ And it appears, at least temporarily, the sole aluminum supplier to JLR has obtained funds to keep running, for how long remains a question. https://www.alcircle.com/news/sanjee...epayment-67715

 

"The chip shortage arose out of decisions made by suppliers of semiconductors in the early months of the pandemic, which shifted their output to makes of personal electronics as auto plants shuttered for weeks. "

I recall there being a few shaky weeks in 2020 (perhaps during the US lockdown) when at least US car sales were slow and then all of a sudden it it was absolutely booming and it was hard to find new or used vehicles. Its now been 15 months or so which confuses me as to why the chip shortage is still occurring. Has there really been that large of uptick in personal electronic demand over years past? Was there something revolutionary that I missed? I just replaced my Ipad I use for work but the previous one lasted six years. People have seemed to purchase more things to use at home, like patio furniture and home improvements, and I get that. I dont understand how the semiconductor suppliers have not caught up or expanded to meet demand unless they are in areas being shutdown by covid as they dont have access to Vaccines.

 

I agree with @Moretti . I have no idea what's causing this drought of chips. I'm not seeing the consumer market boom but I'm not a global economist. I am eagerly awaiting a Starlink satellite receiver as Elon tries to build his satellite network. Maybe that, but it doesn't seem like more than one customer. Is this a run on silver type of thing? (I mentioned I wasn't an economist....)

 

The "shortage" is entirely the auto manufacturers fault - apart from a slight interruption to supply due to a fire at a fab in Taiwan last year, there has been minimal reduction in capacity. What did change was that Auto manufacturers who are used to being the biggest customer of their supply chain cancelled their orders when the shutdown began. When that happened the chip fabs just moved everyone else up the queue. Auto builders are tiny customers for chip foundries - they buy as many chips in a year as Apple or Samsung buy in a couple of weeks, and the chips they buy tend to be older designs and have less margin. So when car sales started again, the "just in time" supply chain folks at the auto companies tried to place their orders and were shocked and surprised to be put to the back of the queue. Note that Toyota, which has moved on from the JIT methodology has had little to no interruption in build and delivery of vehicles as they have gone back to keeping stock of components.

TLR It's a clash between old-style industry and new modes of manufacturing and the auto makers don't have any leverage or clout in that world. There's no chip shortage, just a shortage of chips for vehicles because the buyers at the auto companies didn't understand the chip manufacturing marketplace.

 

not disagreeing with you as you seem to know much more than I do, but how do you explain the absolute dearth of options for new 4runners?

I was looking at a 4runner before I put in the order for the Defender and the Toyota dealership wasn't even taking orders for 4runners.

 

That's interesting - I hadn't heard that. I would guess it's a supply chain issue with something else (even Toyota aren't perfect) and the 4Runner is mostly a North America and Middle East vehicle, so maybe that has something to do with it.

Toyota just beat GM for NA new vehicle sales in the last quarter (https://www.cnbc.com/2021/07/01/toyo...automaker.html)

 

Yes. Work-from-home created extreme demand.

I just got 2 AMD Ryzen chips that I ordered in January for business PC builds. They're mid-tier processors and everything close to them from them and Intel was on the same delay.

The memory took 4 weeks, motherboards were a month, and graphics cards were about 6 weeks.

These are all items that I've ordered a dozen times in the past and have never once had to wait.

 

Don’t forget crypto too - sales of Gfx cards are sky high as everyone has been buying Chips to mine currency

 

I think the autoweek article is trying to make this look like a decision the chip fabs took, rather than one made by the automakers (which is completely understandable given Autoweek's background and readership).

Looking at the issue from a tech perspective (my industry), it's a little different. Here's a primer from a tech publication - https://www.theregister.com/2021/06/...age_explained/

The truth is probably somewhere between these two extremes, but the fact remains that "Car-makers also lack buying power. The world makes between 60 and 70 million new cars each year, and not all use the same chips. Samsung and Apple can each sell the same quantity of smartphones in 90 days and are willing to pay for the kit that makes their new flagship products stand out. Carmakers reliant on older kit, which makes less money for foundries, get less attention from foundries."

 

Computers are now 40% of the cost to build a new car.

If we guess that the average car worldwide cost $22,000 to build (a quick Google search suggests this is low), at 70 million units, there are $1,540,000,000,000 being spent on vehicle computers per year. That's almost 4x the amount that consumers spent worldwide on all brands of smartphones last year.

Autonomous driving and EV's will certainly drive this number higher.

If they can't get some buying power with numbers like that, it's entirely their own fault.