Chip Shortage - Don't Expect Relief Very Soon

This is an excerpt from a newsletter I get (emphasis mine). I emphasized all the ways this is impacting the auto industry. As long as this condition exists, prices are going to be very elevated due to insufficient supply:

A massive global shortage of the semiconductor chips that go in everything from automobiles and industrial equipment to smart phones, computers and household appliances is showing no sign of letting up.

The industry now has about a five days’ supply of chip inventory, which is significantly down from the 40 days’ supply it had in 2019. That makes companies relying on semiconductors to build their products particularly vulnerable to an overseas semiconductor plant shutdown lasting a couple of weeks. Businesses may have to close temporarily and furlough workers in such a scenario.

The Susquehanna Financial Group LLP says businesses are now waiting more than 25 weeks for new chips, while the normal wait time has been around 10 to 14 weeks.

According to a recent Department of Commerce report, the chips most impacted by the shortage are the legacy logic chips used in medical devices, automobiles and more, the analog chips used in power management, image sensors, radio frequency and other applications, and the optoelectronics chips used in sensors and switches.

Starting in the second quarter of 2020 through 2021, semiconductor makers have been operating at over 90% utilization, which is very high for a business that relies on regular maintenance and large amounts of energy input.

Of course, chip demand has been on a tear in recent years and grown more intense during the pandemic, with demand rising 17% in 2021 compared to 2019.

Annual sales for the industry surpassed $500 million for the first time last year, beating the total for the global smartphone market, and show no sign of cooling off.

 

Bingo! This mess is very far from over!

 

500 million in sales seems low.

 

It’s almost as if the automotive industry should stop outsourcing all this shit and make their own chips or something.

 

I agree. Sadly it won’t help lower the costs any time soon. Of course I don’t expect prices to ever go down anyway.

 

Prices will adjust eventually. Only idiots think the markets will never go down.

 

500 million in growth over the previous year maybe

 

Funny, I saw an article yesterday saying that the shortage was starting to ease. Guess it depends who you ask.

 

The shortage is starting to ease on more modern chips, but auto manufacturers purposefully use older, more proven chips in their designs. The chip fabs aren't in a hurry to get more older, lower profit margin chips out the door. I saw this in an article a couple of weeks ago.

 

It's gettin serious guys

 

Almost all of these advanced chips are made in one country. That country is very nervous about one of its neighbors. This mess is years from recovery

 

But priced below MSRP!! I wonder what the doc fee is.

 

Same here......

 

Uh? "Chip shortage"

 

Lol....juice. Our chip aisle was fine.

 

Juice shortage in Florida is sort of funny though! However, realistically it isn't funny since there are serious problems with some orange groves down there. My understanding is, present/future juice production is at risk.

 

Everything is at risk. We won't even talk about shipping costs for a full set of CBI skidplates from Idaho to FL.

 

thems mAcrochips

 

I was recently looking into buying a new car, and it was a lot harder than I expected. Dealers are super low on stock, and the prices are through the roof. I even spoke with one of the salespeople, and they mentioned that it's mainly because of the shortage of chips. Apparently, it's taking months just to get the necessary parts to finish assembling vehicles.

I remember back in 2020, I had to wait a while for a new laptop because of the same issue. It's wild how dependent we are on these tiny chips, yet there’s so much complexity involved in their production.

One thing I learned was how wafer processing plays a huge role in making sure those chips are precisely manufactured. It’s all about ensuring those tiny wafers are handled perfectly during production, which affects everything from medical devices to cars.