Chip shortages still plague carmakers despite weaker semiconductor demand

Demand for semiconductors may be falling, but automobile manufacturers still face chip shortages and supply issues to the extent that some are halting or cutting production. Despite predictions from some industry watchers that the end of chip shortages is in sight and lead times are falling, shortage of key components is still …

[imanidiot]

Coronavirus isn't over, and spin-up takes time

For one thing the coronavirus isn't over so fabs in China, Taiwan (The other China) and Korea for instance are still not all running at full capacity, from what I understand especially the fabs running the older equipment that would be used for the stuff used in cars are still suffering from this.

Apart from that, after car manufacturers suddenly decided to cancel running orders and scale down demand, fabs went in search of other long term customers. There is no new fabs being built for producing in the larger node sizes, so if those fabs are filled up with other customers the car manufacturers will have to go to the back of the line. Even if more fab capacity is opening up (I doubt it) just going from exposing the first layer to having a diced, mounted and packaged chip coming out of a fab takes 3 to 6 months. So a slow increase in fab capacity availability is going to take a while to become apparent to the car manufacturers and others.

[DS999]

Re: Coronavirus isn't over, and spin-up takes time

Just read today that the Foxconn factories making iPhones have been shut down due to another covid outbreak in that region.

The capacity of the fabs themselves aren't an issue, it is the mind bogglingly complex supply chain that feeds them everything from silicon wafers to chemicals to parts to repair the dizzying array of machinery that makes it all work that's been the issue. If TSMC is short on something, they aren't going to stop production on their leading edge lines making chips for Apple, AMD, Qualcomm, etc. where most of their profit comes from. No, they will shut down their old lines making thin profit margins - and those are what are making the chips for cars, washing machines and other stuff that's been in short supply for some time.

And not just dovid, half the world's neon (critical for chipmaking) comes from Ukraine. Or rather came from Ukraine. So that's sent chipmakers scrambling since they normally have kept only a few months' worth on hand.

[Duncan Macdonald]

The automakers cut back their orders - now they are reaping the results

Because of Covid most automakers cut back their semiconductor orders and other companies took their place in the manufacturing pipeline. Now the the automakers want to increase production they find themselves behind many others in the queue for fab time. Because the big automakers believe in JIT (Just In Time) they did not keep a good stock of spares - they assumed that the semiconductor parts would be available when wanted. The automakers are learning the hard way that JIT works very well until it fails horribly.

Icon for the shareholders of the big automakers =========>

[DS999]

Covid was the black swan event everyone missed

After 2008 there was so much talk about "black swan events" and preparing for your business for them. Problem is, everyone was looking for black swan events coming from the financial world, like the 2008 crash, or from terrorism, like 9/11. Very few people (Bill Gates excepted) were talking about the possibility of a worldwide pandemic and what that would mean for supply chains.

Everyone will learn plenty of lessons from this and be better prepared in case this happens again, but the next black swan will probably come from left field again rather than be something they are planning against.

[ITS Retired]

Maybe the auto makers should rethink making everything computer controlled

There needs to be a limit to what is automated and even removed from the drivers control. Do we even need a touch screen to set the temperature, or roll down the windows? A simple knob, or mechanical button often works better.

The driver messing with what is packed in a touch screen with menus, is better than using a smart phone, how?

Often it seems too much is not enough, because we can. Somewhere in there is, or should be, a optimal level of computer control. Leave the rest to the driver.

[DS999]

Re: Maybe the auto makers should rethink making everything computer controlled

That ship has sailed and will never again return to port. Suggesting cars should have less computer control is like saying people should quit using smartphones and go back to landlines.

[CynicalOptimist]

Previously, I'd read that Toyota (the inventor of 'Just in Time') were less affected by this issue in 2021 because they did keep a larger stockpile of chips, as a result of lessons they'd learnt from 2011 Tsunami / earthquake in Japan. So, I'd be interested to know why they are now impacted. Did they also cancel order or are the bottlenecks so bad now, that everyone is impacted, regardless.

[CheesyTheClown]

Duh?

Cars use chips mostly for sensors.

These chips are chosen when each part is designed. So, for example if there is a temperature sensor on each brake pad of the car, it will have a microcontroller that connects the thermal sensor to the CANBUS of the car.

The brake thermal sensor will be tested extremely well over a long and excruciatingly detailed product approval cycle. It will be tested in the lab and in the road. Once the design is certified, it’s given a slew and things like changing parts will not happen… maybe passive components, but certainly not temperature sensitive devices such as semiconductors.

The car manufacturer will use that same sensor on as many cars as possible and for long as possible because designing and certifying a new part is very expensive and more importantly requires a new SKU. Then every car which uses the old SKU as a replacement part will need to be certified for the new SKU. Distribution of the new SKU will take time and updating all systems to use said SKU as a replacement will need to be updated world wide. Then, even if all you did was move from a microcontroller built on 180nm to one built on 28n with a 1 to 1 compatibility, it will take years to identify, resolve or work around, and catalogue the issues with the new part.

Even now, designing new cars, if you add a brake thermal sensor to the design, shortage or not, the car company will use the old part with the old chip because the engineers who even know the requirements and parameters of such a sensor may already be retired.

That means the automotive industry has to find chips made using the same process.

The problem is, the number of cars using that part has been increasing over the years and the number of replacements parts needed has increased proportionally. So, the demand has increased but the supply has not.

Designing new SKUs is an option, but it takes years and would probably bankrupt the companies needing them.

Also, no one, even under the chips act is scaling availability of manufacturing those parts. Everyone wants to make new and bad ass stuff to be competitive.

China is always willing to scale production of this tech. In fact, they can easily scale 28-250nm production with no supplies from outside of China. But that would require actually depending on China for these chips and why should they scale to help the US car makers when the US is attacking every company that can actually solve the problem?

The chips act is great because it helps the US catch up with Asia in terms of tech. The US companies Intel and GF are willing to produce unlimited amounts of 10nm and are even willing to scale 28nm production. But that would only be helpful if the companies who actually need the chips could cover the cost of changing the process. This is not an option… unless of course the US were to invest in the companies using said chips to get new SKUs designed and certified.

We can’t cry like little babies over this shit when no one actually is listening to the people who actually experienced a real chip shortage.

[martinusher]

Re: Duh?

>why should they scale to help the US car makers when the US is attacking every company that can actually solve the problem?

That's pretty much hit the nail on the head. Our (US) policy makers tend to not know the industry at all well, especially the idea that for every super-cosmic bleeding edge chip used in the latest smartphone there are literally millions of other parts used in innumerable other devices. Including cars. They also probably don't realize that there's a lot more to making chips than the wafers and all those other links in the chain may well be spread out over several countries -- its not called a 'supply chain' for nothing. Messing with one link disrupts the entire chain and as you noted China's manufacturers don't have much of an incentive to bust a gut dealing with supply chain issues. (I'd guess that they'd keep everything running just well enough to make it uneconomic to built alternate suppliers while maintaining maximum pressure on "our" businesses. Eventually something's going to crack and its probably not going to be China, they've got too big of a domestic and 'friendly' market.)

[DS999]

Re: Duh?

There was plenty of discussion in the chips act of needing legacy processes not just leading edge, and I believe some portion of the outlay was reserved for legacy processes and for supply chains that feed into fabs rather than fabs themselves.

Fortunately building legacy process capability is far far cheaper and takes much less time than building a leading edge megafab.

[Nonymous Crowd Nerd]

I'm always cynical, but here in particular I'm having trouble reining in my scepticism. Automakers are facing a huge technology shift towards electric cars and correspondingly huge unusable skills, training and infrastructure that they've made over the last decade or so in the hopes that the practical electric car might be headed off before it arrived.

Too late.

This situation that high tech cars can't be delivered suits both sides. The automakers can sustain sales of the old school petrol and diesel cars.. The chip makers can keep prices up by pointing to insatiable demand from automakers. The electric cars can be kept scarce allowing super profits to be made.

The fact that the chips in question are sometimes very cheap indeed besides the cars (and physically small) allows for the unscrupulous to buy and store extremely large numbers of the chips keeping the market tight.