Digging deeper into the chip shortage

There are semiconductors in all that from clothes washers to vehicles to cell phones. There's additionally not anywhere close to enough of them. CNBC investigates how the worldwide chip deficiency began, and what it will take to end it.
 
I find it odd, where the pandemic is being blamed by the press for most of these chip shortages, I find it rather odd that there has been fires at the following major chip manufacturing plants that in my opinion just started the shortages and then Covid took care of the rest.

Jan 4, 2022 : ASML Holdings in Berlin Germany
Mar 19, 2021 : Renesas Naka Tokyo
Oct 20, 2020 : AKM - Nobeoka-shi , Japan
 
Two big factors for car manufacturers (Tesla being the big exception) were that they had moved to outsourcing most everything with just in time supplies, except engines and assembly, and also use older, cheaper chips. The just in time saves on inventory costs and shifts the production and inventory cost risks to the suppliers, so when the pandemic hit and they expected a big drop in production, they cancelled a lot of parts orders. However, the pandemic resulted in a big demand for electronic entertainment and the chip companies had a big increase in demand and sales from these manufacturers. When the car sales slump was much smaller and shorter than predicted, the car companies found themselves at the back of the line for chips, behind the companies that had maintained and increased purchases. (If you were a chip maker, who would you prioritize selling to?) Secondly, the chip makers are always moving ahead to make more sophisticated chips (with a higher profit margin) and the car manufacturers want the old, cheaper designs, and don't have the technical expertise to modify their operating systems and designs to use a variety of chips. Outsourcing and just in time works great until it doesn't.

Larry
 
astrotoy said:
Two big factors for car manufacturers (Tesla being the big exception) were that they had moved to outsourcing most everything with just in time supplies, except engines and assembly, and also use older, cheaper chips. The just in time saves on inventory costs and shifts the production and inventory cost risks to the suppliers, so when the pandemic hit and they expected a big drop in production, they cancelled a lot of parts orders. However, the pandemic resulted in a big demand for electronic entertainment and the chip companies had a big increase in demand and sales from these manufacturers. When the car sales slump was much smaller and shorter than predicted, the car companies found themselves at the back of the line for chips, behind the companies that had maintained and increased purchases. (If you were a chip maker, who would you prioritize selling to?) Secondly, the chip makers are always moving ahead to make more sophisticated chips (with a higher profit margin) and the car manufacturers want the old, cheaper designs, and don't have the technical expertise to modify their operating systems and designs to use a variety of chips. Outsourcing and just in time works great until it doesn't.

Larry
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After 20 years of threatening suppliers with design-outs and beating down prices year over year, the auto industry definitely went to the back of line. Every semiconductor supplier has renegotiated supply agreements in the past 24 months.
 
Of course the problem also impacts audio as it includes simple transistors. I blew out a channel in one of my older, custom hybrid amps ( Oops!). Mouser, Digikey, and Newark were all out of stock and back ordered. There were none in Europe, Farnell, etc.. One transistor type has an estimated delivery in July, 2023. I finally tracked down a few of the parts in Shenzhen, China at 2X and 6Xs usual cost with a minimum order quantity of 50.

The story has a happy ending. Fortunately, my friend doing the repair had a connection who had a small quantity. I still get backorder delivery notices, with changing dates, every couple of weeks or so, as I ordered a few parts for the future ...just in case..
 
According to today's Wall Street Journal, after two years of a chip shortage, we are now finding ourselves in a chip glut in the consumer electronics sector (50% of the market). Consumer demand has dropped significantly and several manufacturers have frozen hiring or initiated layoffs. Apparently demand by automobile manufacturers (15% of the market) is still relatively strong for now.
 
What I notice is that motherboards, pc etcetera are back on the market. A few months ago everything was sold out, only the most expensive pcs where available for crazy high prices. Nowadays, there is something to choose, the prices are a bit high, but they drop a bit.

On the other hand, there are some audio products which are still not available.
 
Barry said:
According to today's Wall Street Journal, after two years of a chip shortage, we are now finding ourselves in a chip glut in the consumer electronics sector (50% of the market). Consumer demand has dropped significantly and several manufacturers have frozen hiring or initiated layoffs. Apparently demand by automobile manufacturers (15% of the market) is still relatively strong for now.
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My understanding is that (along with what you posted is correct), that there are different NM size chips and it really depends on what size chips we are talking about. Chips in consumer electronics are very different from automotive chips for instance.

I've read in several places with the rising interest rates and high inflation, people are buying less consumer electronics (TV type stuff) and focusing on core essentials like food. I think it's only a matter of time before the higher interest rates cool demand for vehicles as well.

We'll certainly see what ends up happening with it all. If the railroad strike happens that will further impact all this severely.
 
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