From Ford trucks to Xbox, chip shortages continue to cause problems

From next week General Motors again stop assembly lines several pickup factories due to a shortage of computer chips. The factories resumed operations for just a week after stopping in July, which was also caused by a shortage of chips.

These production stops may not end anytime soon. “I really think we will continue to see the impact this year, and it will have a tail next year,” warned CEO Mary Barra on Wednesday. And Intel CEO Pat Gelsinger likewise predicted last month that things didn’t go back to square one for at least a year or two.

Now the impact of the supply crisis is spreading to consumer technology. Apple CEO Tim Cook warned last week that the limited supply of semiconductors would negatively impact iPhone sales. Microsoft is struggling to do enough Xbox consoles and Surface laptops. Elon Musk said in court last month that the chip shortage means Tesla will only be able to produce half as much. Home batteries powerwall thinks it can sell. One sex toy company in San Francisco even accumulated microcontrollers to prevent future supply chain problems.

It is clear that the global chip shortage is not going to decrease anytime soon. In fact, it seems to be getting worse. While the White House rushes towards expand production of microcircuits in the United States, it may take years to avoid future deficits before government investment actually pays off for consumers. So for now, the chip industry will continue to be hampered by the impact of the Covid-19 pandemic as products come with missing features and higher prices – often after long delays.

“The administration says, ‘Well, this is temporary.” Willie Shi– told Recode professor of management practice at Harvard Business School. “People are spending a lot of money to speed up the process, and someone will have to pay for it.”

In an effort to measure the scale of the chip shortage, Recode reached out to nearly 30 companies that use, design, and make chips including General Motors, Qualcomm, and Hewlett-Packard. All companies that responded said they were hit by a shortage.

Electronics maker Toshiba told Recode it is being forced to pay higher prices for components, while Toyota said the company’s supply chain problems continue to affect manufacturing at its North American plants. BSH, which makes Bosch home appliances, said some products have delivery times of up to six months.

While companies are adapting in their own way, most weren’t expecting a decision anytime soon. Instead, companies view chip shortages as an industry issue that may remain unresolved. until at least next year and it is quite possible in 2023 r.

Chip shortages still wreak havoc on automotive production

Virtually every major automaker has suffered from chip shortages. Ford Motors announced last month that its second-quarter profit fell 50 percent, more than half a billion dollars. largely due to to the absence of semiconductors. Stellantis, a Dutch automotive conglomerate, stopped production its Jeep Gladiator pickup in July because the company couldn’t get enough chips. And the CFO of Subaru, Katsuyuki Mizuma, recently said that, due to the chip shortage, the company has seven days’ inventory, compared to the 45-day vehicle shipments that the automaker typically has.

These supply chain problems began in the early days of the Covid-19 pandemic, when global lockdowns closed manufacturing plants, disrupting the supply of semiconductors, while sparking a surge in demand for devices such as laptops and game consoles. Feeling the economic downturn, many car companies quit smoking for chips. Semiconductor manufacturing can take up to six months, so when automakers canceled their orders, consumer technology companies were able to jump in and buy these chips. When demand for cars returned and carmakers needed semiconductors again, there weren’t enough of them.

Car buyers are now feeling the impact of an unpredictable pandemic, in the form of a lack of features, higher prices and a lack of options. GM has sold some of its newest pickups and SUVs without advanced gas management systems or wireless charging functions… Renault stopped installing large screens who are driving their Arkana SUVs, while Nissan has left navigation systems in thousands of vehicles.

Tesla has even turned to rewriting its cars. code so that the company can use the chips at its disposal. But even that did not completely save the company from the consequences of the deficit. CEO Elon Musk told investors In July, the company found it particularly difficult to secure the chips needed for its airbags and seat belts, essential vehicle components.

Together, these problems affect the price tags. According to one analyst, about 13 percent of people who bought a car in April paid in excess of the set price, up from 8 percent in 2020. said The Verge… In fact, the shortage of chips has now become so severe that it is not only driving high prices for new cars, but also driving up their prices. old cars too… This means that consumers looking to buy a new car have three limited choices, according to Consumer Reports. wrote in July: “Look at models you haven’t seen before, refrain from buying, or have your old car repaired if it is in poor condition.”

There is no quick fix for semiconductor shortages

The demand for chips is still incredibly high, and there is no reason to expect a sudden surplus of semiconductors in the next few weeks. There are currently only a small number of chip manufacturers in the world, and most of the world’s semiconductor supply comes from one Taiwan-based company: TSMC

According to Falan Inug of Semiconductor Industry Association, a trade and lobbying group representing the chip industry. “Chip production has actually increased significantly and more chips have been shipped in recent months than ever before,” Inung told Recode.

Again, making one chip is incredibly time consuming. At the same time, it takes years of engineering and construction work to build more chip factories, sometimes called factories, and billions of dollars

The White House is still trying to offer some kind of short-term relief. Biden administration officials have already held talks between semiconductor manufacturers and auto companies, which helped more chips back into the hands of automakers. It made the auto giants happy, but upset others. Medical device manufacturers who use chips for everything from patient monitoring systems to assisted robots for surgery, called on Commerce Minister Gina Raimondo, so as not to “prioritize one industry over another.”

The Commerce Department recently completed a 100-day survey of the U.S. semiconductor supply chain that the White House said The result was a collaboration with chip manufacturers and a task force to identify potential supply chain disruptions. The agency is also promoting a $ 52 billion program to stimulate the production of microcircuits in the United States, a plan that will require congressional approval.

“This does not mean that you can build a plant in 30 days. It takes about 2.5 years. ” Patrick PenfieldRecode, a professor of supply chain management at Syracuse University, told Recode. “We have Intel. We have a couple of small manufacturers in the factory, but it will take time – and I think additional investment is needed. “

There is a shortage of consumer technology

Although they bought up chips that automakers ditched earlier during the pandemic, consumer technology companies are now running out of semiconductors as well. This leads to higher prices for laptops and TVs and delays in orders for smartphones and game consoles.

Market Research Firm Strategy Analytics assessed that on average, the global wholesale price of phones from April to June rose by 5 percent. Notebook, Prices for TV and accessories There are also with spikes One investment research company told the Wall Street Journal that HP alone raised printer prices by more than 20 percent during the year. At least one phone manufacturer, the Chinese electronics company Xiaomi, delayed shipment new device model in India. Sony also warned customers in May that there would be no large shipments. PlayStation 5 until at least 2022

The problem has become so aggravated that the supply of microcircuits is in progress. stolen by smugglersScammers have even started selling fake chips to fool small electronics manufacturers. According to the authors, sales of special X-ray machines for detecting counterfeit parts are now growing. Journal

While newer devices often advertise their high-tech chips, they also need simple semiconductors. And right now, these basic chips are in shortest delivery… This category of components includes “standard ICs that perform day-to-day tasks such as display drivers, timers, microcontrollers, or power management ICs,” Harvard professor Shih told Recode.

In announcing how the chip shortage will affect the iPhone, Tim Cook told analysts that “inherited nodes“- simpler chips that can be made using old methods – what slowed down production. Maelstrom fought the same way with a small number of microcontrollers, which are also relatively uncomplicated microcircuits, in the production of washing machines, microwave ovens and refrigerators.

As chip shortages hit consumer technology, chip designers and manufacturers have pledged to increase supply and manufacturing capacity. A spokesperson for Qualcomm, which makes chip processors for devices such as smartphones, told Recode that the company is making many changes and said it will “continue[s] to see strong demand in every single business, outstripping supply. ”

Intel told Recode that the company has increased its CPU capacity by double digits from last year, boosted by strong demand for new electronics. The company is also expanding its manufacturing capacity, and in March the company announced it would invest $ 20 billion in construction. two new factories for the production of chips in Arizona. However, Intel says high demand for semiconductors is an issue and that shortages may persist until 2023.

As chip shortages continue to plague car and laptop manufacturers, consumers are almost certain to feel the impact, possibly a 10 to 15 percent price increase, said Recode Penfield, a supply chain expert based in Syracuse. So for now, whether you’re hoping to get your hands on a pickup truck or laptop for shopping at a (virtual) school, it’s best to buy as early as possible. As Penfield warns, “This is going to be a tough holiday season.”

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