Chip shortage explain this to me

[Apples]

First of all, it is not just "one" chip!

Although the manufacturing of integrated chips is largely automated, it still requires a lot of manual handling. If there is a manpower shortage, every facet of chip manufacturing is affected. While we would like to think China and other SE Asian countries aren't infected with COVID-19, the fact remains, they are. Slowly but surely, the production is ramping up, and the number of backorders is reducing, but we're still behind the proverbial eight ball.

If you're a Home Theater kind of guy, you've might have noticed the rather short supply of audio receivers and other audio components. Big screen TV availability has also been affected, however, the new jointly-owned plant south of Seoul, Korea has helped mediate that facet.

If you're into Apple, Inc., you'd have notices they've started to make their own CPU series (M1). They were smart enough (or just darn lucky) to make this all-important-to-Apple decision. Yet, until they ramp up domestically, they too will suffer a bit.

One can reasonably assume that the China-connection is part of the overall issue. It Is! But it isn't the only bottle neck. How many here remember the 1973 oil crisis? Same difference.

Stay tuned!

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[ScrappyLaptop]

First of all, it is not just "one" chip!

Although the manufacturing of integrated chips is largely automated, it still requires a lot of manual handling. If there is a manpower shortage, every facet of chip manufacturing is affected. While we would like to think China and other SE Asian countries aren't infected with COVID-19, the fact remains, they are. Slowly but surely, the production is ramping up, and the number of backorders is reducing, but we're still behind the proverbial eight ball.

If you're a Home Theater kind of guy, you've might have noticed the rather short supply of audio receivers and other audio components. Big screen TV availability has also been affected, however, the new jointly-owned plant south of Seoul, Korea has helped mediate that facet.

If you're into Apple, Inc., you'd have notices they've started to make their own CPU series (M1). They were smart enough (or just darn lucky) to make this all-important-to-Apple decision. Yet, until they ramp up domestically, they too will suffer a bit.

One can reasonably assume that the China-connection is part of the overall issue. It Is! But it isn't the only bottle neck. How many here remember the 1973 oil crisis? Same difference.

Stay tuned!

Just a side note, it truly amazes me how, despite the very high level of automation in IC and circuit board manufacturing, there's nearly always a step or two that is done manually simply because it was a deemed-necessary change after the initial run and it's cheaper to pay a person at the end of the line to make the change than it would be to rework part of the highly integrated assembly process.

 

[ScrappyLaptop]

"Chips" covers a lot of territory. There are probably hundreds of semiconductors in a modern vehicle. Some are commodity parts, some are specialized or even custom. The shortages are across the board: chips that you used to be able to buy off the shelf basically anywhere have disappeared, and the lead time for ordering a small run of a specialized chip has pushed into 2022 or later. Some manufacturers have responded to commodity chip shortages by simply redesigning their products to use whatever's available. Carmakers tend to not be that nimble, and the approvals to substitute components would probably take longer than the chip shortage. They can try to deliver cars with missing pieces. That might work if it's something like the radio that needs to be fixed later, probably doesn't work if it's the ABS or airbag controller. But if they go too far down that road the deferred cost of reimbursing dealer labor rates to finish every car they sell will kill them. The carmakers have got themselves into quite a pickle because most of them canceled orders when production slowed during covid, so they ended up at the back of the line when the put new orders in. And it's a long line. And they're in this weird place where they are dependent on semiconductors to make their product, and they're too big to be able to just buy odds and ends here and there, but they're not big enough consumers of semiconductors to make them a top customer of the chipmakers they way a tech company like apple or samsung is--would a chipmaker prioritize orders from apple (buying parts for 200+ million iphones a year) or ford (buying parts for a couple million vehicles a year)?

To illustrate this, here's an old school ECM - engine control module. One of the simpler ones. I count at least 13 chips on this side of the circuit board. Most are off the shelf - but in short supply - and I see at least nine that are likely custom made or programmed for that specific circuit board, which likely only fits a certain engine on a few certain vehicles. Any one of those chips not being available from a chip foundry, or the board itself not being available from the factory that builds them, would result in a vehicle that is "missing chips".

But I'm guessing most of us have replaced an ECM at some point - it's a connector or two & a mounting bolt or three. My guess is that's how they're using one module for multiple vehicles. And why it's relatively easy to put the modules in once they are again available.

Now, if it's in the transmission? Probably not as easy. Something buried in the dash? Probably not crucial, but expensive to retro-fit.

Many manufacturers are starting to rethink their much-modified version of the 1970's (Toyota?) "Just in Time" supply chain. The original system in Japan included things like alternate suppliers for each part, and even enough backstock to weather interruptions based on predictions. Makes me wonder if they had as many actuarials as a small insurance company.

 

[VAMike]

Many manufacturers are starting to rethink their much-modified version of the 1970's (Toyota?) "Just in Time" supply chain. The original system in Japan included things like alternate suppliers for each part, and even enough backstock to weather interruptions based on predictions. Makes me wonder if they had as many actuarials as a small insurance company.

It's all about the money--redundancy is expensive, and if you skip it your stock does better and the worst that can happen is you lay a bunch of people off or get a bailout or something. ?‍

 

[tentspast]

I work in the electronics manufacturing industry and some of our customers are dealing with 78 week lead time for components. Bear in mind semi-conductor tech is used in almost every electronic component including simple diodes, LED's, rectifiers etc.

 

[Megawatt]

My play on this chip issue is ATOM stock (not the crypto coin under same name) for the Atomera company in Los Gatos, CA. I got in at $8 and add every month this year. Not telling anyone to do the same, do your DD but it’s an interesting company if you have some $$ for the future plans.

If you understand what they are about and understand what it means for the chip industry you will see there is no other company doing what they claim.

 

[Trigganometry]

The “modules” do use custom chips just for that customers order. Many of the auto manufacturers cancelled JIT orders as a survival mode at beginning of pandemic. What happened is demand surged for personal electronic devices and orders came in for the custom chips used for them. Normal delivery is 20 weeks from order placed. There was a backlog because production was reduced because of worldwide restrictions on daily activities. Then the auto manufacturers came back and reordered. They’re 40 weeks out and limited delivery. So in essence all the auto makers saved themselves a few million dollars to in the end torch billions.

 

[VAMike]

My play on this chip issue is ATOM stock (not the crypto coin under same name) for the Atomera company in Los Gatos, CA. I got in at $8 and add every month this year. Not telling anyone to do the same, do your DD but it’s an interesting company if you have some $$ for the future plans.

If you understand what they are about and understand what it means for the chip industry you will see there is no other company doing what they claim.

IMO it's more likely than not that the chip industry will overcompensate and there will be another bust cycle from oversupply.

 

[P. A. Schilke]

The “modules” do use custom chips just for that customers order. Many of the auto manufacturers cancelled JIT orders as a survival mode at beginning of pandemic. What happened is demand surged for personal electronic devices and orders came in for the custom chips used for them. Normal delivery is 20 weeks from order placed. There was a backlog because production was reduced because of worldwide restrictions on daily activities. Then the auto manufacturers came back and reordered. They’re 40 weeks out and limited delivery. So in essence all the auto makers saved themselves a few million dollars to in the end torch billions.

Hi Rick,

Okay...some manufacturers decided to incorporate all functions in a central CPU....others like Ford decided to network modules. The Central CPU costs huge bucks at the dealer. Many modules reduce the cost of replacement for example...That said...in this day, the chips are custom and if there is a capacity shortage, the the Manufacturer has to make a decision on what module chips it needs. So you can produce a vehicle that runs off the end of line, but does not boot up the Awful Sync for example... So get off the line and park it at the dealer is better than halting and shipping vehicles instead of parking them. Ford is in a tough situation as are other Manufacturers. Build and park pix of Ford Trucks are on the internet... Tough sitiuation.

I suffered through a bulld and park in Louisville, Ky...Seems a brake engineer did not do his job. It only involved Explorer Sport vehicles and we filled every parking spot in Louisville that was not part of a business...Explorer Sport were everywhere... Not of the magnitude of F150... Awful problem... I think it is detailed in another archive...too lazy to search...

Best,
Phil

 

[Delirious]

Just found this....
Manufacturers have found a new source of chips for new vehicles.....

Reminds me back in the early 90s I had a little 1986 Toyota SR5. Went through a puddle I see water up north and and one of my exhaust pipes split at the weld joint where it came off the engine. From watching how the Cubans made do with their cars down there because of our blockade, I cut a coke can and wrapped it around the split with a couple of pipe straps to hold it on and it quieted it down until months later when I finally went and got it re-welded.

 

[fortywater12]

Taiwan Semiconductor Company is actually in the process of building a pretty large manufacturing facility not far from my home in North Phoenix. Probably will be sometime before it’s completed, but it should help alleviate this problem in the long run.

Also, for what it’s worth the chip shortage is impacting all sorts of electronics, not just those in the automobile industry. Things like smoke detectors, carbon monoxide detectors, gaming consoles, radios, and other household electronics. It’s insane how dependent we are on these things.

https://www.reuters.com/technology/...-has-started-arizona-chip-factory-2021-06-01/

Yep, all of the equipment from my company (ASML) is filling that fab, along with many other new fabs popping up from key manufacturers like Intel and Samsung. This is why I have been saying this semiconductor shortage will be around for at least another year - it takes us just about a year to build, qualify, and ship an entire machine since it is incredibly complex. This paired with construction means that the fab wont be producing product for 1 -1.5 years at a minimum....

 

[towpro]

The “modules” do use custom chips just for that customers order. Many of the auto manufacturers cancelled JIT orders as a survival mode at beginning of pandemic. What happened is demand surged for personal electronic devices and orders came in for the custom chips used for them. Normal delivery is 20 weeks from order placed. There was a backlog because production was reduced because of worldwide restrictions on daily activities. Then the auto manufacturers came back and reordered. They’re 40 weeks out and limited delivery. So in essence all the auto makers saved themselves a few million dollars to in the end torch billions.

Plus one of the major manufactures had a plant burn down.

 

[AZRangerDood]

Yep, all of the equipment from my company (ASML) is filling that fab, along with many other new fabs popping up from key manufacturers like Intel and Samsung. This is why I have been saying this semiconductor shortage will be around for at least another year - it takes us just about a year to build, qualify, and ship an entire machine since it is incredibly complex. This paired with construction means that the fab wont be producing product for 1 -1.5 years at a minimum....

Oh no kidding? Interesting stuff. I knew the manufacturing process was fairly complex, but didn’t even think about the machinery needed to do so. Cool to know that’s also being sourced and built locally.

 

[fortywater12]

Oh no kidding? Interesting stuff. I knew the manufacturing process was fairly complex, but didn’t even think about the machinery needed to do so. Cool to know that’s also being sourced and built locally.

Really cool manufacturing process with some high tech equipment. You can google EUV or DUV Lithography if you’re interested in seeing how it works!

 

[Mokume]

Just found this....
Manufacturers have found a new source of chips for new vehicles.....

What! no Maui onion flavor?, what an outrage!

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