Off Topic Chip shortage discussion

:
2017 Mazda CX-5 GT, 2016 Mazda6 iGT, 2014 Mazda3 sGT hatchback
Mod edit: Original posts copied from "What did you pay for your CX-5?" thread.

NOTE: Just a friendly reminder to please refrain from politically-charged discussions of any kind.
  • b ) Racism, Discrimination, Personal Attacks, Profanity, Pornography and Political Discussion of any kind are all strictly prohibited.


AMD CEO, Lisa Su, said the other day that
chip shortage will remain tight in 1H/2022. It will ease off in the 2H.

The problem is that some companies are stockpiling chips to profit from the shortage.
On top of that, many automobile chips are made in Taiwan (e.g. TSMC) and Malaysia.
There is very few COVID cases in Taiwan (actually 0 for past week). Their production has been in full speed/capacity.
Not so with Malaysia.... Production was disrupted on and off.

Stockpiling is the main reason that US Government has asked chip producers like TSMC to provide customer data (in a voluntary survey) so that US can find out who is stockpiling chips. You can guess that many of the stockpilers are not from a country that is friendly to USA. :(
 
Last edited by a moderator:

HardRightEdg

US 2020 CX-5 Touring AWD Soul Red
AMD CEO, Lisa Su, said the other day that
chip shortage will remain tight in 1H/2022. It will ease off in the 2H.

The problem is that some companies are stockpiling chips to profit from the shortage.
On top of that, many automobile chips are made in Taiwan (e.g. TSMC) and Malaysia.
There is very few COVID cases in Taiwan (actually 0 for past week). Their production has been in full speed/capacity.
Not so with Malaysia.... Production was disrupted on and off.

Stockpiling is the main reason that US Government has asked chip producers like TSMC to provide customer data (in a voluntary survey) so that US can find out who is stockpiling chips. You can guess that many of the stockpilers are not from a country that is friendly to USA. :(
If you're referring to China hoarding chips, that thesis is not borne out in the crashing auto sales in that country, far worse than the US:


The White House does not believe there is stockpiling. They're trying to figure if there is. The likely scenario is makers are placing orders for more than what they need in an attempt to get the maximum partial fill, kind of a replay of PPE in the early stages of the pandemic. And the problem can extend cross-industry where chip makers may be allocating more production to higher margin chips going into other electronic devices.

There's also the matter of a bill with $50 billion in domestic chip manufacturing incentives that Biden is behind and which passed the Senate but is stalled in the House. Gathering evidence that hoarding is not the crux of the problem provides leverage in the House. The White House will never implement the Defense Production Act because (1) it would not do any good because it cannot reach across borders and (2) it would throw more fuel on the "socialist" fire. In tete-a-tetes with manufacturers the most they can do is jawbone if there is anything to jawbone.

Anyway, US September auto sales have been released and the picture gets worse. US sales of cars/light trucks are down about 360,000 from last September and about 280,000 from September 2019. And it is not for lack of demand. The average selling price of cars/light trucks has gone from about $37,900 in 2020 to $42,800 this past September according to JD Power while used car prices remain in the stratosphere.
 
:
2017 Mazda CX-5 GT, 2016 Mazda6 iGT, 2014 Mazda3 sGT hatchback
If you're referring to China hoarding chips, that thesis is not borne out in the crashing auto sales in that country, far worse than the US:


The White House does not believe there is stockpiling. They're trying to figure if there is. The likely scenario is makers are placing orders for more than what they need in an attempt to get the maximum partial fill, kind of a replay of PPE in the early stages of the pandemic. And the problem can extend cross-industry where chip makers may be allocating more production to higher margin chips going into other electronic devices.

There's also the matter of a bill with $50 billion in domestic chip manufacturing incentives that Biden is behind and which passed the Senate but is stalled in the House. Gathering evidence that hoarding is not the crux of the problem provides leverage in the House. The White House will never implement the Defense Production Act because (1) it would not do any good because it cannot reach across borders and (2) it would throw more fuel on the "socialist" fire. In tete-a-tetes with manufacturers the most they can do is jawbone if there is anything to jawbone.

Anyway, US September auto sales have been released and the picture gets worse. US sales of cars/light trucks are down about 360,000 from last September and about 280,000 from September 2019. And it is not for lack of demand. The average selling price of cars/light trucks has gone from about $37,900 in 2020 to $42,800 this past September according to JD Power while used car prices remain in the stratosphere.
TSMC explicitly claims there is stock piling.
After being blamed for the shortage of chips, TSMC did their own research and found evidences. TSMC plans to low prioritize orders from those companies who do.

Who is stock piling?
Not limited companies in China. They certainly are more afraid of chip shortage due to Sino-American trade conflict. Others might want to benefit from shortage.

Anyway, many new foundries are being built around the world since last year. We shall see improvement of supply later next year.
 

HardRightEdg

US 2020 CX-5 Touring AWD Soul Red
TSMC explicitly claims there is stock piling.
After being blamed for the shortage of chips, TSMC did their own research and found evidences. TSMC plans to low prioritize orders from those companies who do.

Who is stock piling?
Not limited companies in China. They certainly are more afraid of chip shortage due to Sino-American trade conflict. Others might want to benefit from shortage.

Anyway, many new foundries are being built around the world since last year. We shall see improvement of supply later next year.
If the shortages were a function of stockpiling why are chip makers announcing new foundries, with big announcements from Intel and TSMC? Besides, those foundries announced last year are not scheduled to come on-line until 2024 which may be optimistic. Fabs are like auto plants--from drawing board to initial production is a multi-year process. More fabs is just a reaction to increasing chipification, to coin a word, of all things.

I view Mr. Liu's stockpiling claims with some skepticism.

One man's stockpiling is another man's inventory rebuild from dangerously low levels or a buildup in inventory in anticipation of growing sales. In the automotive sector, chip orders were cancelled with plummeting sales and plant closures in the midst of the pandemic. Now they are caught short. On the other hand, global PC sales have been hitting 10 year highs and phones are on pace for a annual sales record. Are those non-automotive segments "stockpiling" more than usual based on strong sales while heading into the Christmas selling season? That's not really stockpiling, it's just staying ahead of the curve.

Liu is deflecting criticism over his production mix, unfair perhaps, in under-allocating to a lower margin segment (automotive) to satisfy demand in higher margin segments (phones and personal computing devices) in circumstances not of his making. If he went hog wild in ramping up automotive he'd be making less money and getting heat from the phone/computing side of the equation. Crudely put, the chips that go into cars are Model T's compared to the CPU Ferraris going into phones and PCs, with corresponding margins. Can you blame him? Not really.

While it may be hard to find the car you want at a rational price, PC's and phones have been well supplied, at least until Apple's announcement this week, lowering production estimates by 10 million units on chip shortages. TSMC is in the unfortunate position of being the big dog contract manufacturer serving all masters. If Liu wasn't getting heat from the automotive sector he'd be getting it from somewhere else. If TSMC is running at 100% capacity as Liu claims, other chip manufacturers who were or are struggling with getting up to capacity or are also skewing production away from automotive are happy to be in the shadows I'm sure.

You see the heat directed at TSMC from the automotive sector in this January 2021 piece:


In 2020, TSMC's production was 3% automotive, 48% phones, 33% non-phone high performance chips and, evidently, 16% "other". In response to heat on the automotive front, TSMC increased automotive 27% in the 4th. quarter of 2020 but that still represented only 3% of their production mix.

The link you provided is part 2 of the same story.

One thing is for sure. There is no little hording in the automotive sector. While dealers may make up some or all of the difference by jacking up new car prices while dealing with sharply declining inventories and sales, that's not the manufacturers. They make money getting cars to dealers. It's a matter of rebuilding chip inventories. The hording at the margins would be for rolling out high margin/high demand 2022 models and trims which wouldn't really qualify as hording in fact.
 
Last edited:
:
Ottawa, Ontario
:
17 Mazda 6 GT
I wonder if all those chips are in those shipping containers still stuck on ships that can't dock, or in containers sitting on docks that aren't being unloaded due to labour shortages?
The backlog of shipping containers stuck in limbo is huge. It's a big problem.
 
:
South Carolina
:
12 MZ5 13 CX-5
So what? That is the very attitude that got us into this situation. People would rather spend $25 for a DVD player made by slave labor in Communist China than $50 for one made by Americans in America.
 
:
2019 CX-5 Signature
So what? That is the very attitude that got us into this situation. People would rather spend $25 for a DVD player made by slave labor in Communist China than $50 for one made by Americans in America.
Yes, that is proving my point. Companies and share holders like to see increased profits.
 

HardRightEdg

US 2020 CX-5 Touring AWD Soul Red
I wonder if all those chips are in those shipping containers still stuck on ships that can't dock, or in containers sitting on docks that aren't being unloaded due to labour shortages?
The backlog of shipping containers stuck in limbo is huge. It's a big problem.
I think it is a different set of problems.

First, shortages show up in Asian auto production where the chips don't need to go onto container ships. Chinese auto sales have crashed. Chips are small enough and light enough to fly them in quantity around Asia if not across the Pacific.

Second, by one estimate the average vehicle now contains 100 chips, from the ECM to the key fob to the one in a Tesla that opens and closes the doors while flashing the lights while playing a Christmas carol and everything in between with lots of cheap microcontrollers each performing discreet functions. 2020 global light vehicle production totaled 70 million, or 7 billion chips. 2020 global revenue in manufacturing automotive chips is estimated at $35 billion. That puts the average price of auto chips at $5, some more and some less. It's not hard to see why chip manufactures would skew production to higher margin, higher demand chips for phones and PCs while automakers were cancelling orders, depleting inventories and shutting plants. Now it is catch up time. In a just-in-time world, a few months of sever global economic dislocations and uncertainties can take a couple of years to right themselves. At the same time more and more chips are going into lower models and trims getting the safety system packages while more complex EVs and plug-ins are rolling out in force.

Third, catch up is lumpy. What if you have 99 of the 100 chips you need but lack that last $5 chip? It wouldn't be the first time model shipments were delayed for lack of a single small dollar part. In the past it has been a natural disaster or a fire knocking out a part's production. In this case it is a worldwide phenomenon. TSMC says there is hording. Does TSMC manufacturer every kind of chip that goes into a vehicle? Doubt it. Of the ones they produce is the production in perfect balance with demand? Doubt that too. So some of the ones they manufacturer may be in more than ample supply but sitting on factory shelves for lack of the others, or in nearly finished vehicles sitting in lots waiting to be finished for lack of a $5 part or two or three. If that's hording, then so be it.
 
Last edited:

itsmike

CX-5er
The word I think you’re looking for is “hoarding”, whereas “hording” (form of the word horde) is something completely different… just sayin’ 🤓
 

HardRightEdg

US 2020 CX-5 Touring AWD Soul Red
So what? That is the very attitude that got us into this situation. People would rather spend $25 for a DVD player made by slave labor in Communist China than $50 for one made by Americans in America.
And yet you are driving vehicles without a shred of US labor built into them.

The fact of the matter is the US is the leading global manufacturer of value added and specialty products. Or many products for domestic consumption where weight makes shipping costs prohibitive. Or products that lend themselves to a high level of automation. We arm the world with the most advanced and ridiculously expensive weaponry, mostly our friends and some of our enemies. And when a US company manufactures overseas the R&D and product engineering is largely US based. What about employment, you say? A modern US steel plant employs 1/10 the hours of labor to produce a ton of steel than in the 1960's, in all likelihood a value add specialty steel. Vehicles or Anderson windows or Kohler bathtubs or whatnot are not far behind on that score. Of course that's not a pretty picture for unskilled and semi-skilled US manufacturing workers.

And the world keeps getting bigger and richer with more and more demand for consumer goods, with the global middle class growing at a 50 million per year clip. Even if the US could produce a cheap CD player for a competitive price multiplied by the millions of other like cheap products coming out of China or other developing nations, the US doesn't have the population to even begin to supply it.

Look on the bright side. With commie China's labor costs on a steady rise they too are outsourcing to cheaper labor markets where they can. Once labor costs in Vietnam or Malaysia or Thailand or wherever become a little too rich then the Middle East or the Stans or Africa may well be the next frontier. MBS's Saudi Arabia is already on its way.
 
Last edited:

HardRightEdg

US 2020 CX-5 Touring AWD Soul Red
The word I think you’re looking for is “hoarding”, whereas “hording” (form of the word horde) is something completely different… just sayin’ 🤓
I'd keep that in mind if I ever had to go back to 4th. grade, the last time spelling had equal priority with ideas.
 
:
South Carolina
:
12 MZ5 13 CX-5
And yet you are driving vehicles without a shred of US labor built into them.
In 2021, what even is an American car anymore? It's surely not Ford or GM. (Chrysler is Italian owned, so that SURELY doesn't count).

Ford Fusion: built in Mexico
Chevy Impala: built in Canada
Dodge Charger" built in Canada

Toyota Camry: built in Kentucky
Honda Accord: built in Ohio
Nissan Maxima: built in Tennessee
 
:
South Carolina
:
12 MZ5 13 CX-5
For what it's worth, I also have a 58 Ford 641 and 75 Chevy C-10 that's 100% American made, a 94 F-150 that's mostly American made, a 06 Maxima that was built in Tennessee.

It would SUPER please me if Mazda built a plant in America, but they're so small in comparison to other car makers, I don't see that ever happening.
 

HardRightEdg

US 2020 CX-5 Touring AWD Soul Red
In 2021, what even is an American car anymore? It's surely not Ford or GM. (Chrysler is Italian owned, so that SURELY doesn't count).

Ford Fusion: built in Mexico
Chevy Impala: built in Canada
Dodge Charger" built in Canada

Toyota Camry: built in Kentucky
Honda Accord: built in Ohio
Nissan Maxima: built in Tennessee
Everybody knows the location of the corporate headquarters may not be indicative of US content. If one cares about such things in purchasing a new vehicle one must look below the surface.

Fusion, discontinued after 2020, had 34% US content. It's not just about where a vehicle is assembled; it's also where the the parts are made. You are mistaken about the Impala, also discontinued after 2020. Impalas produced at the Detroit-Hamtramck plant had about 83% US content, one of the highest in the industry. Less so for Impalas out of Ontario. Camry is something like 70%.

It is a matter of degree. If one was to look for 100% "purity" it won't be found. However, Mazda to date is 0% US content, so if supporting the US economy and labor at least in part is a priority then Mazda is one of the few brands with a goose egg and the only mainstream brand with 0%.

The Alabama plant? That doesn't matter until you buy one rolling off those lines. Used cars? It doesn't matter except for appearance sake. The content cow left the barn at the time the vehicle rolled off the assembly line.
 
:
South Carolina
:
12 MZ5 13 CX-5
>100% purity

America can't even make a Fighter Jet without parts made in Communist China. They aren't our friends, and that should scare you.
 

HardRightEdg

US 2020 CX-5 Touring AWD Soul Red
>100% purity

America can't even make a Fighter Jet without parts made in Communist China. They aren't our friends, and that should scare you.
If you're referring to circuit boards in the F-35s, the company is Chinese but the part is made in England. I don't think you have to worry about that. Nothing is made 100% anywhere including Chinese products. China is a concern, obviously, but I've become less concerned since Xi took power backtracking to communists principles.