A silicon chip shortage is causing automakers to idle their factories
Automakers canceled orders due to COVID-19, and foundries switched to other customers.
You may have noticed that it's difficult to get ahold of new high-end graphics cards and game consoles these days. In large part, that's due to an ongoing global shortage affecting semiconductor foundries. As it turns out, the problem is even more pronounced in the auto industry. In fact, it's getting so bad that a number of OEMs, including Ford and General Motors, have had to go as far as idling shifts and even entire factories.
Ford had to stop production in Kentucky in December of 2020, and in January, it ordered a month-long pause at a German factory. Stellantis (the new company formed by a merger between Fiat Chrysler and Peugeot) reduced output at factories in the US, Mexico, and Canada around the same time. As did Audi, which had to idle 10,000 employees in Germany, CEO Markus Duesmann said, telling the Financial Times that the problem involved "a very long chain with different supply levels on the components that we are short." Subaru's Gunma factory in Japan has been affected. Production of Toyota's Texas-produced Tundra has, too.
This week, more hits keep coming. Mazda just announced it might have to cut output by 34,000 units this year due to a lack of chips. Nissan's truck factory in Mississippi has reduced its hours. And on Wednesday, GM said it will halt production at factories in Kansas, Canada, Mexico, and South Korea. In many cases, the automakers are trying to prioritize their more in-demand products, but as some of those closures show, that isn't always possible.
Perhaps in the future scientists may discover a way to build automobiles without silicon chips.
Previously: Honda Cuts Car Production on Massive Chip Shortage
TSMC Agrees to Produce More Automotive Processors so Taiwan Can Get Vaccines
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Honda cuts car production on massive chip shortage:
Honda Motor will reduce vehicle production due to a supply crunch in semiconductors, Nikkei has learned, a sign that a pandemic-spurred global shortage is threatening the auto industry.
[...] There are warnings that the cuts could be worse later in the year. "The period starting in February may be grim," said a source familiar with the matter. The shortage could "impact tens of thousands of vehicles during the January-March quarter on the domestic side alone," the source added.
Honda has apparently run short on semiconductors used in vehicle control systems. As people stay mainly indoors and work from home, demand has surged for chips used in smartphones and computers. As chipmakers focus on meeting that demand, semiconductor supplies to auto parts manufacturers have stalled.
[...] Honda will not halt factory operations this month, but the company is expected to limit the daily number of vehicles produced. A cutback of 4,000 autos represents less than 0.1% of the 4.77 million units produced globally in fiscal 2019.
Because the process of procuring material and turning it into semiconductors takes more than three months, adjusting production volume quickly based on demand is a tall order. The coronavirus pandemic caused demand for cars to drop during the first half of 2020. At the time, automakers temporarily cut orders for semiconductors, and the chip suppliers modified production plans accordingly.
[...] The market recovery from the coronavirus impact has kept Honda's factories busy. In November, global production shot up 11.4% from a year earlier to 457,671 vehicles. In Japan alone, production jumped 22.5% to 64,843 units.
But just as Honda pruned excess capacity and is enjoying the comeback in demand, an unexpected fallout from the pandemic is forcing Honda to hit the brakes on production.
"Demand from smartphones, 5G base stations, gaming and elsewhere are robust, so there is limited production capacity to devote to automotive semiconductors," said Kazuhiro Sugiyama at British market intelligence company Omdia. The surge in demand from Chinese electric vehicles have contributed to the supply crunch as well.
TSMC's 'Chip-for-Vaccine' Swap To Delay Integrated Circuit Chip Production
Chipmaker Taiwan Semiconductor Manufacturing Company (TSMC) has agreed to manufacture automobile processors at an expedited rate. TSMC's decision comes after governments in several continents requested the Taiwanese authorities to ask the chipmaker to increase this production - as a global shortage of the products start to emerge as a thorn in the side of the economic recovery of many countries that house automobile manufacturers affected by this shortage.
Following the request, Taiwan's Minister of Economic Affairs Ms. Mei-Hua Wang convened a meeting that involved representatives from Germany, TSMC and other semiconductor companies and the dean of Taiwan's Economic Research Institute to discuss the shortage and how Germany and other countries could help Taiwan in return for providing the aforementioned chips.
The meeting took place earlier this week on Wednesday, and a key item on the agenda was how countries including Germany could help the island in return for TSMC agreeing to step up its vehicle chip output. Specifically, the participants stressed on the need for Taiwan to procure vaccinations for the ongoing pandemic and whether nation-states could help the island in this regard.
Following this, the dean of the Taiwan Economic Research Institute stated that he was already in discussions with TSMC and that the chipmaker had agreed to cooperate to provide chips in return for the vaccines. Subsequently, TSMC confirmed on the following day that it would speed up the process for manufacturing automotive chips, with the confirmation coming soon after a second rumored price increase had been reported by The Nikkei Asian Review on Tuesday.
Chip shortage and high prices threaten supplies of SBCs and other electronics products
A few weeks ago, we started to hear news about a chip shortage for the automotive industry, but the shortage appears to be affecting all sectors now apparently due to a drought in Taiwan where a reservoir could be a risk of being depleted, and TSMC has been asked to reduce its water usage by 7 percent.
I've also started to see several companies in the maker market warn about shortages and price increases. Pine64 announced it would only open pre-order for PinePhone, PinebookPro, PineTab, and other products once they could secure stocks of components, and while they hope to be able to do so within this month, there's no guarantee.
Ameridroid also reported that Hardkernel and another unnamed manufacturer expected really large delays possibly into 2022.
Raspberry Pi least affected?
We asked Raspberry Pi creator and Chief Executive of Raspberry Pi Trading, Eben Upton, to comment on this issue. "We're not expecting any impact from this (or the other factors causing tightness in global supply chains) at present: we're getting great support from our component vendor partners."
Companies like Qualcomm are being affected by several other problems:
(Score: 1, Informative) by Anonymous Coward on Friday February 05 2021, @09:00AM (6 children)
Is it the semi companies who are under producing because they simply don't have capacity?
Or because they didn't have enough warning that the whole world would be buying new gaming PCs and not using public transport?
Did the manufacturers not order enough in advance, were they too JIT?
Did the semi's promise them chips but not deliver?
Basically: which managerial heads should roll, whilst they're dicking with the livelyhoods of the actual grunts who do the work?
(Score: 0) by Anonymous Coward on Friday February 05 2021, @12:30PM
I choose "E" -- all of the above.
(Score: 3, Insightful) by GreatOutdoors on Friday February 05 2021, @02:41PM (1 child)
I expect that the "Too JIT" option is the biggest culprit. I see major projects paused pretty regularly because some company was ill prepared for a minor delay in a shipment and it messed up the whole works. The whole "Just in time" mentality has gotten out of control.
Yes, I did make a logical argument there. You should post a logical response.
(Score: 2, Interesting) by Anonymous Coward on Friday February 05 2021, @02:47PM
I came here specifically because I suspect "too JIT" as well.
I work for a company that buys some... pretty esoteric parts silicon parts. We typically have enough of these on hand to design a replacement product before we run out.
That said, I am sure that our more typical parts are not so well stocked, we were shocked by a shift away from "large" footprint capacitors a while back (everyone is making them smaller because smartphones, but smaller means less resilient usually, and our products are designed to be rugged).
(Score: 3, Interesting) by looorg on Friday February 05 2021, @03:33PM (1 child)
I would be very surprised if the main culprit isn't "to JIT". That said there is (or was) currently no such thing as "to JIT" in the world of production as it is today or at least was pre-pandemic. I wonder if they'll now start to think about how and what a horrible idea it was to send all these production capacities to Asia. It's really a "all eggs in the same basket" problem. Something that companies have previously shied away from since it's to much of a risk. Hopefully this will mean that the production capacity will be more spread across the globe instead of being just in the hands of very few in a few single locations.
That said no Manager heads will roll. It's a "pandemic" issue in their world. If thousands of workers have to be let go then so be it. They can always be rehired when the machines start to roll again.
(Score: 2, Interesting) by shrewdsheep on Friday February 05 2021, @05:19PM
Saying "too JIT" is almost tautological. JIT accounts for certain variation in the supply chain, if variation increases shortages happen. So by definition, you underestimated the variation when a shortage happens.
Shortages first came to light roughly half a year ago due to a shift in fab production to higher margin products (graphics cards, processors). You may still attribute it to JITing (as everything can be), but I would rather say the rules have changed. Would all the manufacturers fall into the same trap?
(Score: 2) by richtopia on Friday February 05 2021, @03:49PM
My understanding is JIT is causing a big issue. COVID-19's impact has actually been small on manufacturing, but silicon in a car is one of the longest supply chains in the world. A reduction in any point of the supply chain will cascade up. For example, materials being shipped could be held at a dock longer than normal and everything following in the manufacturing of a car gets held up.
(Score: 3, Interesting) by shortscreen on Friday February 05 2021, @10:42AM (7 children)
There is only one critical part in my car that relies on integrated circuits. (Whether voltage regulators on the alternator qualify is debatable.) If it fails then I fetch the spare control unit from the trunk and swap it in five minutes. Maybe ten minutes if it's 2AM and freezing cold outside.
In 2021, cars are so stuffed with silicon that not only do they not function without it, but evidently it's not even worth building the rest of the car if the chips aren't on hand. I'm guessing they wouldn't halt production for a shortage of LED headlights or leather seat covers. Without ICs they just give up and go home. That's wild.
They can't substitute a similar part from another product line?
(Score: 4, Interesting) by Mojibake Tengu on Friday February 05 2021, @11:08AM (4 children)
This chips shortage persists in Škoda factory (part of Volkswagen) since August-September 2020. Official press information was lack of controller CPUs from China.
But now, it's too long. There is something deeper in this situation. Consider total lack of GPUs and CPUs on consumer market too.
My bet is, everyone's preparing for imminent war and all those missing chips are actually going into weapons.
Respect Authorities. Know your social status. Woke responsibly.
(Score: 0) by Anonymous Coward on Friday February 05 2021, @03:03PM (3 children)
you have a paranoia problem.
you should talk to your friends and/or a doctor.
(Score: 2) by MIRV888 on Saturday February 06 2021, @03:30AM (2 children)
China controls production of these mission critical components.
That's why we're f*cked.
Seems like they have us by the balls.
(Score: 0) by Anonymous Coward on Saturday February 06 2021, @12:51PM
Buy from someone else. Build your own factories. Take the hit, move on.
(Score: 0) by Anonymous Coward on Saturday February 06 2021, @02:47PM
Not so fast, the big fabs are not all in China. See the list here, https://en.wikipedia.org/wiki/List_of_semiconductor_fabrication_plants [wikipedia.org] which can be sorted by Production Capacity.
(Score: 0) by Anonymous Coward on Friday February 05 2021, @12:35PM
> They can't substitute a similar part from another product line?
I've heard that Tesla might do things like this -- if they are missing some bolt, they go to OSH (large hardware store) and buy a box of something that will fit. If the owners pull back the trim plastic and see the commodity bolt (instead of proper fastener) they are not impressed.
Established car companies don't do that. If all the parts aren't there, trying to sub in another similar part would be a big deal and probably just won't happen. It's the HHGTTG story -- still waiting for lemon soaked paper napkins.
(Score: 2) by VLM on Saturday February 06 2021, @08:40PM
The good news about the microcontroller industry is every mfgr ships 6385971985 variations of their processor with crazy variation in number and type of on chip peripheral. So you can save five cents on an order of ten million widgits. Which multiplies out to half a million bucks, so yeah you kinda do have to optimize like that.
The problem is if you can only assemble your product given an incredibly specific version of the chip, you're doomed. You gonna re-do emissions control testing because you used a new engine controller chip, even if you can port the software?
I think in the "very long run" mfgrs are going to ship FPGAs and you load up if you want 3 canbus or 1 canbus and 2 SPI or 3 SPI or whatever nonsense combo. Not now or even 2025, but maybe by 2030 if the economy is still afloat then.
Now a days you if you need 2 canbus and 3 I2C and a SPI and two of those weird named LCD interfaces then you have to buy a specific microcontroller and pray its always available, but in the future it'll all be FPGA and you'll just synth up your choice of what connects to the pins.
(Score: 0) by Anonymous Coward on Friday February 05 2021, @03:04PM (1 child)
perhaps they're hiding lackluster sales?
(Score: 0) by Anonymous Coward on Friday February 05 2021, @05:41PM
> ...lackluster sales?
Don't think so, light vehicle sales in 2020 are down from 2019, but not all that much given the damage to other sectors of the economy. From https://www.autonews.com/sales/2020-hindsight-light-vehicle-sales-recap [autonews.com] (or https://archive.is/7Onfo [archive.is] )
(Score: 1, Touché) by Anonymous Coward on Friday February 05 2021, @05:52PM
Economies only work if people work. Money is just what people trade in exchange for work. If people don't work then economies don't work.