Automaker Chip Shortage

During this whole thing, I have manintained that manufacturers were using the Covid and the "chip shortge" to be able to convince the consumer that there was a shortage of vehicles that created a demand that really was fake. Profits from automakers are at records while people are willing to pay full sticker (andf much more) just to get a vehicle. Now...it appears that one of the crutches, that being the "chip shortage" is really not the case. From an article this morning:

"GlobalFoundries Inc. shares fell Tuesday after the chip manufacturer's strong outlook was eclipsed by recent signs that the global chip shortage has flipped into a glut."

LOL.....imagine that. The consumer is being played like a cheap fiddle.

The term "chips" covers a lot of area. Generic chips may very well be in a glut whereas specialized chips may very well be in a shortage.

So it can entirely be possible that there is both a glut and a shortage.

Yeah, it's more than just a chip shortage, and it's effecting more than just the auto industry. I'm in the industrial equipment segment, and we can not get microprocessors, capacitors, printed circuit boards, even transformers and contactors. The global electronics supply base it still a long way from recovery and meeting demand capacity. Our current backlog is the largest it's ever been. Not because of production capacity at our facilities, but it's completely down to availability of electrical components.

Trust me, manufacturers across all segments aren't crafty enough to conspire to cut production to this degree, and no one would rather turn customers away than sell them a product. There isn't a business out there that can raise prices enough to make up for the lost revenues from these shortages.

I was thinking of sending out a company-wide email at the heavy truck OEM I work for informing everyone some guy on a car forum read something on the internet and has figured out our devious scheme to rake in excessive profits!
I’ve got to the point I believe only people with actual real life experience in an area have a right to an opinion on that area. I read and see news stories constantly and in areas I have direct experience in, I see how incorrect or slanted what they are reporting really is. It’s not a right or left thing, all news outlets regardless of their political leanings seem pretty incompetent at their jobs these days.
Be skeptical of anything you see or hear on the news.

Shouldn't even matter anymore, how long were those places truly shut down? 2-3 months? We are heading into 3 years into this thing. And auto makers would love (and will even try) to keep this going but it wont. Those lots will be jammed with cars/trucks and thousand on the hood to move them. It only takes one to load up inventory and everyone else will follow. "Gee., I really need a truck, Toyota has 55 Tundras on their lot and Dodge says I can order and wait 6 months" Not hard to see where that goes.

Its called price fixing and its extremely against the law, and they're doing it.

seems like i saw a headline that said they can get chips that were like $0.05 more

China is the source of most of the more low end type chips used in products like cars and trucks, and China still to this day shuts down entire cities and ports for weeks due to Covid outbreaks. So it’s been a lot more than 2-3 months.
And it’s not just Covid causing supply shortages. For example Ukraine has resulted in shortages due to products that a large amount of come from there like wiring harnesses.
Several divisions of my company got completely shut down due to being cut off from getting their wiring harnesses from Ukrainian manufacturing plants.
2-1/2 years after the beginning of the Covid pandemic the supply chain is still pretty messed up and you’d be hard pressed to find a single person in manufacturing or distribution who’d tell you otherwise.

I'm consulting right now for a company making electrical and electronic components for the aerospace and defense industry and we are behind on orders due to raw material shortages such as plastics, specialized metals and various specialized chemicals.

Stellantis presented a robust earnings picture Thursday for the first half of 2022.

The automaker said it made $8 billion (8 billion euros) in net profit, up 34%, with an adjusted operating income margin of 14%, up from 11%, from the same period a year ago. The automaker said it had double-digit margins in all five of its global regions.

The results appeared positive nearly across its metrics, with the automaker touting its progress on vehicle electrification, saying its global battery electric vehicle sales were up 50% to 136,000 units.

CEO Carlos Tavares, in a roundtable meeting with reporters Thursday morning, said the results are amazing.

"We could take a hit of a net revenue drop by 60%, and we would still be in the black, which is a fantastic achievement from the company. It demonstrates that the company is very resilient and an all-weather company," he said.


All while being "short" on material. Anybody that thinks companies are eager to return to the previous days of being able to overproduce product and then have to sell that product at a reduced rate to move the product is nuts. Yes, there are some shortages. I just retired from a business that served aerospace industy and we also had some issues with getting material....but, keep an eye on this. There is no valid reason for any of these companies to be in a big hurry to increase any production. Auto dealers are making record profits (I know some who have indicated they have never made this much money), they can skip all of the costs associated with financing inventories and can reduce their staffing levels as they only need people to take orders on vehicles that are selling with zero incentives and often well above manufacturers MSRP. I'm not saying its all self imposed, but worth thinking about. The days of manufacturer incentives are done.

The solution is easy. Rip the infotainment system out, get rid of Auto braking, side lane assist, computer steering/braking/gas pedal. Boom you now have 2X the number of chips. By the way, I calculated that all out and it cuts the price by 5-8k.

EXACTLY

As a Electrical Engineer, I realize what a joke most of these "features" are and what is going to fail and/or be outdated first. When my wife bought her lat new car, I specfically asked if they made a stripped version less all of the BS. All of the lane departure and super complicated infotainment system means nothing to me. I disabled as many of the "features" as I could but still have the overcomplicted system that is the radio, HVAC and whatever else. I wrote a nice long letter to the manufacturer asking them to create a version of their vehicle that does not have any of the added "features"...yea, I knew I would hear nothing. My old beater truck...rubber floors, crank windows and no power locks....perfect.

The chip shortage is very real I believe.

Go try to buy a new Kenworth, Freightliner, Volvo class 8 truck, etc. Ask a dealer when they can get in one of these power units for you if you order one. They will all say: "maybe a year, maybe two - we can't get any."

I have to admit that my favorite new car was an 85 Mazda 626 with a/c and a 5 spd. I'd buy a new one today if I could. Very comfortable, well built easy to work on, carbureted to boot, 30 MPG in town 39 on trips running ~ 80MPH with the A/C on. Almost forgot, it did have PS and PB but otherwise an awesome daily driver.

That's because every little/small feature/gizmo they add makes them money. Every tiny pc on a car is factored into it's selling price.

my old 99 caravan [affectionately called "the bus"] looks better and better to me each year.
and i have a ton of parts stashed to fix it when it needs something, which other than consumables, is rarely needed.[knocking on my wooden head]

Nearly every manufacturing company on the globe worked through the pandemic. The vast majority of these companies, from metal fabricators to chip companies, are considered essential employers and were exempt from shut-downs. Now, through this did they experience issues, absolutely. Employees who caught the crud, additional cleaning efforts, changes in process to provide additional space, it all was a challenge that slowed output.

Chips is a very broad term. Kind of like camshaft. Just like cams come in flat tappet or roller, chips come in logic and memory. Within those two categories (on either cam or chip) are a range of capabilities. You wouldn't put a .700 lift 300* duration cam in a commuter car. Similarly, there are different chips that are in personal computers, cars, phones, or your tv remote. They aren't all created equal.

While there are a range of chips being made and a range of ways the circuits in them are created, the most complex chips, despite who makes them, are all made on the same lithography equipment. This equipment is made by a company called ASML. The machines that makes these $150 million each and takes months to make and at the moment, is the most capable way of making microchips. Nikon and Canon, former leaders in this industry, have slipped to making tools for lower technology chips.

ASML is a Dutch company. However, most of the largest chip manufacturing companies are not only in China but also in Taiwan and Korea.

Watched a guy on youtube completely rebuild a Peterbilt 359 all by himself, bodywork, paint, interior, removed 13spd and put in new 18 spd, cut frame off behind cab and welded in a new one from a late model truck, then had the motor replaced with a rebuilt cat. New truck and better than anything...new!

Thanks for the interesting update on the technology I left 35+ years back. At that time I was involved with developing a direct write electron beam system that was capable of .5 micron geometry while also being able to do the entire wafer in one pass. It was thought at the time that the use of masks had reached their optical limits. Use of the Electron beam allowed much smaller lines but was time consuming as each die had to be done one at a time. It was strictly a political move that killed the project in spite of being very close to having it ready for release.
Also interesting that Canon backed away from leading the technology as I also worked for them for short time.
I am beginning to wonder if their current generation isn't falling into the same trap we did in the mid to late 70's with QC and overall product quality. I say this due to several recent experiences with a couple of different Japanese companies whose quality and reputations were stellar, but now have slipped substantially especially when responding to known design issues. I'm thinking China or Taiwan make overtake them eventually

i ordered two new 389 Peterbilt's beginning of 2020 , got one July 2021 , they cancelled my 2nd truck , re-ordered two new 579 Peterbilt's ( they said my chances were better since the 389 was being eliminated from the line up ) In October 2021 and at this moment , no build date on either truck yet and Nebraska Peterbilt has no idea when or if I will get any trucks in 2022

My replacement work truck is MIA as well. Ordinarily, we'd order in October and get them in May. Well the order went in, other than being told it's on order there is no proof. The lease company hasn't updated any info on it other than order submitted. Now our company is a global one with who knows how many thousands of work trucks the company has, so you'd think maybe a big customer would get some consideration, nope. I'll probably be 80k miles over the mandatory mileage limit before I get my new truck. Unless it craps out sooner.

Jeesh, must EVERYTHING be a conspiracy?

Back in 1967/1968-model year they made a "stripper" model and it became one of Chrysler's best selling models and buyers loved it...........................I think it was called a Road Runner or something like that? The next model year yes they added more AVAILABLE options but still it was a stripper base model and the buyer not the manufacture added the options they wanted. What a concept,................and what a success story. Gee what happened to that concept????

The vast majority of consumers decided they weren't interested in that concept.