It's fascinating that the response is to close production rather than increase prices.
Those warning of inflation point to events like this as support. But inflation requires that higher producer costs be accepted by consumers.
And for that price transmission mechanism to work, there needs to be supply actually available at the higher price. It appears that just-in-time economics mean that in the event of a shortage your supply just goes offline. You don't get higher prices, just empty shelves.
Those aren't mutually exclusive...
But you can't keep production running when you have no chips. Throwing money at the complete lack of chips doesn't help.
Edit: it’s maybe bad luck that this could coincide with a demand-pull inflation pressure, as people ease back into personal transit.
This assumes there is no substitute good - which there is. Other cars.
If the demand is there, the price increase will find its way to the market, either in the resale market or in alternatives to Jaguar Land Rover.
Raising prices only helps if you can get more supply at a higher price, and you can’t when it takes months to start.
Trying to buy on the used market right now. I promise you we are seeing higher prices because people who had 30k to buy new, are now spending more for the higher quality 1-3 year old used stock.
A couple of weeks ago, with seemingly no large events occurring, all rental cars in San Antonio were rented. This week, they are available, but at higher prices than I would normally expect.
Invented by Toyota, ironically the reason why Japanese cars took over the industry a few decades ago
"Toyota may have pioneered the just-in-time manufacturing strategy but when it comes to chips, its decision to stockpile what have become key components in cars goes back a decade to the Fukushima disaster."
"After the catastrophe severed Toyota’s supply chains on March 11, 2011, the world’s biggest automaker realised the lead-time for semiconductors was way too long to cope with devastating shocks such as natural disasters.
That’s why Toyota came up with a business continuity plan (BCP) that required suppliers to stockpile anywhere from two to six months’ worth of chips for the Japanese carmaker, depending on the time it takes from order to delivery, four sources said."
"“Toyota was, as far as we can tell, the only automaker properly equipped to deal with chip shortages,” said a person familiar with Harman International, which specialises in car audio systems, displays and driver assistance technology."
https://www.reuters.com/article/us-japan-fukushima-anniversa...
As people put off buying new cars when cars start becoming more widely available the prices stay higher until the shortage worked out and then prices of used and new car drops. Manufacturers are likely to overshoot the number of new vehicles since the models they are using assume the increased demand. This means once it is worked out a significant drop in prices and you can get vehicles really cheap. See 2008 cash for clunkers where it caused a spike in used cars price temporarily. It also had the effect that leases where cheaper since manufacturers believe they would be able to sale them used at a higher price which was only temporary causing them to lose money.
You do get increased prices for new stock that don’t have existing contracts. If you screw up your estimate of what you need and your suppliers don’t have the capacity to make your parts, now you have a shortage. Now you have to shutdown because you can’t get parts but a manufacturer who did a better job of estimating will be able to charge a higher price. In this case it would be Toyota which didn’t cut their chip orders when the crisis hit. Of course they are also likely to have some shortage of certain vehicles since there will be a shift in demand for their vechiles. So if you own work trucks the value of them will skyrocket right now since most of them in the US are made by the big 3 which don’t have the chips to manufacture them.
Prices always lag behind because they are the result of all the economic processes that take place, not the cause, and this is just the beginning of the process.
Some one or two year old used vehicles sell for above their MSRP new prices now.
They are closing production on their cheapest cars
> After the [Fukushima] catastrophe severed Toyota’s supply chains on March 11, 2011, the world’s biggest automaker realised the lead-time for semiconductors was way too long to cope with devastating shocks such as natural disasters.
> That’s why Toyota came up with a business continuity plan (BCP) that required suppliers to stockpile anywhere from two to six months’ worth of chips for the Japanese carmaker, depending on the time it takes from order to delivery, four sources said.
> The sources said Toyota has another advantage over some rivals when it comes to chips thanks to its long-standing policy of ensuring it understands all the technology used in its cars, rather than relying on suppliers to provide “black boxes”.
https://www.reuters.com/article/us-japan-fukushima-anniversa...
[0] I'm totally paraphrasing here as I remember reading it in some magazine years ago.
Look! See! Toyota isn't dogmatic about everything being Just In Time. They are only doing it because it is the best option at the time and it works. If it isn't the best option (or doesn't work) then they stockpile like a clever person.
There are a few people who really need their noses rubbed in to this little example.
Most on HN would likely have little exposure to supply chain, take a look at another example coming from Toyota that anybody should have at least heard of it in Software development.
Remember Kanban board?
Holy mother of God that great idea quickly turn into a shit show.
Perhaps they realized the limits of JIT and have looked at storying inventory based on the impact to assembly continuity?
To use an analogy: a surgeon operating on a patient, holds a hand out and says “scalpel” and a scalpel instantly placed in hand. Does it matter that their are trays and trays of parts and other people in the room if we are just evaluating the surgeon’s efficiency?
The plug-in hybrid "rav4 prime" has a 2 year wait list. They sold 3200 last year because they don't have any battery capacity. https://insideevs.com/news/466641/us-toyota-rav4-prime-sales...
This is a bit of digression on this thread, but it's stuff like this that makes it seem like traditional car companies are still out to lunch vs Tesla. They're just too slow to adapt and give up what has worked for decades.
They partly choose to make so few of them because they’re still trying to make hydrogen happen.
The shortage is happening because manufacturers cancelled their chip orders from their suppliers because of reduced sales forecasts due to COVID.
When the manufacturers cancelled their orders from their suppliers, the supplies cancelled the orders from the foundries, which cancelled their slots and gave them to consumer electronics which had increased demand.
When sales of new cars rose, manufacturers called their suppliers for more parts, which called the foundries to increase production only to find out their previous slots had been sold.
It seems like Toyota was farsighted in this.
I'm a hardware engineer for a medical device company, and we've been dealing with supply constraints not only with our MCUs but other ICs like high-side power switches, LDOs, memory, and more. It's tough when we're low volume (a few thousand a year) and the huge automakers and other huge consumer electronics giants are gobbling up all the parts.
Then I had to design a board because a simple 5 to 12 V boost converter from TI became unobtainium.
We are a prototype shop and do quantities of 10 and less most of the time.
I’m projecting that a hobby project I make is going to be delayed by not being able to get the LDO I worked into the design. I’m contemplating switching out the component for something a little more common. (AP2112 for an LM1117 for anyone who’s interested)
Forgive my ignorance on this, as I am but a humble software engineer who is forever in amazement at how all ICs are basically flattened rocks we shoot lightning through to make it do math real dang quick...
As for other comments in this thread, depending on your device, it can see a great deal of thermal stress (steam autoclaves) or vibration (MRI), and not all components in autos are experiencing the total vibrations from internal combustion engines. I've typically designed in components with extended temperature ranges, most commonly 85C+ or even 125C. This increases the reliability and extends the life of your product.
"Automotive-grade" typically means extra lot testing, and some parameters may vary in the datasheet due to the way the parts were validated by the manufacturer, even though they're technically the same part. For instance, I am using a Texas Instruments part that became nearly impossible to source. I had the automotive version in my bill of materials because at time of the design, it was the only version out. An alternative made by TI looked like a good fit, but a few key parameters in the datasheet didn't quite line up. It was because the automotive was tested at like 13.8V input whereas the newer "industrial" part was tested with 24V and slightly different loads. Same exact component, tested slightly differently.
The chip shortage right now is rough.
Just spent a fun 2 days soldering a bunch of 0.1mm wires to boards and adding test sockets so we can sort out which supplier to pay 4X the previous price to vs which ones sent bogus or old oxidized stock.
email in my profile.
Corollas are remarkable how "dumb" they are despite seemed electronic sophistication.
Automotive IC market aside from car only parts looks rather random.
You may have $100 mil spec® parts sitting besides 10¢ parts, and doin essentially the same due to regulatory, and market peculiarities.
And of course, every time anyone on their specific team within the fab gets COVID-like systems, the _entire team_ goes home for two weeks. This has happened several times over the past year.
The summary there seems to be "Insufficient investment in 200mm wafers". Combined with everyone's demand forecasts being screwed up due to COVID and being either too high, or too low. Finally, you can't just move from FabA to FabB (even for the same wafer and process size) quickly, so customers can't just quickly migrate to whatever fabs ended up with excess capacity.
"200mm fabs are older facilities that process chips at mature nodes, which range from 350nm to 90nm" - https://semiengineering.com/demand-picks-up-for-200mm/
The high level of uncertainty doesn't help; how sure are you that there won't be a pandemic related demand crash in six months?
From TSMC's Mark Lui:
- Supply chain disruptions from Covid
- US / China trade disputes
- Digital transformation from Covid (increasing demand for chips)
- "Double booking" feedback loop (companies preorder more than needed, fearing fab capacity limits --> makes it seem like there's less fab capacity --> companies book more capacity, fearing capacity limits)...this is not specific to Covid, but heats up in this kind of situation
It's not unlike the situation with PPE manufacturing circa March 2020.
Maybe fabs take longer than a couple years to set up regardless of money spent?
Maybe fabs take a level of expertise that only a handful of people in the world have, and it's a matter of ramping up promising undergrads to that level which will take like 15+ years?
Maybe analysts expect demand to even out so that capital outlays right now don't make sense?
But all of these are surprising to me to the degree that we still don't have enough semiconductors. I'm just hoping for a sort of comprehensive overview of the issue, if such a thing exists.
- Demand for electronics as a whole, at all scales (from computers to cars to IOT to industrial controls and all kinds of other things that we don't think about) has been shooting up for the last decade (without compensating expansion in fabrication capacity). This is the 3rd serious supply shortage we've seen in electronic components in the last few years (anyone else remember seeing MLCC lead times hit 100 weeks in 2017-2018?).
- All of these supply lines running all the way back to the raw silicon operate with very lean (or no) supply buffers. Think "suppliers making deliveries directly to the factory floor" lean. These sorts of systems are not resilient, and do not respond well to shocks (like suppliers having to shut down due to a global pandemic).
- As has been commonly noted, there have also been demand shocks, where electronics consumers (especially car companies) who are normally operating on timelines forecasting out 6-24 months forecast reduced customer demand, reflected that in their orders, and then had to adjust back when demand for cars came back.
- Similarly, with people locked down and working from home, demand for electronics both for professional use and as a replacement for entertainment options has expanded.
- Finally, there are rumors (that I haven't been able to confirm in a meaningful way) that some large Chinese manufacturers have been stockpiling components in anticipation of further tariffs, sanctions and trade tension.
If the AC and the power seats and the cabin lights used the moral equivalent of a raspberry pi compute engine, would we see supply harder to disrupt, or massive consolidation that just makes these problems worse, for instance every single car plant shutting down for two weeks out of the same three months as the pause wends its way through the supply chain. Today a Chevrolet plant gets the only truckload, but Ram doesn’t run out until tomorrow due to transit delays.
I did not mean mass market parts when I said “moral equivalent” since that was not clear. I meant automotive grade controllers.
I guess the real problem, besides shortages of the IC on the board as someone else said, would be connectors. The circuit boards aren’t just built different, the connectors are ruggedized and in some cases water/dirt resistant too. There’s no way you’ll use the same connector for a five way adjustable seat as for the cabin light controls. And if you did you couldn’t put any of them next to each other or someone plugs the defroster into the cruise control and somebody dies.
Best you could do is a standard circuit board and custom housing that has the wiring harness, and at that point things look pretty similar to the status quo.
Also relays in that situation are probably a bigger part of the wiring than I’m allowing.
Sometimes it involves different materials but usually it’s just more testing on an increased range.
For example a part which handles electric current might be rated to 100mA at an ambient temperature of 20C but only 40mA at 60C or -40C.
Regular consumer electronics you can just ignore these ranges as unreasonable but a car is going to get that hot or that cold so you have to have parts rated for those conditions.
In any case, the current bottleneck is, to a vague approximation, a bottleneck on total output. An RPi compute module has a lot more mm^2 of silicon than a little ECU. You also likely can’t make a good RPi compute-like module on the larger-feature-size fabs that make ECUs.
that wouldn't help. generic and not-generic controllers would still use ICs, and ICs are still what we're slowed down on. a more generic design might have to use more (or more complicated) ICs as well, to have more tolerant inputs.
more generic/standardized controllers might help if there were limits on printed circuit board manufacturing, or board assembly capacity. (as those things get cheaper/easier/faster the more identical units you make. and yes, that applies to ICs as well, but all of the widely used microcontrollers / jellybean parts are already produced in huge volumes.)
Tesla is a notable exception because they actually make their own components, like the Model X Gull wing door actuators.
It wasn’t until I was an adult living on the coast that I understood this and why Midwestern auto shops were so resistant to foreign cars. This process was still in development, and so while one set of brake assembly might fit twenty Chevy and Ford vehicles over a five model year period, you were always having to special order parts for the “weird” cars because you couldn’t keep them in inventory, and so you had to deal with a hostile customer who didn’t understand why their wife’s car got brakes in one day and the Subaru was going to take a week. They storm off to another shop and get the same answer.
That was a multi-billion dollar, very bold and risky bet that paid off. How many car companies do you know where they decided to take on industry leaders like Nvidia and Intel and actually produce a better product? That's really quite remarkable.
If GM said tomorrow that they were going to build better machine-learning chips than Nvidia, we'd all get a good laugh at that.
I bet thet have the very same problem, it's not only the dashboard computer they need chips for.
For all we know, Tesla could be locked into TSMC like everyone else, while Nvidia has their current high-end chips on Samsung as well relationships with TSMC.
I think it was a smart decision for many reasons, that worked out well. It was also a big risk.
Still can't build the car without the rest of them:
https://electrek.co/2021/02/25/tesla-shuts-down-model-3-prod...
Tesla said their ambition was to out-Toyota Toyota in manufacturing. They haven't:
https://www.reuters.com/article/us-japan-fukushima-anniversa...
And who are we to laugh?
To me this seems like auto industry trying to shift blame away from their supply chain management to their vendors.
There have also been unfortunate disasters such as a fire at Renesas https://www.yahoo.com/news/renesas-says-plans-restore-full-0... that have affected lead times.
Cant be the GPU market either ;-)
AMD growth is gone through the roof in general computing, and they're the sole supplier for both PS5 and Xbox's CPU and GPU chips. Unlike Intel who have their own fabs, AMD is locked into TSMC - and when auto manufacturers relinquished slots, they went in.
Nvidia ships a boatload of chips for Nintendo Switch plus GPUs for almost all altcoin miners that can be mined with GPUs and everyday regular gamers.
https://www.benzinga.com/news/earnings/21/04/20771098/tesla-...
Tesla doesn't seem to have a chip problem.
this whole auto chip shortage is auto maker's own f'ck up
They have stopped S/X lines, their highest profit margins models by far, for refresh. But that’s been already delayed by many months, and it’s not expected to start production anytime soon. Their metal moving volume sellers got couple of price increases in a short time.
One thing we know is that we cannot trust Tesla not lie about their production issues. During model 3 ramp up they were repeating how great they’re doing. And recently Musk acknowledged that it was such a chaos, that they were few weeks away from bankruptcy.
While Tesla doesn’t admit they are affected by chip shortage, if it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.
(Full disclosure: I work for an Automotive OEM. I do not have any inside knowledge about the shortage in general, or how it’s affecting my company. All my comments are from my own observation of public news sources.)
The chip makers specifically called out the some OEM for instantly reducing orders and then instantly demand more again. Tesla didn't do that.
The automakers might have messed up their predictions, but they're not disrupting the whole electronics market like that.
I wonder if anyone has documented the various sensors and algorithms used for basic vehicle functionality.
You may also enjoy this video on how to shift an electronically controlled transmission manually with no computer: https://www.youtube.com/watch?v=ozbWf_QsPrw
Not even in the same dimension as commercial stuff, but the primitives are there.
However you can probably hack together something easier that follows the AUTOSAR standard. E.g. the window elevator conteol unit or something.
Of course, it might just be that they are slow to react and changes will be reflected in the coming weeks.
They make gorgeous cars though, with good handling and driver engagement. A V8 (or maybe electric!) F-Type is my attainable dream car.
We have platforms, like the GM2900 that many cars were based on as well to reduce numbers of skus
Shortages are shortages
Have you heard of the automotive right to repair initiative from 2012? Why do you think such a thing was necessary? And guess the main method used to circumvent right to repair automotive laws that were passed in the USA? More complex electronics.
This idea has gotten a lot of play lately. But the unstated alternative is to somehow perfectly forecast future demand for parts. That's very difficult in general and doubly difficult during a global pandemic. And, in fact, well-practiced lean outfits are better at knowing which inputs are potentially most disruptive, because they already obsess over lead times for everything.
Without lean practices you just wind up with giants piles of almost random inventory. That you'd have wound up with a giant pile of CPUs is a total crapshoot. But you would absolutely positively have a bunch of stuff you don't need and never will. And that inventory would choke the whole company to death.
The whole idea that JIT destroyed some glorious, flawless past is the Nirvana fallacy. "Oh, supply chain disruptions happen at all, therefore JIT is entirely useless". It's just a silly idea and needs to be mocked at every opportunity.
You don't have to be a rocket scientist or have a PHD in supply chains to understand there are second/third order consequences by cancelling significant amounts of your forecasted production and then expecting your suppliers to magically pick up where you left off.
Its why you keep production/manufacturing warm rather than do stops (which is what they essentially forced their suppliers to do by cancelling purchases).
This is BCP 101 and I give the auto industry no sympathy since most of this pain was entirely self inflicted. They tried to push all the risk to their suppliers, left them holding the bag and had a shocked Pikachu face when they couldn't ramp back up to prior levels.
My late model American vehicle is my home. Earlier this week, the locks kept popping open when I was trying to go to sleep. Nobody else besides me has a remote entry key.
Allegedly you can bring up a fab large node (still sub micron) in just 4-5 months -- there's a lot of surplus / used gear out there, but will anyone bother (try might not earn back your cap ex).
It’s no wonder there was inadequate response from their supply chain.
I'd buy a simpler car instead of having no car any day.
It's not realistic nowadays to expect a carmaker to sell vehicles that don't depend upon silicon. Ironically, it's not the complex chips that are the issue. It's the little basic ones that have been around for years. Hall effect sensors and things like that. Perhaps nobody ever thought they could be jolted by abnormal market behavior.
Not to mention that prettyuch all the major automakers have laid out a timeline for some or all of their product lines to go electric. Not sure how you would build an electric vehicle without semiconductors.
https://en.wikipedia.org/wiki/Export_variants_of_Soviet_mili...
I first encountered the idea of "Monkey Models" in Suvorov's book (referenced on that page).
The TL;DR is that the Soviets would design their equipment with the best high-tech sensors, weapons, countermeasures, et c., that they could reasonably manage, but also design the equipment to function with much simpler parts & manufacturing processes. So a high-tech Soviet tank might have an electronic targeting system, but also be designed to work with a simpler glass-and-steel rangefinder that could be built with relatively simple tools, in a half-decent machine shop shed. They might fit their best models with advanced armor plating, but design a variant that replaced all that with a little extra steel. They'd do this with practically everything, including aircraft.
Why? Multiple reasons: 1) it let them export "new" equipment to allies and puppet-states at a lower cost and in much greater quantities, by selling them "monkey models" with much of the high-tech gear & parts swapped for low-tech counterparts (older generations of top-end gear would be sent to the closest allies/puppets or, more often, to domestic reserve units, in a kind of tiered system), 2) since most of the Soviet gear the West encountered was in direct or proxy wars with Soviet ally, client, or puppet states, the West couldn't gain much insight into the actual capabilities of modern Soviet equipment, 3) so-equipped allies would be starved of gear that could threaten the actual Soviet military, in case they became adversaries, 4) less-advanced allies could more easily maintain gear without so much high-tech junk in it, and 5) perhaps most importantly, it gave the Soviets a kind of supply-line defense-in-depth—they had not only designed these weapon systems so they could be built (as weaker versions) without high-tech manufacturing, but practiced doing it. In the event of a shooting war with, say, the US, the Soviets could keep shipping (inferior, but much better than nothing) tanks & aircraft to the front lines even if all their high-tech facilities were bombed out of existence and they lost access to advanced materials (say, high-tech armor material), with hardly a hiccup.
Could Land Rover petition the UK Government to ban the exchange of Proof of Work coins in the UK in order to alleviate this chip shortage? Mining activity is a function of the price of the coin, and even bans from minor economies like Turkey have been enough to decrease prices.
My guess is not much, as usual.
Honestly, it'd be fun to see how far you could get. Backup fiberscopes vs cameras?
In another version of my life I was a truck-driver bringing parts to Ford/Chrysler/GM/Honda/Toyota on a daily basis. I've done this for many trucking companies, and the warning/threat that you get at 'orientation' (aka training for 15 minutes) is the same for all of them:
GM Charges us $24,000/hour if we are late for our window by more then 15 minutes.
I'm sure the other automakers had similar threats, but I only ever heard it about GM.
ICs, like electricity, are indispensable to modern life. They're availability must be secured and protected in the same way.
But not ideal. Though all that, I wonder if this was a perfect storm and with the increases and demands for all things smart, it may be that we are playing catchup with a moving goalpost for a few years yet.
I thought the threat to Taiwan (from China) was driving that.
But buried in the news was that Tata was going to build a chip-fab in India.
Tata owns Jaguar Land Rover.
It sounds like Toyota is placing two orders: one for now, and one for Ron.
