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Chip shortage: Toyota to cut global production by 40%

567 points by midnightcity 5y ago

vvarren 5y ago
This so-called “transitory inflation” is really starting to seem like it will parlay into full blown inflation.
- sprafa 5y ago
  How is this related to the chip shortage and Toyota?
  - 3pt14159 5y ago
    When the supply of goods goes down, it pushes prices up.
    - compscistd 5y ago
      But inflation has to do with the supply of money, not the supply of goods, right? Genuine question
      - macksd 5y ago
        It's is often talked about that way: Wikipedia at least defines it as a general price increase. And that still gives you many of the same effects as a money-supplu-triggered inflation. Many annuities are worth less. The dollars in a savings account are worth less. The minimum wage becames worth less...
      - mguerville 5y ago
        Inflation is just when prices go up, for whatever reason. Increased supply of money can cause it (and does more often than not), but decreased supply can also do that as it moves the price equilibrium. Unfortunately we have a bit of both at the moment, money supply shot up and lots of supply chains slowed down.
      - fab1an 5y ago
        If there are fewer goods, prices usually increase, as there is relatively more money chasing fewer goods.
      - selykg 5y ago
        Inflation is the rise in costs for goods. If the supply of these chips causes a loss in supply of in demand items, like cars, then it will cause an increase in the price of cars. The thoughts are that this is temporary, until the components that are in low supply can catch up and meet the demand. But if the lack of supply lasts for too long then people become used to the increase price and manufacturers can just keep the price there at the inflated price. Now it's permanent inflation. Or that can happen if the supply doesn't keep up with the demand.
      - deleted 5y ago
        [deleted]
      - mkj 5y ago
        This central bank says it's prices going up. https://www.rba.gov.au/education/resources/explainers/inflation-and-its-measurement.html https://www.rba.gov.au/education/resources/explainers/inflat...
      - ajmurmann 5y ago
        There is really three types of inflation: 1. Demand driving higher prices 2. Increased cost driving higher prices 3. Expectation of inflation driving higher prices and this inflation itself
      - ModernMech 5y ago
        Inflation has to do with purchasing power of a dollar decreasing. I would argue that inflation is something measured at the scale of the entire economy, and you can't say much about inflation looking at a single commodity, or even a single sector.
      - devttyeu 5y ago
        Kind of both? If I were to come up with a formula, I'd say 'prices = GDP / SupplyOfGoods', where GDP is just 'MoneySupply * MoneyVelocity'. If supply goes down, prices go up. If money supply grows, prices go up. If money velocity (number of times money changes hands in a given period) goes down, prices go down, etc. (It's worth noting that in 2020 when money supply exploded, money velocity fell by a lot, which is why GDP fell, and why there wasn't that much inflation) edit: s/inflation/prices/
      - lordnacho 5y ago
        The problem is when those things affect each other. Otherwise we wouldn't care.
      - throwawaygh 5y ago
        No, inflation has to do with the price of goods and services. Inflation is defined as "a general increase in prices and fall in the purchasing value of money". Inflation can be caused by many things: reduced supply, increased demand, expectation of future price increases, degradation in the quality/desirability of alternative products (eg bond yields), and, yes, an increase in the amount of dollars chasing an asset class/product/service. Re: your original question, to be a bit pedantic, the supply of money on its own cannot cause inflation in consumer goods except via extremely odd channels (e.g., inflation expectations). A trillion dollars sitting in a bank account has approximately no effect on prices. Like a bullet in a chamber, money at rest has no effect on consumers' experience of inflation until it's propelled forward. But it's important not to conflate causes with definitions. Also, attributing causes of inflation to particular instances of inflation is often extremely and inherently political. The inflation we've seen in consumer goods is a complex phenomenon with many disparate causes. Beware of anyone selling you a "just-so" story for the cause of inflation in a few dozen disconnected goods and services. Especially if that story aligns perfectly with their ideology/product/investment/political campaign. And even more especially if they start the story by conflating one possible cause of inflation with the very definition of the thing.
      - ItsMonkk 5y ago
        People think of inflation like they think of the oceans. If the ice caps melt and water melts in, the shore lines from New York to Tokyo rise slightly. If you track this rise, that's inflation. That's not how it works, and it's not what the CPI tracks. Inflation is much more analogous to inland water, you know, lakes and rivers. If you give the bottom 80% of the income distribution more money, they will spend it right away like a river. If you give the 81-90%, portion of it will be saved in their lake(say, a 401k) and they will spend some of it. And if you give the top 10% more money, they save all of it in their reservoir. The way that we have been introducing new money into the system is not by melting ice in the middle of the ocean. We also haven't been raining all over. The key way that new money has been introduced over the past 50 years is by lowering the interest rate. When you lower the interest rate, what happens is that people refinance, and suddenly they can pay less, but quickly realize, oh, I can also borrow more, so they do. I'll show you a few numbers, which I got by going to the zillow housing affordability page with default settings. I only modified the interest rate, all other values stay the same. Year | Average Interest Rate 30 Year Fixed | Home you can Afford 1981 | 18.39 | $124,797 1991 | 9.00 | $200,862 2010 | 6.26 | $244,531 2020 | 2.67 | $328,569 And so what we see people and REITs and companies doing is taking out larger and larger loans, and putting those dollars into assets. Companies take out a bond and buy back their own stock. And why wouldn't they, it's profitable because the environment makes it so. And that money flows throughout the system. We can track the inflow of all of this money by looking at say.. the M2. This seems to be the crux of your point, if the amount of money in the M2 has gone up by 40x since 1971, why is inflation not out of control? The CPI is a measure for inflation that does not track the oceans water level. The M2 tracks that, and as you can see the M2 is out of control. The CPI doesn't track stock purchases. If the CPI were to track stocks weighted at 1971 levels, inflation WOULD be out of control. The CPI tracks, specifically, an average of tangible items that the bottom 80% spends their money on. Therefore the inflation number is based on the height of certain rivers. Now that's an important figure to keep in mind, after all if you get inflation in that bracket and income isn't rising, you quickly run into a revolution. And so that's what the FED has found, if you track the CPI you get the perfect amount of heating to boil the frog without them noticing. But when you introduce money into the system by lowering interest rates, you are in effect giving the money in proportion to the assets already owned. Someone bought that home in 1981, and someone with the same exact income would bid 328k for it today. You basically tripled(and it was a leveraged sale, so 15x!) that home owners asset, without any need to compare anything else, like actual income rises, or for instance SF has moved upmarket which would also effect prices. And so if you don't have much assets, it's a desert. If you do, it's a rain forest. And because the wealthy already have all that they want, demand for those items that the bottom 80% spend their money on doesn't change. So the supply and demand of those items don't change. So the CPI value stays the same. But money was introduced. If you take a look at the velocity of the M2, the M2V, you can see this take place. The wealthy get the gains of the new M2 dollars, and store it away. The more dollars created, the lower the velocity. The lower the velocity, the lower inflation. But that rain is being stored in the reservoirs. If inflation causes stored wealth to lose value it's like a dam bursts and the wealthy start to spend and not save their money, it starts as a trickle and ends in a tsunami.
    - wiz21c 5y ago
      Only if you let greediness exist.
- riggins 5y ago
  https://www.nytimes.com/interactive/2021/08/18/opinion/inflation-economy-transitory.html https://www.nytimes.com/interactive/2021/08/18/opinion/infla... "In July, some of these sectors (used cars in particular) experienced a big deceleration in inflation, bolstering the argument" https://news.yahoo.com/us-used-car-bubble-burst-141009925.html https://news.yahoo.com/us-used-car-bubble-burst-141009925.ht... "The price index for used vehicles rose 0.2% in July, after having risen at least 7.3% in each of the previous three months. The category was one of the few, along with hotel rooms and airfares, that drove recent inflation, the economist Paul Krugman pointed out on Twitter. “Combined, these three sectors account for…more than 1/2 [half] of inflation over the past three months,” Krugman wrote. In May, in fact, a full third of the overall price rise was due to the surge in used car prices."
  - jtbayly 5y ago
    Used cars have a natural price cap, and my understanding is that it has been reached. They are too close to the price of a new car to go any higher.
    - lucasmullens 5y ago
      Maybe, but with new cars being sold for above MSRP, that natural price cap is rising.
    - nszceta 5y ago
      The price of a new car is whatever the dealer is willing to let it go for. MSRP is a starting point, not the final price, which can be literally anything.
    - cableshaft 5y ago
      Yeah, I normally buy used, and this time I just bought new (technically I leased new, but it's the first time I'm leasing a car in my entire life), because it just didn't make any sense to me to buy a used car for almost the same price as a new car.
    - el-salvador 5y ago
      Not everywhere though. I recall Venezuela had unusual car prices about a decade ago. Car dealership inventory was very low due to currency controls and wait times at car dealerships increased to months. A slightly used car, inmediately available for sale, was more expensive one than a new one with months wait.
- JimTheMan 5y ago
  A shortage is not inflation
  - hirako2000 5y ago
    Supply and demand change is what increases or decreases costs. If demand don't adapt, there will be inflation to force it to adapt :)
    - JimTheMan 5y ago
      'Inflation' is not the price increase of a single thing to demand/supply. Inflation is the systemic increase in all costs of what a household would buy as money itself become less valuable. Prices 'inflating' on a single product because there's a shortage of... base materials or whatever is not inflation as an economic term.
      - hirako2000 5y ago
        You are quite right. Except that you are implying other product will decrease in price while that one increases. Vehicles is a rather large market and an element of supply chain costs, chips are used across so many industries. I would rather expect the majority of product to see an increase in price. We can talk technical terms but my comment was a reflection of the markets at large.
- throw0101a 5y ago
  > This so-called “transitory inflation” is really starting to seem like it will parlay into full blown inflation. A lot of the people screaming about inflation were doing so using the argument that there's too much spending and the "excess" money supply will cause the US to turn into Zimbabwe (Fed printers go brrrrrr): demand-pull inflation. The price fluctuations caused pandemic-related supply issues (cost-push inflation) don't have much to do with money supply and stimulus packages. * https://en.wikipedia.org/wiki/Inflation#Keynesian_view https://en.wikipedia.org/wiki/Inflation#Keynesian_view If things get too hot, it's easy enough for interest rates to be pulled up, but given un/employment isn't at pre-pandemic levels, policy makers may let things ride for a while.
  - frockington1 5y ago
    The Fed doesn't seem to care about inflation adding even more burden to the poor. But hey, at least all the asset rich political donors are happy
  - vvarren 5y ago
    My argument doesn’t hinge on the excess spending. Rather, the increase of costs due to a labor shortage, chip shortage, construction materials shortage, etc. is having a compounding effect across the whole economy.
- rz2k 5y ago
  While possible, look at lumber prices now[1] in the context of articles from April saying that the high prices would persist. Economists who study these phenomena tend to be a better guide than reporting that is in the middle of reacting to dramatic signals like shortages and fast price changes. [1] https://tradingeconomics.com/commodity/lumber https://tradingeconomics.com/commodity/lumber
- hindsightbias 5y ago
  I bought 2x4s for $3.60 last weekend. Just a month ago, HN was rife with lumber apocalypse.
kristofferR 5y ago
Good! Toyota has been sabotaging clean cars because they can't compete [1][2]. Most well known car brands have great electric cars now, but Toyota and their oil lobby buddies are trying to halt the progress. The decline of Toyota sales is good news for the world. [1] https://www.nytimes.com/2021/07/25/climate/toyota-electric-hydrogen.html https://www.nytimes.com/2021/07/25/climate/toyota-electric-h... [2] https://insideevs.com/features/524481/toyota-hybrid-pioneer-delaying-evs/ https://insideevs.com/features/524481/toyota-hybrid-pioneer-...
- da_big_ghey 5y ago
  Toyota is not "sabotaging clean cars", only trying to delay regulations.
  - Ma8ee 5y ago
    So not sabotaging, only obstructing. I'm so pissed at all the auto-makers (with the exception of Tesla). The writing has been on the wall for at least a decade in large neon letters, but they all seem taken by surprise that they suddenly have to produce electric cars.
    - CountDrewku 5y ago
      Psst you can avoid all of those issues by not buying Toyota. Stop trying to regulate everyone else into what you want. If these EV's are so good it shouldn't be an issue at all.
      - space_rock 5y ago
        Stop polluting the cities and atmosphere and then it'll be none of our business
        CountDrewku 5y ago
        I bike religiously so sorry you're not going to one up me on the "polluting" less scale. Are you going to come take my ICE vehicle from me? Didn't think so. Drop the authoritarianism it's unbecoming. There's a great country I can suggest you to move to if you want government control over everyone, feel free to PM me for details.
Veliladon 5y ago
Toyota was one of the few (only?) companies to keep a large stockpile of chips on hand to continue production in case of a supply interruption. They kept something like two years worth on hand. I guess 18 months of doing the extremely heavy lifting for the whole industry has taken its toll and now they're in the same boat.
- dd36 5y ago
  I thought Toyota invented not doing that.
  - gameswithgo 5y ago
    Chips are small, don't age fast. Make sense as an exception to the rule.
    - bluGill 5y ago
      Chips also go out of production suddenly (with only a couple years warning - which isn't anywhere near enough time to replace them all). thus any major manufacture has stockpiles of chips that are no longer in production that need to last until production of the widget switches to new chips and have enough left over as spare parts for existing widgets.
      - davidrm 5y ago
        > Chips also go out of production suddenly (with only a couple years warning...) No they don't, automotive semiconductors suppliers have an "obligation" to manufacture the component for at least 15 years, which makes managing the production output planning, spare parts etc. much easier. It's not like walking into your supermarket and finding out that your favorite brand of chocolate is no longer available. There are minor exceptions, and sudden changes in the demand might affect the immediate availability, but at the very least the part is almost guaranteed to be produced for 15 years with defined notice policies. Microcontrollers don't have a pin-compatible drop in replacement when they get discounted, but many different ICs do, like power supplies, transistors etc., so discounting them is not a big deal. e.g.: https://www.nxp.com/products/product-information/nxp-product-programs/product-longevity:PRDCT_LONGEVITY_HM https://www.nxp.com/products/product-information/nxp-product... > Participating products are available for a minimum of 10 years from product launch (15 years from product launch for many products developed for the automotive, telecom and medical segments), and are supported by standard end-of-life notification policies.
dhbradshaw 5y ago
As a chip supplier, I'd be feeling a lot of pressure right now. In the short term you can squeeze and the tail can wag the dog for a bit. But longer term this opens the door wide open for new competitors in the market and / or vertical integration.
- selykg 5y ago
  I don't think chip suppliers are playing games here, are they? I think in general all chip manufacturers are at capacity and it comes down to getting in line. And I'm sure many chip manufacturers are trying to expand their capacity. I can't imagine they're sitting there thinking this will last forever.
  - dhbradshaw 5y ago
    I'm not sure the reasons for the shortage matter. If you have a dependency that's causing you major problems, you try to become less dependent on it.
  - arglebarglegar 5y ago
    they’ll play it to benefit themselves any way they can, why wouldn’t they
- twarge 5y ago
  I've noticed that the shortage of chips is also strongly driven by speculators simply buying up everything in sight and trying to resell at multiples of the cost.
  - swarnie_ 5y ago
    You think people are buying up Chips designed to go in to Toyota cars? Surely they're beyond worthless to anyone but the manufacturer and Toyota themselves?
    - detaro 5y ago
      Parent was speaking of the chip shortage in general, which goes way past cars. Car manufacturers will do what they can to isolate themselves from the open market (and buy the numbers and have the political backing to do so), but demand for non-car parts affects allocation of production capacity to their demands too. > designed to go in to Toyota cars? Chips rarely are designed for a specific car, and a car will also contain quite a few that are not strictly specific to automotive.
imaginariet 5y ago
As Taleb likes to say, an efficient system is the opposite of a robust system, kind of by definition. We are now witnessing the effects of our modern hyper-efficient just-in-time global manufacturing system.
- akg_67 5y ago
  Actually, Toyota moved away from JIT after 2011 earthquake when several of it’s factories had to stop production due to lack of parts from other factories impacted by earthquake. One of the change was increased inventory levels of components. Toyota is one of the last automaker to reduce production due to the current chip shortage, because they had enough chips for 18-24 months of production. Edit: It seems some of Toyota factories in Southeast Asia have shutdown due to Covid spread in those countries resulting in shortage of parts supplied to factories in Japan. Reported to be 40% reduction in production.
- monkeynotes 5y ago
  Actually Toyota's manufacturing process was changed after Fukushima and was one of the only companies that plans for situations like this: https://www.autoblog.com/2021/03/09/toyota-how-it-avoided-semiconductor-shortage/ https://www.autoblog.com/2021/03/09/toyota-how-it-avoided-se... Edit, what the other poster said.
  - AzzieElbab 5y ago
    yeah, but about everyone else?
    - sumtechguy 5y ago
      They now learn the lesson Toyota learned in 2011.
- patentatt 5y ago
  And it’s the same with our healthcare system and hospitals. Because they are run as businesses, hospitals are finely tuned to be mostly full most of the time. When COVID fills up 30% of your beds, it quickly overwhelms the system and it crumbles. This is why healthcare needs to be publicly owned, because robustness is necessarily inefficient, and inefficient is incompatible with capitalism.
ceva 5y ago
That is good news for planet earth!
- folli 5y ago
  Why? Because older, less efficient cars are being kept on the road for longer?
  - thrwyoilarticle 5y ago
    The question of whether to keep an old car or buy a new, cleaner car is difficult, with many important unspecified variables such as who 'owns' the emissions due to the manufacture of a car (the manufacturer? the first owner? all owners?). This isn't true for mileage though. If you move closer to work, your commute will emit less.
  - RutZap 5y ago
    I believe that driving an old car for longer has a smaller environmental impact than consistently driving newer cars as the bulk of emissions is during the manufacturing process. I have no data to support my statement, it's just my hunch. I'd be very keen if someone with the right knowledge can approve or disprove my statement.
    - zelos 5y ago
      Not true at all, ~80% of emissions from an ICE car are from using and servicing it. https://www.iea.org/data-and-statistics/charts/comparative-life-cycle-greenhouse-gas-emissions-of-a-mid-size-bev-and-ice-vehicle https://www.iea.org/data-and-statistics/charts/comparative-l... Looking at that chart I think you could build a brand new ICE car, throw it away, build an EV and drive that instead and still come out ahead?
      - lotsofpulp 5y ago
        > Vehicle assumptions: 200 000 km lifetime mileage I was under the impression decent quality ICE vehicles are proven to last at least 320k km these days, and can easily last 15+ years. Have electric vehicles even been in use long enough to have sufficient data to compare?
belter 5y ago
"Porsche will provide cars with ‘fake chips’ to reduce delivery times" https://news.ycombinator.com/item?id=28042518 https://news.ycombinator.com/item?id=28042518
- laydn 5y ago
  That makes no sense. I wonder what they mean by "fake" chips? Are they simply not placing the chip on the board, or are they using a footprint compatible different chip (unlikely), or are they completely redesigning the board with another chip which has much better availability? (most likely)
  - jtbayly 5y ago
    Or leaving out the infotainment system.
  - detaro 5y ago
    Presumably they are building cars but leave entire modules out, and then fit them later as supply arrives. Has some benefits over stopping production, if you can afford to have a stockpile of cars around.
rcMgD2BwE72F 5y ago
On one hand, Toyota buys so many chips that their supplier will probably prioritize their orders. On the other hand, Tesla is tiny compared to Toyota but is probably more flexible and can adapt faster, e.g by using alt chips with new firmware and by using fewer chips per vehicles (to be proven, but we know Model Y has half the number of ECUs of Mach E / ID.4 for instance). Also, without dealers, Tesla could better manage their build-to-order system and pricing (to push customers towards high margin vehicles and forgo volume growth while the shortage continues)
- itsoktocry 5y ago
  >to push customers towards high margin vehicles Wait, isn't this what people tell us is wrong with dealerships, and why the Tesla method is superior?
  - rcMgD2BwE72F 5y ago
    Not a sales method, just raising price on the cheapest models. I meant pull not push.
flyinglizard 5y ago
Does anyone know the particulars of the shortage? Talking more about the commodity chips. Very hard to get anything from TI, ST or Microchip. Which fabs and nodes are specifically overloaded?
- adamcharnock 5y ago
  I'm not sure if this will answer your specific questions, but I found this HN comment from a few months ago to be some very interesting background: https://news.ycombinator.com/item?id=26931498 https://news.ycombinator.com/item?id=26931498
- baybal2 5y ago
  Not nodes, wafer sizes. Most severe shortages are on 200mm. 200mm had 12 month lead times before COVID, now we talk about years.
icegreentea2 5y ago
The article (and others about this topic) indicate that the chip shortage isn't just a static. They all claim that chip and other supply chains (all based on South East Asian) are all under new pressure from delta strain spread. In fact, I wonder how much of this really is chip supply vs general supply. Most articles on this open with headlines about chip supply, but then contains quotes from Toyota about "supply" and "parts" in general.
- ruuda 5y ago
  Yeah, this also makes no sense to me: > The Covid pandemic boosted demand for appliances that use chips, such as phones, TVs and games consoles. SOCs in phones and game consoles are produced on very different processes than chips used in cars, no? Cars don't need the smallest dies or most energy-efficient chips. These industries are not competing for the same capacity. Or am I missing something?
  - gameswithgo 5y ago
    modern car entertainment systems often use some of the same parts as tvs/game systems/pcs etc perhaps the engine ECU is not the chip that is in low supply
  - detaro 5y ago
    They certainly overlap. SoCs aren't the only chips in game consoles or other devices, different kinds of chip production have shared supply chains that themselves are struggling, SoCs used in cars aren't necessarily that different from the ones in other appliances (e.g. NVidia Tegra X1 is used both in the Nintendo Switch and some cars, and probably a pile of other things) ...
  - petre 5y ago
    > SOCs in phones and game consoles are produced on very different processes than chips used in cars, no? Yes, some of them are different. Consumer chips are not industrial norm, they have narrower environmental operating ranges. The foundries producing automotive chips shifted production to consumer chips during the lockdowns, as the auto production lines were on hold. This caused supply chain disruptions. Add to that US > China IP export bans and you have a black swan event.
phkahler 5y ago
And here I was picturing a 4-axis machine...
nickthemagicman 5y ago
I looked for a simple non-electronic car recently to buy, and found out that the government has mandated numerous safety systems requiring electronics like backup cameras, no seatbelt alarms, blind spot monitoring, lane assist etc, and in the upcoming infrastructure bill there is a rider to add breathalyzers to every new car made in America. (ref below) Is there an officially designated cost/reduced risk ratio that policy makers can go by to determine if a regulation is worth while? Is a regulation that costs 1 billion dollars to save 10 lives at 100 million a life considered worthwhile? Is a regulation that costs 1 billion dollars to save 1 million lives at a cost of 1000 a life worthwhile? Is there even an officially designated cost per life saved for new safety regulations? If not it seems like a slippery slope, and the government can never overreach as long as it can justify the regulation by saying it saves a single life. Reference: https://time.com/6086981/bipartisan-infrastructure-bill-breathalyzers/ https://time.com/6086981/bipartisan-infrastructure-bill-brea...
- selimthegrim 5y ago
  You might want to look up the marginal cost of a backup camera what with CCDs these days
  - nickthemagicman 5y ago
    The manufacturers add a significant markup I imagine. My original point is what's the cost benefit ratio boundary of enforced safety laws?
- frankchn 5y ago
  The DOT and the NHTSA considers that value to be $6.3 million per "statistical life" in 2009 dollars [1] [1]: https://www.nhtsa.gov/staticfiles/administration/pdf/Value_of_Statistical_Life-2009_Dollars.pdf https://www.nhtsa.gov/staticfiles/administration/pdf/Value_o...
- HatchedLake721 5y ago
  Why though? There’s more cars in America than drivers. Let’s reduce safety regulations because people want new cars? Let’s reduce safety regulations to save corporations money?
wonderwonder 5y ago
So new cars are going to be come more expensive due to supply limitations and in turn used cars will continue to become more expensive as they can rise to a certain % of the new car price. At the same time housing prices continue to sky rocket. Seems like not a great time for someone just stepping into adulthood and financial responsibility.
- ipqk 5y ago
  The difference being that lots of people want to keep those inflated housing prices high (nimbyism), whereas nearly everyone wants car prices to go back to normal.
  - yalogin 5y ago
    Car prices won't go back to normal again though. They will come up clever financing schemes to make people pay but the prices will never be reduced.
    - wyager 5y ago
      This is mostly just a reflection of the fact that the value of the dollar has declined precipitously over the last 18 months. Dollar prices are sticky, so it can take a bit of a shock for inflation to “kick in”, but we’ve had plenty of shocks to go around.
      - jondwillis 5y ago
        I'll add a bit of a pedantic point: the dollar hasn't really lost any value _against other currencies_ (DXY) over the past year. In fact, it is a little higher. It has lost value against lots of commodities and "real" goods.
      - smeyer 5y ago
        I don't think it's fair to attribute "most" of this to inflation. Car prices have been rising much faster than many other components of CPI, so even in real rather than nominal dollars cars are getting more expensive.
GordonS 5y ago
Is there a credible estimate of when the chip shortage is likely to be over?
- baybal2 5y ago
  Digitimes tell of q3-4 2022
mnadkvlb 5y ago
Can someone explain, why this is not reported as in what inflation looks like ? when Supply cant meet demand we get higher prices, what am i missing here ?
- thaumasiotes 5y ago
  That's not really the usual concept of "inflation". Every commodity fluctuates in price. Inflation is when the price of a unit of money falls. Conceptually, it's very easy to distinguish "cars cost more dollars because cars are more expensive" from "cars cost more dollars because dollars are cheaper". In practice, it's difficult to measure the value of a dollar. But in general, inflation looks more like the price of everything going up, and less like the price of cars going up. (Currently, a lot of different prices are going up, and current inflation is high. But you can't just point to Toyota raising prices and say "See? This is what inflation looks like!" That is what inflation looks like, but it's also what not-inflation looks like.)
- itsoktocry 5y ago
  >Can someone explain, why this is not reported as in what inflation looks like ? What do you mean "this is not reported"? Are you actually looking at the BLS inflation reports? The fact is, semi-conductor price increases make up a tiny proportion of the average person's cost of living.
11thEarlOfMar 5y ago
If you have a taste for irony, my company makes critical components for semiconductor equipment. If we can't ship, equipment companies can't ship new equipment. If they can't ship, semiconductor fabs can't increase capacity to meet the demand and solve the shortage. We went line down last week due to shortage of a chip for our component. In reality, the shortage is somewhat self-inflicted, like toilet paper a year ago, but for whatever combination of real demand + hoarding, we can't get chips.
- throwawaygh 5y ago
  A negative feedback loop in semiconductor supply seems like a situation where a government should just step in manage the market a bit.
  - dimitrios1 5y ago
    The solution to a market inefficiency isn't to involve a more inefficient entity.
    - ramesh31 5y ago
      Ah yes, the Herbert Hoover approach.
      - MagicWishMonkey 5y ago
        I wonder how many of these people rant about how bad the government is while using GPS to navigate their way to work on government funded roadways.
        evilduck 5y ago
        On the DARPA derived internet, no less.
        nradov 5y ago
throwaway894345 5y ago
What are these chips and what is preventing us from scaling up capacity? I’m not challenging that it’s difficult, but the reporting seems shoddy. Maybe I’m the only one who wants to understand this stuff, but these kinds of questions always seem obvious to me (same with COVID vaccine manufacturing).
- acdha 5y ago
  Here’s a good rundown: it ultimately all comes back to chip fabs being huge operations with massive upfront costs which makes them sensitive to both the pandemic’s direct effects and secondary problems like the way the auto manufacturers slashed orders in 2020, forcing the chip manufacturers to sign other contracts to avoid idling that much capacity[1], and unrelated problems happening at the same time like cryptocurrency pulling capacity away from useful applications. https://www.eetimes.com/the-chips-are-down-with-no-relief-in-sight/ https://www.eetimes.com/the-chips-are-down-with-no-relief-in... 1. I’m not sure how much of this has been independently verified but this commenter blames the auto manufacturers heavily: https://news.ycombinator.com/item?id=26931498 https://news.ycombinator.com/item?id=26931498
  - throwaway894345 5y ago
    That's a really good HN comment, thanks for sharing!
waterside81 5y ago
Can someone explain to me why this wasn't the case before covid? Are the companies who are ahead of the automakers "in line" ordering more than before covid?
- Saturdays 5y ago
  Simplest answer: Demand has gone up overall for technology like tvs, computers, game consoles, etc... Meanwhile, during covid the ability to scale (production and supply chain) to meet that demand has been difficult.
- bluGill 5y ago
  Cars are not a large market compared to cell phones and other users of ships. Cars are louder than the rest, but not bigger. They typical car lasts 10-15 years. Cell phones about 2. More people have a cell phone than a car. Sure the car has more chips, but not by enough to make them bigger than phones. (Phones and cars mostly don't use the same process)
neals 5y ago
Come on, we all know this problem and we all know the solution. It's probably red-circuits that we are talking about here. We've all been there: you have your yellow belts full of green-circuits, but the red ones are just so much more complex. You need to set up the entire oil production chain for that, which is tedious and you probably rushed it just 'get a few red circuits so I can get my electric furnace'... I say, take a step back, take some time and really automate plastic-bar production (yes, even the oil wells and refineries, and don't just put rocks in a container, belt them over there like a grown-up) Only after producting enough for a full red belt, should you continue expanding into other branches, like robots and faster belts. Don't they teach this stuff anymore?
- spsesk117 5y ago
  I love playing Factorio, but it's moments like above when it starts to stop feeling like a game and it starts to feel like refactoring code at work.
  - blunte 5y ago
    Factorio is a nice and simplistic (and fun, for a while) way to demonstrated many aspects of software and product development. You go through basic product planning and design, first quick MVP, then some feedback loops where you recognize some needed design changes, etc. Then once you have it figured out, you want more. So you start scaling up. That scaling often necessitates refactoring, because it necessitates space and time management (no sense having a bottleneck in your system which limits your growth potential). Then you have the aliens which represent unexpected problems and failures. A while back someone posted about playing Factorio with job candidates as a way to see how they thing and solve problems. This is probably much better than most tech interviews. If you can be decent at Factorio, you can probably be pretty decent as a software developer.
- TeMPOraL 5y ago
  I'd laugh but then I saw this comment: https://news.ycombinator.com/item?id=28233436 https://news.ycombinator.com/item?id=28233436. Yup, Factorio is a nice way to learn about supply chains. Unfortunately, like almost all videogames, it assumes the whole system is run by a benevolent dictator (i.e. the player). In real life, most of the complexity and most of the waste comes from the system being built incrementally and operated by great many parties in a mix of cooperative and competitive relationships.
2OEH8eoCRo0 5y ago
What are the barriers here? As sophisticated as automobiles have become I don't see them needing bleeding edge 5nm fabs. My bigger question is: Why is there not a thriving "small business" chip fab industry?
- snarf21 5y ago
  My guess it that it is like a refinery, building the factory takes too long with a large capital outlay. For instance, it may take a year or two to build and cost (let's guess) $500M. Now in that time, let's say all the existing players ramp back up (or expand!!) and there is no shortage. You now are producing chips that are cheaper elsewhere and it is hard to recoup your investment. Also, you may be limited on where you can find people with expertise in this area.
- bob33212 5y ago
  In theory you could wire up an old pentium or 386 and program it to do the same thing some of these chips do but you have the same problem there. No on has a 5M supply of 386s just sitting around in good condition.
- pjc50 5y ago
  The minimum cost of entry is in the hundreds of millions to billions, it's not especially environmentally friendly, and you're competing against what would normally be fully-paid-off old production lines from the incumbents. There's a thriving small business design industry, but the manufacturing is a classical capital-intensive manufacturing business that also requires very specialist staff.
btbuildem 5y ago
I don't see this raised anywhere -- but what's so bad about producing fewer cars (the poor neglected shareholders and exec bonuses aside)? It's almost as if we would need to lean into this, reducing growth and producing fewer cars would be in line with efforts to mitigate the drivers of climate change. What if car manufacturers pivoted their KPIs and focused on making long-lasting, serviceable vehicles? Toyota is already the worldwide leader in these, as evidenced anywhere that's not smoothly paved suburbia-land.
- eldaisfish 5y ago
  Consider for a moment the people outside the developed world whose lives are greatly improved by cars. Scarcity drives prices up putting things out of their reach.
  - 5e92cb50239222b 5y ago
    Have you even been to the developing world? We mostly drive old junkers that were discarded by Americans and Europeans after 15 years of use for breaking and polluting too much.
    - eldaisfish 5y ago
      this comment is a textbook example of how out of touch many here are. The developing world also makes cars. India - to name just one - is among the largest exporters of vehicles to several countries in Africa. No, people in the developing world do not drive hand-me-downs from the West.
      - fomine3 5y ago
        Both.
    - jcranberry 5y ago
      Need to keep that supply of junkers coming though!
  - 5y ago
melfrey 5y ago
Will the car price starts to increase due to the chip shortage?
- avelis 5y ago
  Price increases already happened in the US for used cars. This will only continue the premium for used cars.
  - stevewodil 5y ago
    Why is it not affecting new car pricing as dramatically? And why would that continue? Used car prices cannot surpass new car prices surely, so at some point new car prices will be raised because of the low supply and high demand, or new car orders won't be fulfilled for months later
    - bluGill 5y ago
      Used cars have surpassed new car prices in the past. Generally because new cars can't actually be bought at any price. A car today is sometimes worth more than a better car that doesn't exit.
Neil44 5y ago
I was speaking to a car dealer client the other week and heard some funny stories, like selling off cheap batches of vans with various non-essential electronics missing - just holes in the dash - and the promise that units would be available to fit later.
Scoundreller 5y ago
Many countries have a funny concept of strategic industries. In mine, dairy is a strategic industry that is coddled by government so that we can have a local source. But every country thinks that so there’s foes and allies that can supply us UHT or powder milk on a moment’s notice. And if our milk supply disappeared tomorrow, everyone over 1y could substitute with 10000000 different things for nutrition. Cars are another. Every country props up its auto industry, so why worry about a domestic supply? Meanwhile, there are critical components, pharma ingredients or other inputs built in 1 factory in a country we could likely end up in a big dispute with. Just goes to show that industry protection has nothing to do with risk/dependence on that product, and everything to do with picking and choosing which industries are important voting bases.
- deleted 5y ago
  [deleted]
- baybal2 5y ago
  How the essential farma became nearly 100% reliant on foreign manufacturers is I think the most exemplary case of this nonsense. I read some year ago that there were laws in US which at least somehow discouraged the pharma from shipping manufacturing abroad, and it was the big pharma itself which lobbied these laws out. This is how China held US at gunpoint in the early days of COVID — "Stay put, or we pull 90%+ of your antibiotics supply"
  - NotSammyHagar 5y ago
    I don't think china did that, any supporting news articles?
- cutemonster 5y ago
  > picking and choosing which industries are important voting bases. And on a bribes and corruption basis, to some extent, too? For example, I never thought about what are the strategic industries, when voting.
  - 5y ago
varispeed 5y ago
There is a lot of scalping going on. I keep an eye on certain parts and as soon the stock comes up, it disappears within minutes. Then you can buy all those chips on AliBaba at 10 times the price. I think government should look into that as this is a huge problem for many businesses.
JKCalhoun 5y ago
So the new car thief will yank the computer(s) out of newer cars, sell them on the black market.
- 1-6 5y ago
  My Toyota Prius is still sitting around without a catalytic converter on it. Procrastinating because I'm not being called back to the office yet.
- bluGill 5y ago
  No, because the computer is tied to the VIN, and you need a dealer to change that. Dealers will check to see if the VIN is stolen. Not all cars have that, manufactures have been using the above to stop theft for years.
candyman 5y ago
I wonder if there will be a long term shift in supply chains toward less "asset light" and more vertically integrated operations with sourcing moved closer to end market demand.
baxuz 5y ago
Ordered a Yaris Hybrid in June. Still no info on the order, except that the factory in France is on shutdown in August till the 23rd. Except: > Until now, Toyota had managed to avoid doing the same, with the exception of extending summer shutdowns by a week in France Which means it reopens in September... > Toyota is to slash worldwide vehicle production by 40% in September because of the global microchip shortage. Oh boy. Hopefully my order is in one of the first in the queue.
- gccs 5y ago
  Yaris isn't a Toyota. Its made by Mazda and they slap a Toyota logo on it. I wouldn't worry.
  - baxuz 5y ago
    Not true for the European market: https://en.wikipedia.org/wiki/Toyota_Yaris_(XP210) https://en.wikipedia.org/wiki/Toyota_Yaris_(XP210)
mensetmanusman 5y ago
This is a huge deal, imagine that the production of one Apple AirTag means one less vehicle produced.
- aembleton 5y ago
  I'm sure a car has many more chips than an AirTag.
whiteboardr 5y ago
@kliment had a pretty good summary on this: https://news.ycombinator.com/item?id=26931498 https://news.ycombinator.com/item?id=26931498
aazaa 5y ago
> Taiwan Semiconductor Manufacturing plans to build new factories in the US and Japan I can't help but think that this massive shortage is setting up and equal an opposite reaction 2-3 years down the road: a glut as all this new capacity comes online. Especially given that because companies are now scrambling for chips, they're likely to over-order to ensure future supply.
m23khan 5y ago
Here in Toronto, Canada: One fallout of this is the rise in prices of old / used cars. To give you an idea, a 2018 Toyota/Honda minivan is Canadian dollars 10,000 higher than pre-covid times. It's ok for folks who have a newish car and want to buy another used car as their current car prices would have increased. But if you are like me, who drives a 15+ year rusty old car and is desperate to buy a 3-4 year old car, then good luck. Not only are the prices much higher (and your car's value is junk) but at the same time, inventory (even for used cars) is super low. I would have loved to live in a City / Country where car is not necessary but this city I live is built for cars... Purely as a joke: Maybe car manufacturers should revive the production lines to produce 1980s Toyota Cressidas, Camrys and Chevy Impalas.
mrfusion 5y ago
Has anyone considered redesigning the car to not need these particular chips? Do a massive push to target a different chip or even a FPGA. There must be something out there to run the software.
fomine3 5y ago
It seems that primary problem isn't chip shortage but other parts shortage made in Asia. https://asia.nikkei.com/Business/Automobiles/Toyota-to-cut-global-output-40-in-September-on-ASEAN-outbreaks https://asia.nikkei.com/Business/Automobiles/Toyota-to-cut-g...
deleted 5y ago
[deleted]
tharne 5y ago
Crazy idea: make cars that don't rely on microchips and software. As a bonus, they'll probably last longer, be cheaper to repair, and won't distract drivers as much. There is software in too many consumer goods, usually with very little benefit to the end user, beyond marketing and being able to justify a higher price tag (oooh, it's a "smart" toaster). I don't need the Toyota equivalent of an iPad on my dashboard.
- ticviking 5y ago
  I know for a fact there's a market for this in both cars and televisions.
- Beached 5y ago
  unfortunately the volume of regulations regarding automotive technology doesn't allow for this. if Toyota or any other manufacturer wants to make a chipless car, first the law makers have to allow them to. I'm not aware of how you can do emissions monitoring through canbus (required) without chips. not sure how you can do rearview monitors (required) without chips. there are countless other things that are regulated that require chips. and competitor pressure for assisted driving technology like lane assist, blonde side monitoring, navigation/gps/etc all require chips. the dream of going back to a chipless is a nice one imo, but they are just not legal.
  - tharne 5y ago
    There are some hurdles for sure, but for most of their history cars did not have chips in them, so we must have found a way.
    - agentdrtran 5y ago
      Cars are several orders of magnitude safer now than in the past and driver assistance is part of that.
      - tharne 5y ago
        Most of the biggest safety features that had the most impact were developed in the 1960's and 70's after people like Ralph Nader really pushed the auto industry to do better. There was a second big bump in safety in the late 80's and earlier 90's with the addition of airbags. I'm pretty sure you could design a car with few or no computers in it that would be on par with most cars on the road today in terms of safety. Sure, you'd lose some safety features like backup cams, but nothing that huge compared with earlier safety improvements.
chemmail 5y ago
Its really bad, we have 1 main dealer around us with uusally over 1000 in stock in normal times. They only have 4 cars in stock, all Avalons.

567 points by midnightcity 5y ago

vvarren 5y ago

This so-called “transitory inflation” is really starting to seem like it will parlay into full blown inflation.

sprafa 5y ago
How is this related to the chip shortage and Toyota?
- 3pt14159 5y ago
  When the supply of goods goes down, it pushes prices up.
  - compscistd 5y ago
    But inflation has to do with the supply of money, not the supply of goods, right? Genuine question
    - macksd 5y ago
      It's is often talked about that way: Wikipedia at least defines it as a general price increase. And that still gives you many of the same effects as a money-supplu-triggered inflation. Many annuities are worth less. The dollars in a savings account are worth less. The minimum wage becames worth less...
    - mguerville 5y ago
      Inflation is just when prices go up, for whatever reason. Increased supply of money can cause it (and does more often than not), but decreased supply can also do that as it moves the price equilibrium. Unfortunately we have a bit of both at the moment, money supply shot up and lots of supply chains slowed down.
    - fab1an 5y ago
      If there are fewer goods, prices usually increase, as there is relatively more money chasing fewer goods.
    - selykg 5y ago
      Inflation is the rise in costs for goods. If the supply of these chips causes a loss in supply of in demand items, like cars, then it will cause an increase in the price of cars. The thoughts are that this is temporary, until the components that are in low supply can catch up and meet the demand. But if the lack of supply lasts for too long then people become used to the increase price and manufacturers can just keep the price there at the inflated price. Now it's permanent inflation. Or that can happen if the supply doesn't keep up with the demand.
    - deleted 5y ago
      [deleted]
    - mkj 5y ago
      This central bank says it's prices going up. https://www.rba.gov.au/education/resources/explainers/inflation-and-its-measurement.html https://www.rba.gov.au/education/resources/explainers/inflat...
    - ajmurmann 5y ago
      There is really three types of inflation: 1. Demand driving higher prices 2. Increased cost driving higher prices 3. Expectation of inflation driving higher prices and this inflation itself
    - ModernMech 5y ago
      Inflation has to do with purchasing power of a dollar decreasing. I would argue that inflation is something measured at the scale of the entire economy, and you can't say much about inflation looking at a single commodity, or even a single sector.
    - devttyeu 5y ago
      Kind of both? If I were to come up with a formula, I'd say 'prices = GDP / SupplyOfGoods', where GDP is just 'MoneySupply * MoneyVelocity'. If supply goes down, prices go up. If money supply grows, prices go up. If money velocity (number of times money changes hands in a given period) goes down, prices go down, etc. (It's worth noting that in 2020 when money supply exploded, money velocity fell by a lot, which is why GDP fell, and why there wasn't that much inflation) edit: s/inflation/prices/
    - lordnacho 5y ago
      The problem is when those things affect each other. Otherwise we wouldn't care.
    - throwawaygh 5y ago
      No, inflation has to do with the price of goods and services. Inflation is defined as "a general increase in prices and fall in the purchasing value of money". Inflation can be caused by many things: reduced supply, increased demand, expectation of future price increases, degradation in the quality/desirability of alternative products (eg bond yields), and, yes, an increase in the amount of dollars chasing an asset class/product/service. Re: your original question, to be a bit pedantic, the supply of money on its own cannot cause inflation in consumer goods except via extremely odd channels (e.g., inflation expectations). A trillion dollars sitting in a bank account has approximately no effect on prices. Like a bullet in a chamber, money at rest has no effect on consumers' experience of inflation until it's propelled forward. But it's important not to conflate causes with definitions. Also, attributing causes of inflation to particular instances of inflation is often extremely and inherently political. The inflation we've seen in consumer goods is a complex phenomenon with many disparate causes. Beware of anyone selling you a "just-so" story for the cause of inflation in a few dozen disconnected goods and services. Especially if that story aligns perfectly with their ideology/product/investment/political campaign. And even more especially if they start the story by conflating one possible cause of inflation with the very definition of the thing.
    - ItsMonkk 5y ago
      People think of inflation like they think of the oceans. If the ice caps melt and water melts in, the shore lines from New York to Tokyo rise slightly. If you track this rise, that's inflation. That's not how it works, and it's not what the CPI tracks. Inflation is much more analogous to inland water, you know, lakes and rivers. If you give the bottom 80% of the income distribution more money, they will spend it right away like a river. If you give the 81-90%, portion of it will be saved in their lake(say, a 401k) and they will spend some of it. And if you give the top 10% more money, they save all of it in their reservoir. The way that we have been introducing new money into the system is not by melting ice in the middle of the ocean. We also haven't been raining all over. The key way that new money has been introduced over the past 50 years is by lowering the interest rate. When you lower the interest rate, what happens is that people refinance, and suddenly they can pay less, but quickly realize, oh, I can also borrow more, so they do. I'll show you a few numbers, which I got by going to the zillow housing affordability page with default settings. I only modified the interest rate, all other values stay the same. Year | Average Interest Rate 30 Year Fixed | Home you can Afford 1981 | 18.39 | $124,797 1991 | 9.00 | $200,862 2010 | 6.26 | $244,531 2020 | 2.67 | $328,569 And so what we see people and REITs and companies doing is taking out larger and larger loans, and putting those dollars into assets. Companies take out a bond and buy back their own stock. And why wouldn't they, it's profitable because the environment makes it so. And that money flows throughout the system. We can track the inflow of all of this money by looking at say.. the M2. This seems to be the crux of your point, if the amount of money in the M2 has gone up by 40x since 1971, why is inflation not out of control? The CPI is a measure for inflation that does not track the oceans water level. The M2 tracks that, and as you can see the M2 is out of control. The CPI doesn't track stock purchases. If the CPI were to track stocks weighted at 1971 levels, inflation WOULD be out of control. The CPI tracks, specifically, an average of tangible items that the bottom 80% spends their money on. Therefore the inflation number is based on the height of certain rivers. Now that's an important figure to keep in mind, after all if you get inflation in that bracket and income isn't rising, you quickly run into a revolution. And so that's what the FED has found, if you track the CPI you get the perfect amount of heating to boil the frog without them noticing. But when you introduce money into the system by lowering interest rates, you are in effect giving the money in proportion to the assets already owned. Someone bought that home in 1981, and someone with the same exact income would bid 328k for it today. You basically tripled(and it was a leveraged sale, so 15x!) that home owners asset, without any need to compare anything else, like actual income rises, or for instance SF has moved upmarket which would also effect prices. And so if you don't have much assets, it's a desert. If you do, it's a rain forest. And because the wealthy already have all that they want, demand for those items that the bottom 80% spend their money on doesn't change. So the supply and demand of those items don't change. So the CPI value stays the same. But money was introduced. If you take a look at the velocity of the M2, the M2V, you can see this take place. The wealthy get the gains of the new M2 dollars, and store it away. The more dollars created, the lower the velocity. The lower the velocity, the lower inflation. But that rain is being stored in the reservoirs. If inflation causes stored wealth to lose value it's like a dam bursts and the wealthy start to spend and not save their money, it starts as a trickle and ends in a tsunami.
  - wiz21c 5y ago
    Only if you let greediness exist.
riggins 5y ago
https://www.nytimes.com/interactive/2021/08/18/opinion/inflation-economy-transitory.html https://www.nytimes.com/interactive/2021/08/18/opinion/infla... "In July, some of these sectors (used cars in particular) experienced a big deceleration in inflation, bolstering the argument" https://news.yahoo.com/us-used-car-bubble-burst-141009925.html https://news.yahoo.com/us-used-car-bubble-burst-141009925.ht... "The price index for used vehicles rose 0.2% in July, after having risen at least 7.3% in each of the previous three months. The category was one of the few, along with hotel rooms and airfares, that drove recent inflation, the economist Paul Krugman pointed out on Twitter. “Combined, these three sectors account for…more than 1/2 [half] of inflation over the past three months,” Krugman wrote. In May, in fact, a full third of the overall price rise was due to the surge in used car prices."
- jtbayly 5y ago
  Used cars have a natural price cap, and my understanding is that it has been reached. They are too close to the price of a new car to go any higher.
  - lucasmullens 5y ago
    Maybe, but with new cars being sold for above MSRP, that natural price cap is rising.
  - nszceta 5y ago
    The price of a new car is whatever the dealer is willing to let it go for. MSRP is a starting point, not the final price, which can be literally anything.
  - cableshaft 5y ago
    Yeah, I normally buy used, and this time I just bought new (technically I leased new, but it's the first time I'm leasing a car in my entire life), because it just didn't make any sense to me to buy a used car for almost the same price as a new car.
  - el-salvador 5y ago
    Not everywhere though. I recall Venezuela had unusual car prices about a decade ago. Car dealership inventory was very low due to currency controls and wait times at car dealerships increased to months. A slightly used car, inmediately available for sale, was more expensive one than a new one with months wait.
JimTheMan 5y ago
A shortage is not inflation
- hirako2000 5y ago
  Supply and demand change is what increases or decreases costs. If demand don't adapt, there will be inflation to force it to adapt :)
  - JimTheMan 5y ago
    'Inflation' is not the price increase of a single thing to demand/supply. Inflation is the systemic increase in all costs of what a household would buy as money itself become less valuable. Prices 'inflating' on a single product because there's a shortage of... base materials or whatever is not inflation as an economic term.
    - hirako2000 5y ago
      You are quite right. Except that you are implying other product will decrease in price while that one increases. Vehicles is a rather large market and an element of supply chain costs, chips are used across so many industries. I would rather expect the majority of product to see an increase in price. We can talk technical terms but my comment was a reflection of the markets at large.
throw0101a 5y ago
> This so-called “transitory inflation” is really starting to seem like it will parlay into full blown inflation. A lot of the people screaming about inflation were doing so using the argument that there's too much spending and the "excess" money supply will cause the US to turn into Zimbabwe (Fed printers go brrrrrr): demand-pull inflation. The price fluctuations caused pandemic-related supply issues (cost-push inflation) don't have much to do with money supply and stimulus packages. * https://en.wikipedia.org/wiki/Inflation#Keynesian_view https://en.wikipedia.org/wiki/Inflation#Keynesian_view If things get too hot, it's easy enough for interest rates to be pulled up, but given un/employment isn't at pre-pandemic levels, policy makers may let things ride for a while.
- frockington1 5y ago
  The Fed doesn't seem to care about inflation adding even more burden to the poor. But hey, at least all the asset rich political donors are happy
- vvarren 5y ago
  My argument doesn’t hinge on the excess spending. Rather, the increase of costs due to a labor shortage, chip shortage, construction materials shortage, etc. is having a compounding effect across the whole economy.
rz2k 5y ago
While possible, look at lumber prices now[1] in the context of articles from April saying that the high prices would persist. Economists who study these phenomena tend to be a better guide than reporting that is in the middle of reacting to dramatic signals like shortages and fast price changes. [1] https://tradingeconomics.com/commodity/lumber https://tradingeconomics.com/commodity/lumber
hindsightbias 5y ago
I bought 2x4s for $3.60 last weekend. Just a month ago, HN was rife with lumber apocalypse.

kristofferR 5y ago

Good! Toyota has been sabotaging clean cars because they can't compete [1][2]. Most well known car brands have great electric cars now, but Toyota and their oil lobby buddies are trying to halt the progress. The decline of Toyota sales is good news for the world. [1] https://www.nytimes.com/2021/07/25/climate/toyota-electric-hydrogen.html https://www.nytimes.com/2021/07/25/climate/toyota-electric-h... [2] https://insideevs.com/features/524481/toyota-hybrid-pioneer-delaying-evs/ https://insideevs.com/features/524481/toyota-hybrid-pioneer-...

da_big_ghey 5y ago
Toyota is not "sabotaging clean cars", only trying to delay regulations.
- Ma8ee 5y ago
  So not sabotaging, only obstructing. I'm so pissed at all the auto-makers (with the exception of Tesla). The writing has been on the wall for at least a decade in large neon letters, but they all seem taken by surprise that they suddenly have to produce electric cars.
  - CountDrewku 5y ago
    Psst you can avoid all of those issues by not buying Toyota. Stop trying to regulate everyone else into what you want. If these EV's are so good it shouldn't be an issue at all.
    - space_rock 5y ago
      Stop polluting the cities and atmosphere and then it'll be none of our business
      - CountDrewku 5y ago
        I bike religiously so sorry you're not going to one up me on the "polluting" less scale. Are you going to come take my ICE vehicle from me? Didn't think so. Drop the authoritarianism it's unbecoming. There's a great country I can suggest you to move to if you want government control over everyone, feel free to PM me for details.

Veliladon 5y ago

Toyota was one of the few (only?) companies to keep a large stockpile of chips on hand to continue production in case of a supply interruption. They kept something like two years worth on hand. I guess 18 months of doing the extremely heavy lifting for the whole industry has taken its toll and now they're in the same boat.

dd36 5y ago
I thought Toyota invented not doing that.
- gameswithgo 5y ago
  Chips are small, don't age fast. Make sense as an exception to the rule.
  - bluGill 5y ago
    Chips also go out of production suddenly (with only a couple years warning - which isn't anywhere near enough time to replace them all). thus any major manufacture has stockpiles of chips that are no longer in production that need to last until production of the widget switches to new chips and have enough left over as spare parts for existing widgets.
    - davidrm 5y ago
      > Chips also go out of production suddenly (with only a couple years warning...) No they don't, automotive semiconductors suppliers have an "obligation" to manufacture the component for at least 15 years, which makes managing the production output planning, spare parts etc. much easier. It's not like walking into your supermarket and finding out that your favorite brand of chocolate is no longer available. There are minor exceptions, and sudden changes in the demand might affect the immediate availability, but at the very least the part is almost guaranteed to be produced for 15 years with defined notice policies. Microcontrollers don't have a pin-compatible drop in replacement when they get discounted, but many different ICs do, like power supplies, transistors etc., so discounting them is not a big deal. e.g.: https://www.nxp.com/products/product-information/nxp-product-programs/product-longevity:PRDCT_LONGEVITY_HM https://www.nxp.com/products/product-information/nxp-product... > Participating products are available for a minimum of 10 years from product launch (15 years from product launch for many products developed for the automotive, telecom and medical segments), and are supported by standard end-of-life notification policies.

dhbradshaw 5y ago

As a chip supplier, I'd be feeling a lot of pressure right now. In the short term you can squeeze and the tail can wag the dog for a bit. But longer term this opens the door wide open for new competitors in the market and / or vertical integration.

selykg 5y ago
I don't think chip suppliers are playing games here, are they? I think in general all chip manufacturers are at capacity and it comes down to getting in line. And I'm sure many chip manufacturers are trying to expand their capacity. I can't imagine they're sitting there thinking this will last forever.
- dhbradshaw 5y ago
  I'm not sure the reasons for the shortage matter. If you have a dependency that's causing you major problems, you try to become less dependent on it.
- arglebarglegar 5y ago
  they’ll play it to benefit themselves any way they can, why wouldn’t they
twarge 5y ago
I've noticed that the shortage of chips is also strongly driven by speculators simply buying up everything in sight and trying to resell at multiples of the cost.
- swarnie_ 5y ago
  You think people are buying up Chips designed to go in to Toyota cars? Surely they're beyond worthless to anyone but the manufacturer and Toyota themselves?
  - detaro 5y ago
    Parent was speaking of the chip shortage in general, which goes way past cars. Car manufacturers will do what they can to isolate themselves from the open market (and buy the numbers and have the political backing to do so), but demand for non-car parts affects allocation of production capacity to their demands too. > designed to go in to Toyota cars? Chips rarely are designed for a specific car, and a car will also contain quite a few that are not strictly specific to automotive.

imaginariet 5y ago

As Taleb likes to say, an efficient system is the opposite of a robust system, kind of by definition. We are now witnessing the effects of our modern hyper-efficient just-in-time global manufacturing system.

akg_67 5y ago
Actually, Toyota moved away from JIT after 2011 earthquake when several of it’s factories had to stop production due to lack of parts from other factories impacted by earthquake. One of the change was increased inventory levels of components. Toyota is one of the last automaker to reduce production due to the current chip shortage, because they had enough chips for 18-24 months of production. Edit: It seems some of Toyota factories in Southeast Asia have shutdown due to Covid spread in those countries resulting in shortage of parts supplied to factories in Japan. Reported to be 40% reduction in production.
monkeynotes 5y ago
Actually Toyota's manufacturing process was changed after Fukushima and was one of the only companies that plans for situations like this: https://www.autoblog.com/2021/03/09/toyota-how-it-avoided-semiconductor-shortage/ https://www.autoblog.com/2021/03/09/toyota-how-it-avoided-se... Edit, what the other poster said.
- AzzieElbab 5y ago
  yeah, but about everyone else?
  - sumtechguy 5y ago
    They now learn the lesson Toyota learned in 2011.
patentatt 5y ago
And it’s the same with our healthcare system and hospitals. Because they are run as businesses, hospitals are finely tuned to be mostly full most of the time. When COVID fills up 30% of your beds, it quickly overwhelms the system and it crumbles. This is why healthcare needs to be publicly owned, because robustness is necessarily inefficient, and inefficient is incompatible with capitalism.

ceva 5y ago

That is good news for planet earth!

folli 5y ago
Why? Because older, less efficient cars are being kept on the road for longer?
- thrwyoilarticle 5y ago
  The question of whether to keep an old car or buy a new, cleaner car is difficult, with many important unspecified variables such as who 'owns' the emissions due to the manufacture of a car (the manufacturer? the first owner? all owners?). This isn't true for mileage though. If you move closer to work, your commute will emit less.
- RutZap 5y ago
  I believe that driving an old car for longer has a smaller environmental impact than consistently driving newer cars as the bulk of emissions is during the manufacturing process. I have no data to support my statement, it's just my hunch. I'd be very keen if someone with the right knowledge can approve or disprove my statement.
  - zelos 5y ago
    Not true at all, ~80% of emissions from an ICE car are from using and servicing it. https://www.iea.org/data-and-statistics/charts/comparative-life-cycle-greenhouse-gas-emissions-of-a-mid-size-bev-and-ice-vehicle https://www.iea.org/data-and-statistics/charts/comparative-l... Looking at that chart I think you could build a brand new ICE car, throw it away, build an EV and drive that instead and still come out ahead?
    - lotsofpulp 5y ago
      > Vehicle assumptions: 200 000 km lifetime mileage I was under the impression decent quality ICE vehicles are proven to last at least 320k km these days, and can easily last 15+ years. Have electric vehicles even been in use long enough to have sufficient data to compare?

belter 5y ago

"Porsche will provide cars with ‘fake chips’ to reduce delivery times" https://news.ycombinator.com/item?id=28042518 https://news.ycombinator.com/item?id=28042518

laydn 5y ago
That makes no sense. I wonder what they mean by "fake" chips? Are they simply not placing the chip on the board, or are they using a footprint compatible different chip (unlikely), or are they completely redesigning the board with another chip which has much better availability? (most likely)
- jtbayly 5y ago
  Or leaving out the infotainment system.
- detaro 5y ago
  Presumably they are building cars but leave entire modules out, and then fit them later as supply arrives. Has some benefits over stopping production, if you can afford to have a stockpile of cars around.

rcMgD2BwE72F 5y ago

On one hand, Toyota buys so many chips that their supplier will probably prioritize their orders. On the other hand, Tesla is tiny compared to Toyota but is probably more flexible and can adapt faster, e.g by using alt chips with new firmware and by using fewer chips per vehicles (to be proven, but we know Model Y has half the number of ECUs of Mach E / ID.4 for instance). Also, without dealers, Tesla could better manage their build-to-order system and pricing (to push customers towards high margin vehicles and forgo volume growth while the shortage continues)

itsoktocry 5y ago
>to push customers towards high margin vehicles Wait, isn't this what people tell us is wrong with dealerships, and why the Tesla method is superior?
- rcMgD2BwE72F 5y ago
  Not a sales method, just raising price on the cheapest models. I meant pull not push.

flyinglizard 5y ago

Does anyone know the particulars of the shortage? Talking more about the commodity chips. Very hard to get anything from TI, ST or Microchip. Which fabs and nodes are specifically overloaded?

adamcharnock 5y ago
I'm not sure if this will answer your specific questions, but I found this HN comment from a few months ago to be some very interesting background: https://news.ycombinator.com/item?id=26931498 https://news.ycombinator.com/item?id=26931498
baybal2 5y ago
Not nodes, wafer sizes. Most severe shortages are on 200mm. 200mm had 12 month lead times before COVID, now we talk about years.

icegreentea2 5y ago

The article (and others about this topic) indicate that the chip shortage isn't just a static. They all claim that chip and other supply chains (all based on South East Asian) are all under new pressure from delta strain spread. In fact, I wonder how much of this really is chip supply vs general supply. Most articles on this open with headlines about chip supply, but then contains quotes from Toyota about "supply" and "parts" in general.

ruuda 5y ago
Yeah, this also makes no sense to me: > The Covid pandemic boosted demand for appliances that use chips, such as phones, TVs and games consoles. SOCs in phones and game consoles are produced on very different processes than chips used in cars, no? Cars don't need the smallest dies or most energy-efficient chips. These industries are not competing for the same capacity. Or am I missing something?
- gameswithgo 5y ago
  modern car entertainment systems often use some of the same parts as tvs/game systems/pcs etc perhaps the engine ECU is not the chip that is in low supply
- detaro 5y ago
  They certainly overlap. SoCs aren't the only chips in game consoles or other devices, different kinds of chip production have shared supply chains that themselves are struggling, SoCs used in cars aren't necessarily that different from the ones in other appliances (e.g. NVidia Tegra X1 is used both in the Nintendo Switch and some cars, and probably a pile of other things) ...
- petre 5y ago
  > SOCs in phones and game consoles are produced on very different processes than chips used in cars, no? Yes, some of them are different. Consumer chips are not industrial norm, they have narrower environmental operating ranges. The foundries producing automotive chips shifted production to consumer chips during the lockdowns, as the auto production lines were on hold. This caused supply chain disruptions. Add to that US > China IP export bans and you have a black swan event.

phkahler 5y ago

And here I was picturing a 4-axis machine...

nickthemagicman 5y ago

I looked for a simple non-electronic car recently to buy, and found out that the government has mandated numerous safety systems requiring electronics like backup cameras, no seatbelt alarms, blind spot monitoring, lane assist etc, and in the upcoming infrastructure bill there is a rider to add breathalyzers to every new car made in America. (ref below) Is there an officially designated cost/reduced risk ratio that policy makers can go by to determine if a regulation is worth while? Is a regulation that costs 1 billion dollars to save 10 lives at 100 million a life considered worthwhile? Is a regulation that costs 1 billion dollars to save 1 million lives at a cost of 1000 a life worthwhile? Is there even an officially designated cost per life saved for new safety regulations? If not it seems like a slippery slope, and the government can never overreach as long as it can justify the regulation by saying it saves a single life. Reference: https://time.com/6086981/bipartisan-infrastructure-bill-breathalyzers/ https://time.com/6086981/bipartisan-infrastructure-bill-brea...

selimthegrim 5y ago
You might want to look up the marginal cost of a backup camera what with CCDs these days
- nickthemagicman 5y ago
  The manufacturers add a significant markup I imagine. My original point is what's the cost benefit ratio boundary of enforced safety laws?
frankchn 5y ago
The DOT and the NHTSA considers that value to be $6.3 million per "statistical life" in 2009 dollars [1] [1]: https://www.nhtsa.gov/staticfiles/administration/pdf/Value_of_Statistical_Life-2009_Dollars.pdf https://www.nhtsa.gov/staticfiles/administration/pdf/Value_o...
HatchedLake721 5y ago
Why though? There’s more cars in America than drivers. Let’s reduce safety regulations because people want new cars? Let’s reduce safety regulations to save corporations money?

wonderwonder 5y ago

So new cars are going to be come more expensive due to supply limitations and in turn used cars will continue to become more expensive as they can rise to a certain % of the new car price. At the same time housing prices continue to sky rocket. Seems like not a great time for someone just stepping into adulthood and financial responsibility.

ipqk 5y ago
The difference being that lots of people want to keep those inflated housing prices high (nimbyism), whereas nearly everyone wants car prices to go back to normal.
- yalogin 5y ago
  Car prices won't go back to normal again though. They will come up clever financing schemes to make people pay but the prices will never be reduced.
  - wyager 5y ago
    This is mostly just a reflection of the fact that the value of the dollar has declined precipitously over the last 18 months. Dollar prices are sticky, so it can take a bit of a shock for inflation to “kick in”, but we’ve had plenty of shocks to go around.
    - jondwillis 5y ago
      I'll add a bit of a pedantic point: the dollar hasn't really lost any value _against other currencies_ (DXY) over the past year. In fact, it is a little higher. It has lost value against lots of commodities and "real" goods.
    - smeyer 5y ago
      I don't think it's fair to attribute "most" of this to inflation. Car prices have been rising much faster than many other components of CPI, so even in real rather than nominal dollars cars are getting more expensive.

GordonS 5y ago

Is there a credible estimate of when the chip shortage is likely to be over?

baybal2 5y ago
Digitimes tell of q3-4 2022

mnadkvlb 5y ago

Can someone explain, why this is not reported as in what inflation looks like ? when Supply cant meet demand we get higher prices, what am i missing here ?

thaumasiotes 5y ago
That's not really the usual concept of "inflation". Every commodity fluctuates in price. Inflation is when the price of a unit of money falls. Conceptually, it's very easy to distinguish "cars cost more dollars because cars are more expensive" from "cars cost more dollars because dollars are cheaper". In practice, it's difficult to measure the value of a dollar. But in general, inflation looks more like the price of everything going up, and less like the price of cars going up. (Currently, a lot of different prices are going up, and current inflation is high. But you can't just point to Toyota raising prices and say "See? This is what inflation looks like!" That is what inflation looks like, but it's also what not-inflation looks like.)
itsoktocry 5y ago
>Can someone explain, why this is not reported as in what inflation looks like ? What do you mean "this is not reported"? Are you actually looking at the BLS inflation reports? The fact is, semi-conductor price increases make up a tiny proportion of the average person's cost of living.

11thEarlOfMar 5y ago

If you have a taste for irony, my company makes critical components for semiconductor equipment. If we can't ship, equipment companies can't ship new equipment. If they can't ship, semiconductor fabs can't increase capacity to meet the demand and solve the shortage. We went line down last week due to shortage of a chip for our component. In reality, the shortage is somewhat self-inflicted, like toilet paper a year ago, but for whatever combination of real demand + hoarding, we can't get chips.

throwawaygh 5y ago
A negative feedback loop in semiconductor supply seems like a situation where a government should just step in manage the market a bit.
- dimitrios1 5y ago
  The solution to a market inefficiency isn't to involve a more inefficient entity.
  - ramesh31 5y ago
    Ah yes, the Herbert Hoover approach.
    - MagicWishMonkey 5y ago
      I wonder how many of these people rant about how bad the government is while using GPS to navigate their way to work on government funded roadways.
      - evilduck 5y ago
        On the DARPA derived internet, no less.
        nradov 5y ago

throwaway894345 5y ago

What are these chips and what is preventing us from scaling up capacity? I’m not challenging that it’s difficult, but the reporting seems shoddy. Maybe I’m the only one who wants to understand this stuff, but these kinds of questions always seem obvious to me (same with COVID vaccine manufacturing).

acdha 5y ago
Here’s a good rundown: it ultimately all comes back to chip fabs being huge operations with massive upfront costs which makes them sensitive to both the pandemic’s direct effects and secondary problems like the way the auto manufacturers slashed orders in 2020, forcing the chip manufacturers to sign other contracts to avoid idling that much capacity[1], and unrelated problems happening at the same time like cryptocurrency pulling capacity away from useful applications. https://www.eetimes.com/the-chips-are-down-with-no-relief-in-sight/ https://www.eetimes.com/the-chips-are-down-with-no-relief-in... 1. I’m not sure how much of this has been independently verified but this commenter blames the auto manufacturers heavily: https://news.ycombinator.com/item?id=26931498 https://news.ycombinator.com/item?id=26931498
- throwaway894345 5y ago
  That's a really good HN comment, thanks for sharing!

waterside81 5y ago

Can someone explain to me why this wasn't the case before covid? Are the companies who are ahead of the automakers "in line" ordering more than before covid?

Saturdays 5y ago
Simplest answer: Demand has gone up overall for technology like tvs, computers, game consoles, etc... Meanwhile, during covid the ability to scale (production and supply chain) to meet that demand has been difficult.
bluGill 5y ago
Cars are not a large market compared to cell phones and other users of ships. Cars are louder than the rest, but not bigger. They typical car lasts 10-15 years. Cell phones about 2. More people have a cell phone than a car. Sure the car has more chips, but not by enough to make them bigger than phones. (Phones and cars mostly don't use the same process)

neals 5y ago

Come on, we all know this problem and we all know the solution. It's probably red-circuits that we are talking about here. We've all been there: you have your yellow belts full of green-circuits, but the red ones are just so much more complex. You need to set up the entire oil production chain for that, which is tedious and you probably rushed it just 'get a few red circuits so I can get my electric furnace'... I say, take a step back, take some time and really automate plastic-bar production (yes, even the oil wells and refineries, and don't just put rocks in a container, belt them over there like a grown-up) Only after producting enough for a full red belt, should you continue expanding into other branches, like robots and faster belts. Don't they teach this stuff anymore?

spsesk117 5y ago
I love playing Factorio, but it's moments like above when it starts to stop feeling like a game and it starts to feel like refactoring code at work.
- blunte 5y ago
  Factorio is a nice and simplistic (and fun, for a while) way to demonstrated many aspects of software and product development. You go through basic product planning and design, first quick MVP, then some feedback loops where you recognize some needed design changes, etc. Then once you have it figured out, you want more. So you start scaling up. That scaling often necessitates refactoring, because it necessitates space and time management (no sense having a bottleneck in your system which limits your growth potential). Then you have the aliens which represent unexpected problems and failures. A while back someone posted about playing Factorio with job candidates as a way to see how they thing and solve problems. This is probably much better than most tech interviews. If you can be decent at Factorio, you can probably be pretty decent as a software developer.
TeMPOraL 5y ago
I'd laugh but then I saw this comment: https://news.ycombinator.com/item?id=28233436 https://news.ycombinator.com/item?id=28233436. Yup, Factorio is a nice way to learn about supply chains. Unfortunately, like almost all videogames, it assumes the whole system is run by a benevolent dictator (i.e. the player). In real life, most of the complexity and most of the waste comes from the system being built incrementally and operated by great many parties in a mix of cooperative and competitive relationships.

2OEH8eoCRo0 5y ago

What are the barriers here? As sophisticated as automobiles have become I don't see them needing bleeding edge 5nm fabs. My bigger question is: Why is there not a thriving "small business" chip fab industry?

snarf21 5y ago
My guess it that it is like a refinery, building the factory takes too long with a large capital outlay. For instance, it may take a year or two to build and cost (let's guess) $500M. Now in that time, let's say all the existing players ramp back up (or expand!!) and there is no shortage. You now are producing chips that are cheaper elsewhere and it is hard to recoup your investment. Also, you may be limited on where you can find people with expertise in this area.
bob33212 5y ago
In theory you could wire up an old pentium or 386 and program it to do the same thing some of these chips do but you have the same problem there. No on has a 5M supply of 386s just sitting around in good condition.
pjc50 5y ago
The minimum cost of entry is in the hundreds of millions to billions, it's not especially environmentally friendly, and you're competing against what would normally be fully-paid-off old production lines from the incumbents. There's a thriving small business design industry, but the manufacturing is a classical capital-intensive manufacturing business that also requires very specialist staff.

btbuildem 5y ago

I don't see this raised anywhere -- but what's so bad about producing fewer cars (the poor neglected shareholders and exec bonuses aside)? It's almost as if we would need to lean into this, reducing growth and producing fewer cars would be in line with efforts to mitigate the drivers of climate change. What if car manufacturers pivoted their KPIs and focused on making long-lasting, serviceable vehicles? Toyota is already the worldwide leader in these, as evidenced anywhere that's not smoothly paved suburbia-land.

eldaisfish 5y ago
Consider for a moment the people outside the developed world whose lives are greatly improved by cars. Scarcity drives prices up putting things out of their reach.
- 5e92cb50239222b 5y ago
  Have you even been to the developing world? We mostly drive old junkers that were discarded by Americans and Europeans after 15 years of use for breaking and polluting too much.
  - eldaisfish 5y ago
    this comment is a textbook example of how out of touch many here are. The developing world also makes cars. India - to name just one - is among the largest exporters of vehicles to several countries in Africa. No, people in the developing world do not drive hand-me-downs from the West.
    - fomine3 5y ago
      Both.
  - jcranberry 5y ago
    Need to keep that supply of junkers coming though!
- 5y ago

melfrey 5y ago

Will the car price starts to increase due to the chip shortage?

avelis 5y ago
Price increases already happened in the US for used cars. This will only continue the premium for used cars.
- stevewodil 5y ago
  Why is it not affecting new car pricing as dramatically? And why would that continue? Used car prices cannot surpass new car prices surely, so at some point new car prices will be raised because of the low supply and high demand, or new car orders won't be fulfilled for months later
  - bluGill 5y ago
    Used cars have surpassed new car prices in the past. Generally because new cars can't actually be bought at any price. A car today is sometimes worth more than a better car that doesn't exit.

Neil44 5y ago

I was speaking to a car dealer client the other week and heard some funny stories, like selling off cheap batches of vans with various non-essential electronics missing - just holes in the dash - and the promise that units would be available to fit later.

Scoundreller 5y ago

Many countries have a funny concept of strategic industries. In mine, dairy is a strategic industry that is coddled by government so that we can have a local source. But every country thinks that so there’s foes and allies that can supply us UHT or powder milk on a moment’s notice. And if our milk supply disappeared tomorrow, everyone over 1y could substitute with 10000000 different things for nutrition. Cars are another. Every country props up its auto industry, so why worry about a domestic supply? Meanwhile, there are critical components, pharma ingredients or other inputs built in 1 factory in a country we could likely end up in a big dispute with. Just goes to show that industry protection has nothing to do with risk/dependence on that product, and everything to do with picking and choosing which industries are important voting bases.

deleted 5y ago
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baybal2 5y ago
How the essential farma became nearly 100% reliant on foreign manufacturers is I think the most exemplary case of this nonsense. I read some year ago that there were laws in US which at least somehow discouraged the pharma from shipping manufacturing abroad, and it was the big pharma itself which lobbied these laws out. This is how China held US at gunpoint in the early days of COVID — "Stay put, or we pull 90%+ of your antibiotics supply"
- NotSammyHagar 5y ago
  I don't think china did that, any supporting news articles?
cutemonster 5y ago
> picking and choosing which industries are important voting bases. And on a bribes and corruption basis, to some extent, too? For example, I never thought about what are the strategic industries, when voting.
- 5y ago

varispeed 5y ago

There is a lot of scalping going on. I keep an eye on certain parts and as soon the stock comes up, it disappears within minutes. Then you can buy all those chips on AliBaba at 10 times the price. I think government should look into that as this is a huge problem for many businesses.

JKCalhoun 5y ago

So the new car thief will yank the computer(s) out of newer cars, sell them on the black market.

1-6 5y ago
My Toyota Prius is still sitting around without a catalytic converter on it. Procrastinating because I'm not being called back to the office yet.
bluGill 5y ago
No, because the computer is tied to the VIN, and you need a dealer to change that. Dealers will check to see if the VIN is stolen. Not all cars have that, manufactures have been using the above to stop theft for years.

candyman 5y ago

I wonder if there will be a long term shift in supply chains toward less "asset light" and more vertically integrated operations with sourcing moved closer to end market demand.

baxuz 5y ago

Ordered a Yaris Hybrid in June. Still no info on the order, except that the factory in France is on shutdown in August till the 23rd. Except: > Until now, Toyota had managed to avoid doing the same, with the exception of extending summer shutdowns by a week in France Which means it reopens in September... > Toyota is to slash worldwide vehicle production by 40% in September because of the global microchip shortage. Oh boy. Hopefully my order is in one of the first in the queue.

gccs 5y ago
Yaris isn't a Toyota. Its made by Mazda and they slap a Toyota logo on it. I wouldn't worry.
- baxuz 5y ago
  Not true for the European market: https://en.wikipedia.org/wiki/Toyota_Yaris_(XP210) https://en.wikipedia.org/wiki/Toyota_Yaris_(XP210)

mensetmanusman 5y ago

This is a huge deal, imagine that the production of one Apple AirTag means one less vehicle produced.

aembleton 5y ago
I'm sure a car has many more chips than an AirTag.

whiteboardr 5y ago

@kliment had a pretty good summary on this: https://news.ycombinator.com/item?id=26931498 https://news.ycombinator.com/item?id=26931498

aazaa 5y ago

> Taiwan Semiconductor Manufacturing plans to build new factories in the US and Japan I can't help but think that this massive shortage is setting up and equal an opposite reaction 2-3 years down the road: a glut as all this new capacity comes online. Especially given that because companies are now scrambling for chips, they're likely to over-order to ensure future supply.

m23khan 5y ago

Here in Toronto, Canada: One fallout of this is the rise in prices of old / used cars. To give you an idea, a 2018 Toyota/Honda minivan is Canadian dollars 10,000 higher than pre-covid times. It's ok for folks who have a newish car and want to buy another used car as their current car prices would have increased. But if you are like me, who drives a 15+ year rusty old car and is desperate to buy a 3-4 year old car, then good luck. Not only are the prices much higher (and your car's value is junk) but at the same time, inventory (even for used cars) is super low. I would have loved to live in a City / Country where car is not necessary but this city I live is built for cars... Purely as a joke: Maybe car manufacturers should revive the production lines to produce 1980s Toyota Cressidas, Camrys and Chevy Impalas.

mrfusion 5y ago

Has anyone considered redesigning the car to not need these particular chips? Do a massive push to target a different chip or even a FPGA. There must be something out there to run the software.

fomine3 5y ago

It seems that primary problem isn't chip shortage but other parts shortage made in Asia. https://asia.nikkei.com/Business/Automobiles/Toyota-to-cut-global-output-40-in-September-on-ASEAN-outbreaks https://asia.nikkei.com/Business/Automobiles/Toyota-to-cut-g...

deleted 5y ago

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tharne 5y ago

Crazy idea: make cars that don't rely on microchips and software. As a bonus, they'll probably last longer, be cheaper to repair, and won't distract drivers as much. There is software in too many consumer goods, usually with very little benefit to the end user, beyond marketing and being able to justify a higher price tag (oooh, it's a "smart" toaster). I don't need the Toyota equivalent of an iPad on my dashboard.

ticviking 5y ago
I know for a fact there's a market for this in both cars and televisions.
Beached 5y ago
unfortunately the volume of regulations regarding automotive technology doesn't allow for this. if Toyota or any other manufacturer wants to make a chipless car, first the law makers have to allow them to. I'm not aware of how you can do emissions monitoring through canbus (required) without chips. not sure how you can do rearview monitors (required) without chips. there are countless other things that are regulated that require chips. and competitor pressure for assisted driving technology like lane assist, blonde side monitoring, navigation/gps/etc all require chips. the dream of going back to a chipless is a nice one imo, but they are just not legal.
- tharne 5y ago
  There are some hurdles for sure, but for most of their history cars did not have chips in them, so we must have found a way.
  - agentdrtran 5y ago
    Cars are several orders of magnitude safer now than in the past and driver assistance is part of that.
    - tharne 5y ago
      Most of the biggest safety features that had the most impact were developed in the 1960's and 70's after people like Ralph Nader really pushed the auto industry to do better. There was a second big bump in safety in the late 80's and earlier 90's with the addition of airbags. I'm pretty sure you could design a car with few or no computers in it that would be on par with most cars on the road today in terms of safety. Sure, you'd lose some safety features like backup cams, but nothing that huge compared with earlier safety improvements.

chemmail 5y ago

Its really bad, we have 1 main dealer around us with uusally over 1000 in stock in normal times. They only have 4 cars in stock, all Avalons.