When the pandemic started, car manufacturers predicted demand for cars will decline drastically and canceled orders from suppliers. Then it turned out demand ac

When the pandemic started, car manufacturers predicted demand for cars will decline drastically and canceled orders from suppliers. Then it turned out demand actually rises because people still have to go to work but don’t want to take public transport, and old cars still need to be replaced with new cars. So they asked their suppliers not just for the original amount of parts but ordered even more parts. But all the chip production slots were already reassigned to customers from other industries. So then the car manufacturers told their suppliers to pay multiples to get the chips (to outbid others) or outright buy the chip production slots from other companies, otherwise they’d have to halt car production lines. The just-in-time philosophy in the car industry made this worse because they have almost no parts in stock. Due to the huge cancelations, reassignments and huge orders, supply chains of different industries fight over available chip production capacity. Bringing chip factories online takes multiple years and chip manufacturers are hesitant to invest into more capacity because when it’s available it might not be needed anymore and they will sit on billion dollar ruins. So this chip shortage will take quite a while until all supply chains run smoothly again.