14 ms·

Chip shortages due to lack of investment in right fabs

207 points by laktak 5y ago

JavaBatman 5y ago
> "Automotive semiconductors will continue to be a limiting constraint on the automotive market through the first half of 2022, but barring any unforeseen shutdowns or semiconductor manufacturing issues, supply should gradually improve through the second half of the year," she said. Probably a good idea to wait til the end of the year to buy a new car then. The market is simply and truly insane right now. The best price you can get for a used car is now the MSRP of the new version. And the best price you can get for a new car is $5-6k over MSRP. It's just insane. If you're spending $40k on a RAV4 or CRV, you might as well just spend that same $40k and get a Tesla.
- taubek 5y ago
  What has happened with all those cars that weren't sold during 2020 and 2021 due to pandemic? I remember seeing photos of huge parking lots filled with new cars? Did they all get sold in the end? Here is just one atricle on this topic https://time.com/5830664/cars-cargo-ships/ https://time.com/5830664/cars-cargo-ships/ [Edit]: fixed typo
  - function_seven 5y ago
    My recollection is that only happened during the first month or two of the pandemic. When everyone thought we were surely plunging into a recession or depression. The stock market dropped quite a bit during that same period. After the initial few months, it all reversed. I don't recall ever seeing any stories like the one you linked past 2020.
  - senectus1 5y ago
    I know that here in Australia its damned hard to get a car. 5 months ago I placed an order, would have been happy with a 2021 model but they don't have any... so I'm stuck waiting till October THIS YEAR... over a years wait. for one of the most popular cars on the Australian market.
    - rosege 5y ago
      Can you say what you are getting? I got a RAV4 which I ordered in Nov 2020 and collected in late Mar 2021. Not long after the wait list blew out to 8 months.
    - visarga 5y ago
      Looks like a similar situation to car sales in Eastern Europe in the 1980s. You had to wait for years to be able to buy a new one, even if it was the popular model of the day. Some people made money by registering to the queue and selling their spot.
      - taubek 5y ago
        Trabant, Wartburg, Moskvitch, Zastava, Lada, Skoda,... I guess all of them had a long waiting lists. I don't know if it was a joke but I've heard that people would leave their spots in last will and testimony to their kids.
        vasac 5y ago
        Not sure about others but in the '80s nobody waited for Zastava. All over the country foreign cars were "assembled" (Opel, Renault, Citroen, WV Golf...) so while Zastava priduced cheaper cars they weren't the only game in the town and they kinda produced enough to satisfy demand (actually I believe that they would prefered that demand for their cars was even larger). Not sure about 60's and 70's though.
    - BLKNSLVR 5y ago
      It might be fairly easy to get a second-hand hail-damaged-but-mechanically-fine bargain. The flipside of that is the potential insurance hell invited by that situation.
  - vkou 5y ago
    > What has happened with all those cars that weren't sold during 2020 and 2021 due to pandemic? People collectively realized that they don't want to be taking public transit in the middle of a pandemic.
  - jcranberry 5y ago
    If I remember correctly rental businesses were offloading cars at a crazy rate to survive the pandemic, but then once people were travelling again they needed to buy them back up at a crazy rate.
- deleted 5y ago
  [deleted]
- Qub3d 5y ago
  > The market is simply and truly insane right now. It's ridiculous. I was very fortunate to get a CPO near the end of 2019. Whenever I take it in for service, I get both a text and an in-person request to have my car's value appraised. They're offering 2-5K over carfax value, no questions asked -- which is currently more than I paid for the car 3 years ago! Frankly, if I lived in a more walkable/bikable area, I might do it.
- katbyte 5y ago
  I just got a new car at msrp in Canada so it is possible, a Toyota. However there was no bargaining and was more “call everyone and find the dealer with one coming in soon and grab it”
  - RansomStark 5y ago
    It's interesting that you managed to get a Toyota. Toyota until very late on wasn't affected by the chip shortage [0]. Toyota practically invented lean manufacturing and are the only business that seems to do it right, I guess it's because they didn't need to bring in a bunch of lean consultants, that either miss the nuance or can't effectively communicate that nuance. Lean manufacturing and JIT are like DRY in software development. Those that are just learning think don't repeat yourself is a rule, "DRY means DRY" whereas experts have learnt that "DRY means DRY except in all of those situations where it is better to repeat yourself". Toyota knew prior to the pandemic that their chip supply chain was vulnerable, being filled with single points of failure, and they stocked accordingly. But those stocks were only going to last so long, and, thanks in part to the panic buying of the other car manufacturers, Toyota is also facing a shortage. The above is a really long winded way to say, I'd be interested to know if MSRP Toyota's will remain available in the near term, mostly because I'm in the market for a new car, I'll put the local Toyota dealers at the top of the list. [0] https://fortune.com/2021/08/02/toyota-cars-chip-shortage-semiconductors/ https://fortune.com/2021/08/02/toyota-cars-chip-shortage-sem... [1] https://www.nytimes.com/2021/09/10/business/toyota-production-chip-shortage.html https://www.nytimes.com/2021/09/10/business/toyota-productio...
    - katbyte 5y ago
      I know they went up a little over the last couple years, but they (at least tacomas) hold their price really well, and they are generally solid and will last. Driven Toyotas all my life and 100% recommend them. My only advice is to just call all your local dealers and find one with a vehicle already on its way to claim
  - newfie_bullet 5y ago
    Also in Canada. We ordered a new Rav4 back in early October and just got word that it's 'scheduled' to arrive in the middle of April. When we first placed the order it was thought that we'd have it by Christmas/New Years. Definitely major delays and shortages but the MSRP doesn't seem to have been affected (but time will tell when we actually go to sign the paperwork)
- redisman 5y ago
  Model Y which is still smaller is $60k right now
- martythemaniak 5y ago
  Tesla's been growing like crazy, but the demand is crazier still. I ordered a Model Y in September. It's currently set to arrive in March, in the mean time the price of a new one has gone up almost 10% since I ordered.
- hansthehorse 5y ago
  I was at a honda dealer last friday and they didn't have a single new car on the lot. I person I knew there told me they sold every car in their allotment before it shipped and at a hefty markup. They haven't had an unsold new car hit the lot in months. There were selling used cars for more than they sold for when new. I was on the edge of buying a new Camry in the summer of 2019 and decided to wait one more year. That didn't work out very well.
11thEarlOfMar 5y ago
There are a several factors that conspire to make the shortage worse: - These legacy chips fabbed at legacy nodes are made with legacy equipment. In many cases, that equipment is a) fully depreciated and b) no longer available. Yes, most chips can be made with new equipment, but the profits with a new tool set are not going to justify the expense. You wouldn't buy a new $8 million CVD tool to make a 180 nm microcontroller that might sell for $2. - Many chips are fabbed at 1 place only. The chip company owns the IP and has a defacto monopoly on the features of that chip, or even class of chips. If that fab is shut down, no more are being produced and customers have to buy up what brokers can scrounge. The more warehouses get picked out, the higher the prices go. In one extreme example, a chip made at Infineon's Kulim fab in Malaysia, that sold for $0.47, was purchased for $100 @ by (ironically) a chip equipment company. - Hoarding has made the issue far worse. Companies are instructing buyers to order more than 1 year ahead, and seeing lead times exceed 1 year as well. The more these lead times extend, the farther into the future buyers extend their horizon and lead times just keep rolling. - It may actually be the case that organic demand growth is not the main problem. More likely, it was the successful (and therefore vulnerable) just-in-time supply chain that collapsed as soon as COVID interrupted the choreographed flow of material.
- erosenbe0 5y ago
  Paging a semiconductor engineer. Isn't it not necessarily possible to do die shrinks and get drop-in compatibility, particularly for Q rated automotive chips? Moreover, some of these chips eat 5 volts by design and I don't think 28nm or 14nm or 7nm will provide enough resistance for that. Plus, some have pmic or internal power mosfets that are specific to various processes.
  - Kliment 5y ago
    It's almost never possible to do a function-compatible die shrink for anything that needs to work over a large voltage and/or temperature range. Many automotive chips operate at 80V or more, 5V and 12V parts are ubiquitous, and indeed lots need bulk area to be able to switch large currents. Making them on small processes is not only an enormous design effort where it's possible at all, it also doesn't make sense because there's still way more capacity on larger processes than on smaller ones, and the only way small processes win is by packing so many dies on a wafer that they can get away with their terrible per-wafer cost and awfully bad defect rate.
zackees 5y ago
olliej 5y ago
Is this the ongoing saga of car companies refusing to ever actually invest in/update any of their electronic designs? [edit: the answer is yes]
- lnsru 5y ago
  The answer is no. Car companies are doing no electronic designs. They are done by dozen layers of subcontractors like Bosch, Valeo or Continental or myriad others. Car companies depend heavily on them.
  - JoachimS 5y ago
    There is probably at least 1000 electrical engineers in the Gothenburg, Sweden area alone that would disagree with you. Companies like VCC, Geely, CEVT, Volvo, Polestar and first tier electronics, digital, system and software consultants are sweeping the job market clean to be able to handle all in-house electronic design work. The pendulum from just sourcing from companies like Bosch, Continental turned hard about five years ago. Now electronic and SW design is critical diversification, and part of what creates core value in automotive.
    - lnsru 5y ago
      Sounds logical to me. I never understood this subcontracting thing with many layers. At the end somebody must do the job and has only fraction of original order revenue. On the other hand if car companies would buy the few remaining components for electrical vehicles from subcontractors… well, all the cars and brands would be exactly the same with minor adjustments.
      - JoachimS 5y ago
        Going back 10-ish years or so, basically everybody was writing requirement specifications to be included in RFQs. Primarily sent to the multinational suppliers like Continental. Sourcing and integration was the technical focus. And project management etc. Now it is 100% in the other direction. There are engineers everywhere. Basically, if there is a space (under stairs even), there is a desk with an engineer. Doing serious design work. The new automotive cybersecurity requirements also contribute to renewed need for control and detailed knowledge of subsystems.
MrBuddyCasino 5y ago
The demand for leading-edge nodes comes from CPUs and GPUs. Once they move to the newest node, won’t previous capacity be freed to manufacture chips that don’t strictly need the better process but simply need manufacturing capacity? The machines are surely depreciated by then. Or is the cost of porting the design and making the masks prohibitive?
- dragonelite 5y ago
  It's usually not technical or capacity usually it's the whole ecosystem surrounding 14, 7, 5nm and lower ecosystems that makes it not really profitable. The initial costs grows exponentially. SOC, CPU and GPU might be one of the few consumer goods the economics work.
  - MrBuddyCasino 5y ago
    > The initial costs grows exponentially. I understand that, but is this unavoidable? After all, the old designs don't need the precision of the advanced node, couldn't they (automatically?) translate their existing coarse designs and maybe produce masks more cheaply because a 40nm design doesn't need to be as perfect as a 7nm one? I'm sure this is nonsense otherwise they would have done that already, I'm just interested in why.
    - dragonelite 5y ago
      Im not a expert or even knowledgable but i was familiar with this image: https://www.extremetech.com/wp-content/uploads/2018/06/nano3.png https://www.extremetech.com/wp-content/uploads/2018/06/nano3... It's probably that the software and extras investment is not worth it right now.
- blihp 5y ago
  The more recent previous nodes are too new for companies like the autos as they want 20+ year old process nodes like 90nm+. So having excess 14nm capacity, for example, doesn't give them what they want since they can't just retrofit the fab for 130nm. However, not having made arrangements with fabs to keep the older nodes around contractually, they (customers like the autos) may not have an option other than paying to redesign their chips for newer process nodes in at least some cases at this point.
bsder 5y ago
I'll slag Always Late(tm) Inventory as much as anybody. However, let's also point out that "fabless semiconductor companies" are a significant part of the problem, too. "Owning a fab" is a capital intensive operation. Shedding the fab and becoming a "pure fabless" design house increases your profitability dramatically. Until you can't ship any chips because all the fab owners are making their own chips and you have no leverage to get them to make yours.
- jabl 5y ago
  I disagree with that. Due to the economics of chip manufacturing, massive consolidation in the industry was inevitable. Fabless has enabled countless companies to operate despite only a few leading edge fabs worldwide being economically justifiable. It's not (only) about profitability, but without fabless worldwide chip innovation would come out from the geriatric bureaucracies of a few megacorporations. Even if you don't look at the leading edge, where the economics of a fab aren't as forbidding, fabless has enabled entrepreneurs with a clever idea to get started with much less capital than would have been required in the old vertically integrated manufacturer world. And it's not like the current chip shortage is somehow manufactured by the fabs in order to shaft their customers. If the fabs were able to, of course they'd produce all the chips their customers would pay for. Particularly so for the pure-play foundries like TSMC, which explicitly don't make their own chips.
  - gorjusborg 5y ago
    which part of what they said do you disagree with exactly? Both of you are correct, in my opinion. I worked at a fabless as a logic designer. We used TSMC, as we didn't have capital enough for a fab. We wouldn't have been making chips if fabs for hire weren't available. On the other hand, consolidation on foundry as a service makes the system more brittle. I don't see how there's much argument to be had on that point.
    - jabl 5y ago
      > which part of what they said do you disagree with exactly? I'm disagreeing with: > > "fabless semiconductor companies" are a significant part of the problem, too. and > > Until you can't ship any chips because all the fab owners are making their own chips and you have no leverage to get them to make yours. because I don't believe the problem underlying the current chip shortage is due to the fabs voluntarily reducing their output in order to screw their customers, or that the fabs would give preferential treatment to in-house customers (which, as I mentioned, in the case of pure-play foundries like TSMC, certainly isn't the case). > On the other hand, consolidation on foundry as a service makes the system more brittle. That's true, but OTOH, the alternative to the current fabless + market foundry model isn't a world with tens or even hundreds of vertically integrated manufactures with their own leading edge fabs (that is, some kind of rollback to the 1980'ies), but rather a world where all leading edge chip development would be concentrated in a few megacorporations, with IMHO drastic effects on the rate of innovation across the entire industry, and susceptible to similar shocks like we see today if one of them would hit serious problems. While I don't see a way out on the dependence on very few suppliers of leading edge fab capacity and all the problems that entails, I guess for slightly larger process nodes (say, in the 20-40nm range) where the capital costs aren't as big, there could be plenty of space for a healthy competitive landscape. Perhaps partially funded by governments (or things like the EU) that want their own chip manufacturing capability for "digital sovereignty" and national security/arms manufacturing reasons.
Kliment 5y ago
This article is sadly incorrect (not poor journalism necessarily, but based on statements from vendors who are defending their own interests). Big name manufacturers are refusing to invest in fab expansion because they believe (correctly) that total demand for semiconductors has barely moved. What has changed is the confidence in the market (and this was destroyed by a major fuckup by car manufacturers deciding to screw over their suppliers at the expense of literally the entire industry). Nobody is actually producing more electronics (many manufacturers are producing less because they need to ration supply and can't allocate as much to specific products and risk not being able to produce others). Everyone is buying more, because they can't be confident they'll be able to get stock when they need it. Chip manufacturers know that anything they put on the market now will be gone immediately, at any price. They also know that one day everyone will have enough stock stockpiled and will stop buying for a while. If they increase production now, they have added expenses and a limited time to recoup them before there's oversupply on the market. If they keep production at current levels, they get more revenue as the prices are higher, and lower costs so they can weather the coming overproduction phase better. It makes zero economic sense to expand production. Some chip manufacturers are asking customers up front for demand visibility several years out to be able to plan better. Others are being absolute dicks and doing the same thing in an openly-hostile way by holding customers hostage (yes we know you ordered two reels of this part and we promised delivery by date X. We won't deliver on date X unless you also order and pay for another ten reels which we won't commit to a delivery date on, and also your order for the two reels is non-cancellable and non-refundable). I can't name this company because it would put the customer at risk, but they're a household name in the industry. The core problem is everyone is operating in the dark and there's no visibility into future demand, supply, pricing, or availability. In this situation, large capital expenses make sense on the buyer side (to ensure future supply and widen their visibility horizon) but not on the supplier side (who then shoulder the risk of future demand cratering and being left sitting on their capex).
- libertine 5y ago
  >Chip manufacturers know that anything they put on the market now will be gone immediately, at any price. Isn't this part of the problem of having cheap money to go around? I've got anecdotal feedback last year from some friends in different industries (mainly construction), complaining that "The americans are hoarding everything...", he said this after complaining they were buying concrete in the secondary market. Like, when Apple buys full production of 3nm at TSMC[0] - isn't this in a sense anti-competitive practice? They have access to unlimited money, it's like you have a cheat in the real world. The end game is that money starts to lose it's value, like it's happening now. I hate to use this term, but maybe the WTC or some entity should start to think that the idea of "quotas" maybe ain't that bad in a globalized world that has countries printing money like crazy. They completely fuck up entire supply chains out of greed and fear. Then those "quotas" could be sold around, but at first no one should be harmed due to some crazy practices. [0]https://www.club386.com/tsmc-apple-first-3nm-policy-leads-to-amd-and-qualcomm-mutiny/ https://www.club386.com/tsmc-apple-first-3nm-policy-leads-to...
herthabsc 5y ago
Do you think there is a stock play here?
- edhelas 5y ago
  Seriously ?
- totalZero 5y ago
  I bought some INTC calls last week. They are reinvesting their substantial revenues into construction of new facilities, reflecting the view that semis demand will be elevated for some time to come. I think the semiconductor sector could see a dispersion of valuations as businesses make different predictions about how best to skate to where the puck will be. So far Intel seems to have interpreted the shortages correctly, whereas some other firms saw the shortages through rose-colored glasses.
foft 5y ago
Perhaps it is time to add some of this to the data provided when buying the parts. Number of fab companies that can make the part and if the fab equipment is active/obsolete.
Zenst 5y ago
Sadly it takes a problem to bring out the hindsight. Sure lack of investment may well have been a factor, but a larger factor would be the shift towards just-in-time manufacturing. This has in many walks of the supply chain over the pandemic, highlighted this and many other downsides of such an approach. We must also not forget the ever driven push to faster, smaller bleeding-edge process nodes and the demand. In effect, the whole pandemic proved a perfect storm for whole markets. As always, lessons will be learned, though, in the end, higher consumer prices will and is inevitable as companies apply mitigations to address the issues that played out. Sure not all issues are as easy a fix as adding more capacity, stock warehousing and those additional costs, costs that we as consumers have seen play out as reduced prices as some of the savings with just-in-time have been passed on, though mostly to share-holders I do somewhat feel. This raises another question - will company share-holders who have enjoyed and profited from the shift in increased dividends over the decades thru this business model approach, accept a small cut, or will we (as I suspect) see that carry on and the increased costs/impact passed onto the consumers.
thereddaikon 5y ago
There is an opportunity in the market for sometime to come in and make relatively low cost machinery to fab at older process nodes. If someone designed and sold photolithography equipment meant for no greater than say 90nm and it did for pennies on the dollar compared to current EUV equipment then it could be a huge deal for the semi conductor industry. There are plenty of designs that don't really need to be produced with more modern processes. That are just fine at 180nm, 130nm or 90nm. The natural attrition of old process nodes due to the hardware reaching end of life is unnecessary and I think in part why we are in this situation.
- jopsen 5y ago
  But can older processes be made much cheaper than they where when they were launched? Is it an under investment in these processes because the price was too low?
  - thereddaikon 5y ago
    Presumably if a machine can be made with X level of precision for Y cost then one with a lower level of precision could be made for a lower cost. Although it probably doesn't scale linearly. One relevant large advance I know of is in laser. What used to take very expensive chemical lasers in the 90's can now be done with inexpensive solid state lasers with much lower power draw, much higher output and greater reliability.
    - jopsen 5y ago
      Maybe, if someone is making the investment -- which the article suggest isn't happening. After all, if you build such a factory, you won't be able to target the lucrative high-end chips. And if competing factories were built when they were state-of-the-art, and the hardware paid for when they did high-end chips. The problem could be that low-end chips simply are cheaper than the amortized cost of building a factory.
tgtweak 5y ago
I've hated Intel for a nearly a decade leading up to the Pandemic (My last intel system was an i7-3960x). Since the beginning of this chip shortage supply chain nightmare however, I've become very bullish on Intel. They are one of the rare US companies that have retained the knowledge to build and operate their own competitive fabs. That is something that AMD, Nvidia and several others have left in favor of consolidation (TMSC, Samsung) and specialization - much to their benefit commercially (and at the expense of Intel). As there are renewed reality checks on the pitfalls of having a critical fundamental supply chain epicenter outside of your realm of influence (Talking from the perspective of the US/EU here), I expect companies that can build and operate fabs on US and European soil will have renewed support from federal, state and capital markets. My hope is that it is not a passing fad and that it will carry on in perpetuity. I hope that it is competitive from a cost and performance perspective. Also, in spite of that, Intel has also decided they will use TSMC's next gen process (3nm) as a backfill while they catch up and build out their own fab roadmap. That decision is exactly the watershed moment where AMD started taking off, in terms of performance and efficiency on their own CPU and GPUs (the spinning out of Global Foundry and shift to TSMC's manufacturing), where they started taking leads in markets that they hadn't seen for 15 years. It was the right decision at the time, and it remains so - from a purely financial/technological perspective. The fact Intel's CPUs (raptor lake) and upcoming GPUs (Arc), made on a 3-year old lithography process, can compete with AMD's latest on TSMC's cutting edge is pretty respectable. When/If Intel finally gets access to a process that leapfrogs them ahead nearly 4 years... that kind of generational jump will hopefully be quite remarkable. So, as much as I hated Intel, they seem to be the best bet for truly competitive fabs outside of the 750km radius circle they all currently reside in beside the East China Sea. Edit: Yes I'm aware that TSMC has been talking about building fabs in the US/EU for a while now but really, it's been all talk for the last 3 years and feels like a pony show vs a genuine desire to build out the region and be competitive. The matter of where a company's chain of command and head office sits is nontrivial from a de-risking perspective.
- onepointsixC 5y ago
  I most certainly shared your dislike of intel over the stagnation of CPU's in the past 6 years. But I've come to appreciate more that Intel indeed is the last western player in leading node fabs. Pat Gelsinger has inspired much hope for me in Intel making a come back and focusing on the right things.
tengbretson 5y ago
We're far enough past the initial shockwaves from car manufacturers under-ordering at the beginning of the pandemic. Is it safe to say now that this shortage would have occurred regardless of covid?
Animats 5y ago
There was an article on HN a few months back about a new printing process for ICs in the, what, 100nm range. The idea was to have a plant suitable for making short runs of undemanding parts. If that's possible, it's probably a useful niche someone will occupy. Automotive is headed in the wrong direction. Tesla's dashboard now consumes several hundred watts and cuts vehicle range around 3%.[1] Come on. You do not need Unreal Engine in the dashboard. [1] https://www.neowin.net/news/tesla-wants-model-3-owners-to-give-up-some-range-for-a-better-infotainment-system/ https://www.neowin.net/news/tesla-wants-model-3-owners-to-gi...

207 points by laktak 5y ago

> "Automotive semiconductors will continue to be a limiting constraint on the automotive market through the first half of 2022, but barring any unforeseen shutdowns or semiconductor manufacturing issues, supply should gradually improve through the second half of the year," she said. Probably a good idea to wait til the end of the year to buy a new car then. The market is simply and truly insane right now. The best price you can get for a used car is now the MSRP of the new version. And the best price you can get for a new car is $5-6k over MSRP. It's just insane. If you're spending $40k on a RAV4 or CRV, you might as well just spend that same $40k and get a Tesla.

taubek 5y ago
What has happened with all those cars that weren't sold during 2020 and 2021 due to pandemic? I remember seeing photos of huge parking lots filled with new cars? Did they all get sold in the end? Here is just one atricle on this topic https://time.com/5830664/cars-cargo-ships/ https://time.com/5830664/cars-cargo-ships/ [Edit]: fixed typo
- function_seven 5y ago
  My recollection is that only happened during the first month or two of the pandemic. When everyone thought we were surely plunging into a recession or depression. The stock market dropped quite a bit during that same period. After the initial few months, it all reversed. I don't recall ever seeing any stories like the one you linked past 2020.
- senectus1 5y ago
  I know that here in Australia its damned hard to get a car. 5 months ago I placed an order, would have been happy with a 2021 model but they don't have any... so I'm stuck waiting till October THIS YEAR... over a years wait. for one of the most popular cars on the Australian market.
  - rosege 5y ago
    Can you say what you are getting? I got a RAV4 which I ordered in Nov 2020 and collected in late Mar 2021. Not long after the wait list blew out to 8 months.
  - visarga 5y ago
    Looks like a similar situation to car sales in Eastern Europe in the 1980s. You had to wait for years to be able to buy a new one, even if it was the popular model of the day. Some people made money by registering to the queue and selling their spot.
    - taubek 5y ago
      Trabant, Wartburg, Moskvitch, Zastava, Lada, Skoda,... I guess all of them had a long waiting lists. I don't know if it was a joke but I've heard that people would leave their spots in last will and testimony to their kids.
      - vasac 5y ago
        Not sure about others but in the '80s nobody waited for Zastava. All over the country foreign cars were "assembled" (Opel, Renault, Citroen, WV Golf...) so while Zastava priduced cheaper cars they weren't the only game in the town and they kinda produced enough to satisfy demand (actually I believe that they would prefered that demand for their cars was even larger). Not sure about 60's and 70's though.
  - BLKNSLVR 5y ago
    It might be fairly easy to get a second-hand hail-damaged-but-mechanically-fine bargain. The flipside of that is the potential insurance hell invited by that situation.
- vkou 5y ago
  > What has happened with all those cars that weren't sold during 2020 and 2021 due to pandemic? People collectively realized that they don't want to be taking public transit in the middle of a pandemic.
- jcranberry 5y ago
  If I remember correctly rental businesses were offloading cars at a crazy rate to survive the pandemic, but then once people were travelling again they needed to buy them back up at a crazy rate.
deleted 5y ago
[deleted]
Qub3d 5y ago
> The market is simply and truly insane right now. It's ridiculous. I was very fortunate to get a CPO near the end of 2019. Whenever I take it in for service, I get both a text and an in-person request to have my car's value appraised. They're offering 2-5K over carfax value, no questions asked -- which is currently more than I paid for the car 3 years ago! Frankly, if I lived in a more walkable/bikable area, I might do it.
katbyte 5y ago
I just got a new car at msrp in Canada so it is possible, a Toyota. However there was no bargaining and was more “call everyone and find the dealer with one coming in soon and grab it”
- RansomStark 5y ago
  It's interesting that you managed to get a Toyota. Toyota until very late on wasn't affected by the chip shortage [0]. Toyota practically invented lean manufacturing and are the only business that seems to do it right, I guess it's because they didn't need to bring in a bunch of lean consultants, that either miss the nuance or can't effectively communicate that nuance. Lean manufacturing and JIT are like DRY in software development. Those that are just learning think don't repeat yourself is a rule, "DRY means DRY" whereas experts have learnt that "DRY means DRY except in all of those situations where it is better to repeat yourself". Toyota knew prior to the pandemic that their chip supply chain was vulnerable, being filled with single points of failure, and they stocked accordingly. But those stocks were only going to last so long, and, thanks in part to the panic buying of the other car manufacturers, Toyota is also facing a shortage. The above is a really long winded way to say, I'd be interested to know if MSRP Toyota's will remain available in the near term, mostly because I'm in the market for a new car, I'll put the local Toyota dealers at the top of the list. [0] https://fortune.com/2021/08/02/toyota-cars-chip-shortage-semiconductors/ https://fortune.com/2021/08/02/toyota-cars-chip-shortage-sem... [1] https://www.nytimes.com/2021/09/10/business/toyota-production-chip-shortage.html https://www.nytimes.com/2021/09/10/business/toyota-productio...
  - katbyte 5y ago
    I know they went up a little over the last couple years, but they (at least tacomas) hold their price really well, and they are generally solid and will last. Driven Toyotas all my life and 100% recommend them. My only advice is to just call all your local dealers and find one with a vehicle already on its way to claim
- newfie_bullet 5y ago
  Also in Canada. We ordered a new Rav4 back in early October and just got word that it's 'scheduled' to arrive in the middle of April. When we first placed the order it was thought that we'd have it by Christmas/New Years. Definitely major delays and shortages but the MSRP doesn't seem to have been affected (but time will tell when we actually go to sign the paperwork)
redisman 5y ago
Model Y which is still smaller is $60k right now
martythemaniak 5y ago
Tesla's been growing like crazy, but the demand is crazier still. I ordered a Model Y in September. It's currently set to arrive in March, in the mean time the price of a new one has gone up almost 10% since I ordered.
hansthehorse 5y ago
I was at a honda dealer last friday and they didn't have a single new car on the lot. I person I knew there told me they sold every car in their allotment before it shipped and at a hefty markup. They haven't had an unsold new car hit the lot in months. There were selling used cars for more than they sold for when new. I was on the edge of buying a new Camry in the summer of 2019 and decided to wait one more year. That didn't work out very well.

11thEarlOfMar 5y ago

There are a several factors that conspire to make the shortage worse: - These legacy chips fabbed at legacy nodes are made with legacy equipment. In many cases, that equipment is a) fully depreciated and b) no longer available. Yes, most chips can be made with new equipment, but the profits with a new tool set are not going to justify the expense. You wouldn't buy a new $8 million CVD tool to make a 180 nm microcontroller that might sell for $2. - Many chips are fabbed at 1 place only. The chip company owns the IP and has a defacto monopoly on the features of that chip, or even class of chips. If that fab is shut down, no more are being produced and customers have to buy up what brokers can scrounge. The more warehouses get picked out, the higher the prices go. In one extreme example, a chip made at Infineon's Kulim fab in Malaysia, that sold for $0.47, was purchased for $100 @ by (ironically) a chip equipment company. - Hoarding has made the issue far worse. Companies are instructing buyers to order more than 1 year ahead, and seeing lead times exceed 1 year as well. The more these lead times extend, the farther into the future buyers extend their horizon and lead times just keep rolling. - It may actually be the case that organic demand growth is not the main problem. More likely, it was the successful (and therefore vulnerable) just-in-time supply chain that collapsed as soon as COVID interrupted the choreographed flow of material.

erosenbe0 5y ago
Paging a semiconductor engineer. Isn't it not necessarily possible to do die shrinks and get drop-in compatibility, particularly for Q rated automotive chips? Moreover, some of these chips eat 5 volts by design and I don't think 28nm or 14nm or 7nm will provide enough resistance for that. Plus, some have pmic or internal power mosfets that are specific to various processes.
- Kliment 5y ago
  It's almost never possible to do a function-compatible die shrink for anything that needs to work over a large voltage and/or temperature range. Many automotive chips operate at 80V or more, 5V and 12V parts are ubiquitous, and indeed lots need bulk area to be able to switch large currents. Making them on small processes is not only an enormous design effort where it's possible at all, it also doesn't make sense because there's still way more capacity on larger processes than on smaller ones, and the only way small processes win is by packing so many dies on a wafer that they can get away with their terrible per-wafer cost and awfully bad defect rate.

zackees 5y ago

olliej 5y ago

Is this the ongoing saga of car companies refusing to ever actually invest in/update any of their electronic designs? [edit: the answer is yes]

lnsru 5y ago
The answer is no. Car companies are doing no electronic designs. They are done by dozen layers of subcontractors like Bosch, Valeo or Continental or myriad others. Car companies depend heavily on them.
- JoachimS 5y ago
  There is probably at least 1000 electrical engineers in the Gothenburg, Sweden area alone that would disagree with you. Companies like VCC, Geely, CEVT, Volvo, Polestar and first tier electronics, digital, system and software consultants are sweeping the job market clean to be able to handle all in-house electronic design work. The pendulum from just sourcing from companies like Bosch, Continental turned hard about five years ago. Now electronic and SW design is critical diversification, and part of what creates core value in automotive.
  - lnsru 5y ago
    Sounds logical to me. I never understood this subcontracting thing with many layers. At the end somebody must do the job and has only fraction of original order revenue. On the other hand if car companies would buy the few remaining components for electrical vehicles from subcontractors… well, all the cars and brands would be exactly the same with minor adjustments.
    - JoachimS 5y ago
      Going back 10-ish years or so, basically everybody was writing requirement specifications to be included in RFQs. Primarily sent to the multinational suppliers like Continental. Sourcing and integration was the technical focus. And project management etc. Now it is 100% in the other direction. There are engineers everywhere. Basically, if there is a space (under stairs even), there is a desk with an engineer. Doing serious design work. The new automotive cybersecurity requirements also contribute to renewed need for control and detailed knowledge of subsystems.

MrBuddyCasino 5y ago

The demand for leading-edge nodes comes from CPUs and GPUs. Once they move to the newest node, won’t previous capacity be freed to manufacture chips that don’t strictly need the better process but simply need manufacturing capacity? The machines are surely depreciated by then. Or is the cost of porting the design and making the masks prohibitive?

dragonelite 5y ago
It's usually not technical or capacity usually it's the whole ecosystem surrounding 14, 7, 5nm and lower ecosystems that makes it not really profitable. The initial costs grows exponentially. SOC, CPU and GPU might be one of the few consumer goods the economics work.
- MrBuddyCasino 5y ago
  > The initial costs grows exponentially. I understand that, but is this unavoidable? After all, the old designs don't need the precision of the advanced node, couldn't they (automatically?) translate their existing coarse designs and maybe produce masks more cheaply because a 40nm design doesn't need to be as perfect as a 7nm one? I'm sure this is nonsense otherwise they would have done that already, I'm just interested in why.
  - dragonelite 5y ago
    Im not a expert or even knowledgable but i was familiar with this image: https://www.extremetech.com/wp-content/uploads/2018/06/nano3.png https://www.extremetech.com/wp-content/uploads/2018/06/nano3... It's probably that the software and extras investment is not worth it right now.
blihp 5y ago
The more recent previous nodes are too new for companies like the autos as they want 20+ year old process nodes like 90nm+. So having excess 14nm capacity, for example, doesn't give them what they want since they can't just retrofit the fab for 130nm. However, not having made arrangements with fabs to keep the older nodes around contractually, they (customers like the autos) may not have an option other than paying to redesign their chips for newer process nodes in at least some cases at this point.

bsder 5y ago

I'll slag Always Late(tm) Inventory as much as anybody. However, let's also point out that "fabless semiconductor companies" are a significant part of the problem, too. "Owning a fab" is a capital intensive operation. Shedding the fab and becoming a "pure fabless" design house increases your profitability dramatically. Until you can't ship any chips because all the fab owners are making their own chips and you have no leverage to get them to make yours.

jabl 5y ago
I disagree with that. Due to the economics of chip manufacturing, massive consolidation in the industry was inevitable. Fabless has enabled countless companies to operate despite only a few leading edge fabs worldwide being economically justifiable. It's not (only) about profitability, but without fabless worldwide chip innovation would come out from the geriatric bureaucracies of a few megacorporations. Even if you don't look at the leading edge, where the economics of a fab aren't as forbidding, fabless has enabled entrepreneurs with a clever idea to get started with much less capital than would have been required in the old vertically integrated manufacturer world. And it's not like the current chip shortage is somehow manufactured by the fabs in order to shaft their customers. If the fabs were able to, of course they'd produce all the chips their customers would pay for. Particularly so for the pure-play foundries like TSMC, which explicitly don't make their own chips.
- gorjusborg 5y ago
  which part of what they said do you disagree with exactly? Both of you are correct, in my opinion. I worked at a fabless as a logic designer. We used TSMC, as we didn't have capital enough for a fab. We wouldn't have been making chips if fabs for hire weren't available. On the other hand, consolidation on foundry as a service makes the system more brittle. I don't see how there's much argument to be had on that point.
  - jabl 5y ago
    > which part of what they said do you disagree with exactly? I'm disagreeing with: > > "fabless semiconductor companies" are a significant part of the problem, too. and > > Until you can't ship any chips because all the fab owners are making their own chips and you have no leverage to get them to make yours. because I don't believe the problem underlying the current chip shortage is due to the fabs voluntarily reducing their output in order to screw their customers, or that the fabs would give preferential treatment to in-house customers (which, as I mentioned, in the case of pure-play foundries like TSMC, certainly isn't the case). > On the other hand, consolidation on foundry as a service makes the system more brittle. That's true, but OTOH, the alternative to the current fabless + market foundry model isn't a world with tens or even hundreds of vertically integrated manufactures with their own leading edge fabs (that is, some kind of rollback to the 1980'ies), but rather a world where all leading edge chip development would be concentrated in a few megacorporations, with IMHO drastic effects on the rate of innovation across the entire industry, and susceptible to similar shocks like we see today if one of them would hit serious problems. While I don't see a way out on the dependence on very few suppliers of leading edge fab capacity and all the problems that entails, I guess for slightly larger process nodes (say, in the 20-40nm range) where the capital costs aren't as big, there could be plenty of space for a healthy competitive landscape. Perhaps partially funded by governments (or things like the EU) that want their own chip manufacturing capability for "digital sovereignty" and national security/arms manufacturing reasons.

Kliment 5y ago

This article is sadly incorrect (not poor journalism necessarily, but based on statements from vendors who are defending their own interests). Big name manufacturers are refusing to invest in fab expansion because they believe (correctly) that total demand for semiconductors has barely moved. What has changed is the confidence in the market (and this was destroyed by a major fuckup by car manufacturers deciding to screw over their suppliers at the expense of literally the entire industry). Nobody is actually producing more electronics (many manufacturers are producing less because they need to ration supply and can't allocate as much to specific products and risk not being able to produce others). Everyone is buying more, because they can't be confident they'll be able to get stock when they need it. Chip manufacturers know that anything they put on the market now will be gone immediately, at any price. They also know that one day everyone will have enough stock stockpiled and will stop buying for a while. If they increase production now, they have added expenses and a limited time to recoup them before there's oversupply on the market. If they keep production at current levels, they get more revenue as the prices are higher, and lower costs so they can weather the coming overproduction phase better. It makes zero economic sense to expand production. Some chip manufacturers are asking customers up front for demand visibility several years out to be able to plan better. Others are being absolute dicks and doing the same thing in an openly-hostile way by holding customers hostage (yes we know you ordered two reels of this part and we promised delivery by date X. We won't deliver on date X unless you also order and pay for another ten reels which we won't commit to a delivery date on, and also your order for the two reels is non-cancellable and non-refundable). I can't name this company because it would put the customer at risk, but they're a household name in the industry. The core problem is everyone is operating in the dark and there's no visibility into future demand, supply, pricing, or availability. In this situation, large capital expenses make sense on the buyer side (to ensure future supply and widen their visibility horizon) but not on the supplier side (who then shoulder the risk of future demand cratering and being left sitting on their capex).

libertine 5y ago
>Chip manufacturers know that anything they put on the market now will be gone immediately, at any price. Isn't this part of the problem of having cheap money to go around? I've got anecdotal feedback last year from some friends in different industries (mainly construction), complaining that "The americans are hoarding everything...", he said this after complaining they were buying concrete in the secondary market. Like, when Apple buys full production of 3nm at TSMC[0] - isn't this in a sense anti-competitive practice? They have access to unlimited money, it's like you have a cheat in the real world. The end game is that money starts to lose it's value, like it's happening now. I hate to use this term, but maybe the WTC or some entity should start to think that the idea of "quotas" maybe ain't that bad in a globalized world that has countries printing money like crazy. They completely fuck up entire supply chains out of greed and fear. Then those "quotas" could be sold around, but at first no one should be harmed due to some crazy practices. [0]https://www.club386.com/tsmc-apple-first-3nm-policy-leads-to-amd-and-qualcomm-mutiny/ https://www.club386.com/tsmc-apple-first-3nm-policy-leads-to...

herthabsc 5y ago

Do you think there is a stock play here?

edhelas 5y ago
Seriously ?
totalZero 5y ago
I bought some INTC calls last week. They are reinvesting their substantial revenues into construction of new facilities, reflecting the view that semis demand will be elevated for some time to come. I think the semiconductor sector could see a dispersion of valuations as businesses make different predictions about how best to skate to where the puck will be. So far Intel seems to have interpreted the shortages correctly, whereas some other firms saw the shortages through rose-colored glasses.

foft 5y ago

Perhaps it is time to add some of this to the data provided when buying the parts. Number of fab companies that can make the part and if the fab equipment is active/obsolete.

Zenst 5y ago

Sadly it takes a problem to bring out the hindsight. Sure lack of investment may well have been a factor, but a larger factor would be the shift towards just-in-time manufacturing. This has in many walks of the supply chain over the pandemic, highlighted this and many other downsides of such an approach. We must also not forget the ever driven push to faster, smaller bleeding-edge process nodes and the demand. In effect, the whole pandemic proved a perfect storm for whole markets. As always, lessons will be learned, though, in the end, higher consumer prices will and is inevitable as companies apply mitigations to address the issues that played out. Sure not all issues are as easy a fix as adding more capacity, stock warehousing and those additional costs, costs that we as consumers have seen play out as reduced prices as some of the savings with just-in-time have been passed on, though mostly to share-holders I do somewhat feel. This raises another question - will company share-holders who have enjoyed and profited from the shift in increased dividends over the decades thru this business model approach, accept a small cut, or will we (as I suspect) see that carry on and the increased costs/impact passed onto the consumers.

thereddaikon 5y ago

There is an opportunity in the market for sometime to come in and make relatively low cost machinery to fab at older process nodes. If someone designed and sold photolithography equipment meant for no greater than say 90nm and it did for pennies on the dollar compared to current EUV equipment then it could be a huge deal for the semi conductor industry. There are plenty of designs that don't really need to be produced with more modern processes. That are just fine at 180nm, 130nm or 90nm. The natural attrition of old process nodes due to the hardware reaching end of life is unnecessary and I think in part why we are in this situation.

jopsen 5y ago
But can older processes be made much cheaper than they where when they were launched? Is it an under investment in these processes because the price was too low?
- thereddaikon 5y ago
  Presumably if a machine can be made with X level of precision for Y cost then one with a lower level of precision could be made for a lower cost. Although it probably doesn't scale linearly. One relevant large advance I know of is in laser. What used to take very expensive chemical lasers in the 90's can now be done with inexpensive solid state lasers with much lower power draw, much higher output and greater reliability.
  - jopsen 5y ago
    Maybe, if someone is making the investment -- which the article suggest isn't happening. After all, if you build such a factory, you won't be able to target the lucrative high-end chips. And if competing factories were built when they were state-of-the-art, and the hardware paid for when they did high-end chips. The problem could be that low-end chips simply are cheaper than the amortized cost of building a factory.

tgtweak 5y ago

I've hated Intel for a nearly a decade leading up to the Pandemic (My last intel system was an i7-3960x). Since the beginning of this chip shortage supply chain nightmare however, I've become very bullish on Intel. They are one of the rare US companies that have retained the knowledge to build and operate their own competitive fabs. That is something that AMD, Nvidia and several others have left in favor of consolidation (TMSC, Samsung) and specialization - much to their benefit commercially (and at the expense of Intel). As there are renewed reality checks on the pitfalls of having a critical fundamental supply chain epicenter outside of your realm of influence (Talking from the perspective of the US/EU here), I expect companies that can build and operate fabs on US and European soil will have renewed support from federal, state and capital markets. My hope is that it is not a passing fad and that it will carry on in perpetuity. I hope that it is competitive from a cost and performance perspective. Also, in spite of that, Intel has also decided they will use TSMC's next gen process (3nm) as a backfill while they catch up and build out their own fab roadmap. That decision is exactly the watershed moment where AMD started taking off, in terms of performance and efficiency on their own CPU and GPUs (the spinning out of Global Foundry and shift to TSMC's manufacturing), where they started taking leads in markets that they hadn't seen for 15 years. It was the right decision at the time, and it remains so - from a purely financial/technological perspective. The fact Intel's CPUs (raptor lake) and upcoming GPUs (Arc), made on a 3-year old lithography process, can compete with AMD's latest on TSMC's cutting edge is pretty respectable. When/If Intel finally gets access to a process that leapfrogs them ahead nearly 4 years... that kind of generational jump will hopefully be quite remarkable. So, as much as I hated Intel, they seem to be the best bet for truly competitive fabs outside of the 750km radius circle they all currently reside in beside the East China Sea. Edit: Yes I'm aware that TSMC has been talking about building fabs in the US/EU for a while now but really, it's been all talk for the last 3 years and feels like a pony show vs a genuine desire to build out the region and be competitive. The matter of where a company's chain of command and head office sits is nontrivial from a de-risking perspective.

onepointsixC 5y ago
I most certainly shared your dislike of intel over the stagnation of CPU's in the past 6 years. But I've come to appreciate more that Intel indeed is the last western player in leading node fabs. Pat Gelsinger has inspired much hope for me in Intel making a come back and focusing on the right things.

tengbretson 5y ago

We're far enough past the initial shockwaves from car manufacturers under-ordering at the beginning of the pandemic. Is it safe to say now that this shortage would have occurred regardless of covid?

Animats 5y ago

There was an article on HN a few months back about a new printing process for ICs in the, what, 100nm range. The idea was to have a plant suitable for making short runs of undemanding parts. If that's possible, it's probably a useful niche someone will occupy. Automotive is headed in the wrong direction. Tesla's dashboard now consumes several hundred watts and cuts vehicle range around 3%.[1] Come on. You do not need Unreal Engine in the dashboard. [1] https://www.neowin.net/news/tesla-wants-model-3-owners-to-give-up-some-range-for-a-better-infotainment-system/ https://www.neowin.net/news/tesla-wants-model-3-owners-to-gi...