A chip shortage that began when consumers stocked up on PCs and other electronics during the Covid-19 pandemic is now threatening to confuse auto production around the world

On Tuesday, GM said it would extend U.S. production cuts, Canada and Mexico by mid-March join a long list of major automakers, including Ford, Honda and Fiat Chrysler, who have warned investors or slowed vehicle production because of the shortage of chips

But it’s not just the automotive industry struggling to get enough semiconductors to build their products. AMD and Qualcomm, which sell chips to most of the leading electronics companies, have noticed the shortage in recent weeks. Sony blamed the chip shortage for it so difficult is getting a PlayStation 5 game console

Chips are set to remain tight in the coming months as demand remains higher than ever before The Semiconductor Industry Association announced in December that global chip sales would grow 84% in 2021 from a total of 433 billion USD in 2020 that’s up 51% growth between 2019 and 2020 – a remarkable jump given the size of the absolute numbers

Semiconductors are in short supply due to the strong demand for electronics, the shift in business models in the semiconductor world that created a bottleneck in outsourced chip factories, and the impact of the United States Trade war with China that began under former President Trump

The first wave affected people buying PCs, monitors, and other gadgets to remotely work or go to school. Then, last fall, home entertainment devices like game consoles, TVs, smartphones, and tablets flew out the shelves

PC sales rose 48% in 2020 to 275 million units, with over 10% growth over the holiday season, according to Gartner, which reversed a year-long decline and is the highest annual growth in the PC market since 2010

Other devices also sold well The Consumer Tech Association, an American trading group, said 2020 was the biggest year on record with retail sales of nearly $ 442 billion, and there will be huge demand for game consoles, headphones and smart in 2021 -Home products is forecast

All of these devices contain a lot of chips? Not just the central processor, which can cost tens or hundreds of dollars, but also cheaper small chips to control the display, manage the power supply, or run a 5G modem

“The current chip shortage begins with the unprecedented demand for personal computers and peripherals as the globe worked from home and attended school,” said Patrick Moorhead, founder of Moor Insights, a company that studies the semiconductor industry / p>

Electronics industry giants who reported record sales say they could have been even better if there had been enough supply Apple, which recently posted a quarter of $ 111 billion, analysts said the offer was up New iPhones Not Enough To Meet Demand CEO Tim Cook told Reuters that “semiconductors are very tight”

AMD CEO Lisa Su, who is making the processor the focus of the new consoles from Sony and Microsoft, said last month that she would expect bottlenecks at least in the first half of the year “The industry needs to increase overall capacity,” said Su. p>

The shortage shows a structural change in the semiconductor industry Many of the leading semiconductor companies are now “fabless”, which means that they only design the chips and the technology in them. Other companies, so-called foundries, are largely tasked with actually manufacturing the chips

The foundries are run by companies like TSMC in Taiwan or Samsung in South Korea – and it turned out they were already making chips ASAP. If a company cut orders in the early days of the pandemic, it had to do it again / p>

Automakers do not compete directly with high-tech companies for the same chip supply. Car chips are usually based on older chip manufacturing technologies and do not require upgrading

“The shortage in the semiconductor industry is consistently great,” Qualcomm’s new CEO Cristiano Amon said last month, “Not just leading nodes, but also legacy nodes,” referring to chip manufacturing technology

Cars now contain dozens of tiny chips, many of which perform functions like power management. Cars also use many microcontrollers that can control traditional automotive tasks like power steering or being the brain at the heart of an infotainment system. Automakers typically use just-in-time as well “-Production, which means you don’t have to store additional parts

“The problem is, you’re 30 years oldCan’t sell a $ 000 car without that 10-cent chip, “said Gaurav Gupta, Gartner semiconductor analyst

“If the chip that powers the dials in the car or the automatic braking slows down, so will the rest of the vehicle,” Bryce Johnstone, automotive director of marketing for chip designer Imagination Technologies, told earlier CNBC

Now the automotive industry is realizing that this is a lower priority than electronics companies in the foundries.In 2020, only 3% of TSMC’s sales were in automotive chips, compared to 48% for smartphones

Tech companies are “the volume guys, they have higher margins, and they never cut their orders and have long-term contracts with the foundries,” said Gupta, “Now that this automatic demand has peaked faster than the OEMs expected, Cars cannot return to the queue “

Foundries are aware of the problem TSMC, considered the most advanced and essential foundry, said it was trying to help the auto companies and that it would spend up to $ 28 billion this year to make it to increase their capacity

“While our capacity is at full capacity with demand from all sectors, TSMC is reallocating our wafer capacity to support the global automotive industry,” TSMC said in a January statement

Automakers also use automotive grade chips that are carefully “qualified” against industry-standard binders to ensure they are durable and reliable “The industry is finding it harder to alternatively relocate their production lines and supply chains” Trendforce, an advisory group for the semiconductor industry, wrote in a report last month

Last year the US. Semiconductor Manufacturing International (SMIC), the largest foundry in China, has been restricted to get advanced chip making equipment and it has become much more difficult to sell their finished products to companies with US Ties customers have had to shift their orders to competitors like TSMC, said Gupta

SMIC executives have recognized that the US. The move prevented it from using its full capacity when it said geopolitical factors were preventing it from taking advantage of “this year’s rare market opportunity,” indicating the chip shortage

Some companies have also decided to store important chips in front of the US Deadline, utilization of production capacity last year For example, Huawei stored critical radio chips before the sanctions, reported Bloomberg News

Inventories were also driven by supply issues as Covid hit the world. SK Hynix, a major manufacturer of memory chips, announced an increase in sales in July last year, driven by “growing concerns about the IT supply chain in general”

Some companies that have inventory of chips are now taking advantage of the benefits Toyota said Wednesday that it does not expect to cut its production rate since it has been storing chips for four months to make up for the shortage increased its earnings guidance for the full year by 54%

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World News – US – Why there’s a chip shortage hurting everything from the PlayStation 5 to the Chevy Malibu

Source: https://www.cnbc.com/2021/02/10/whats-causing-the-chip-shortage-affecting-ps5-cars-and-more.html