We’re starting to see some numbers attached to the ongoing semiconductor shortage and accompanying predictions for how much of a drag the issue might be in 2021. Current predictions suggest automakers could lose some $61B in sales worldwide. Discussions between the auto industry and its chip manufacturing partners also sound as if they could be going better.
At first glance, a sales reduction of that magnitude doesn’t sound like much. The top 10 auto manufacturers on Earth collectively earn about $1.63T in revenue per year. $61B isn’t much, by comparison, objectively speaking.
The coronavirus hit the automotive industry pretty hard in 2020, however, and even though sales recovered more strongly than expected in the back half of the year, automakers across the world saw their sales fall by 10-20 percent year-on-year. Nissan took a particular whack, with sales down 33 percent. These 10-20 percent annual declines were actually cheered for being much smaller than expected, but manufacturers are in no mood to leave money on the table.
Relationships between TSMC and the various automotive companies have hit a low point, with each blaming the other for the current shortage, according to Bloomberg. If you ask the automotive manufacturers, the problem is that TSMC and its ilk are preferentially allocating capacity to gadget manufacturers. If you ask the foundries, the automotive companies are so in love with lean manufacturing, they refuse to keep reasonable hardware stockpiles on hand. TSMC recently pledged to shift some manufacturing and allocate additional resources to the automotive industry, while pointedly observing its inability to magically conjure production resources out of thin air.
If I had to guess, I’d guess automakers aren’t used to dealing with the longer production timelines that semiconductor companies require. Having allocated production away from car manufacturers in early 2020, it’ll take time to allocate production back towards them. Bloomberg’s article specifically mentions that it may take until Q3 to completely work through the production issues. If you squint, you can see the industry broadly coming into alignment around the idea that we won’t see a return to normal conditions in Q1. Right now it looks like Q2 should slowly begin to recover. Maybe we’ll see MSRPs and easy product availability by the end of Q2 — or maybe we’ll see shortages bleed into the start of Q3. Right now, nobody seems to know.
Most likely, this period of constant shortages of everything will give way to erratic shortages of whatever product you most wanted to buy, which will, in turn, fade off to sporadic non-availability of things you find it annoying to wait a few weeks for. It will inevitably manage to be the wrong week for nearly everyone, all of the time. But hopefully, problems will clear up within six months.
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