SHOPSMART AUTOS – CUSTOMER INFORMATION – DECEMBER 9, 2021-2
Chip shortage will last ‘well into 2022’and the impact will go beyond cars
– I mean, a $60 billion number, just to put it in perspective, as your report kind of walks through there, almost $2 billion each, GM and Ford, in terms of loss to profit in 2021. I mean it’s a lot for companies now that are dealing with this. But I guess some people watching might say, how did they not see it coming? And I guess that stems back to kind of how hard it was to predict changes in the pandemic when you saw people buying fewer cars and then all of a sudden that demand really came back. I mean, talk to me about how hard it is for these chip makers now to kind of adjust when they’re already behind the eight ball. ANNE HOECKER: Yeah, it’s interesting because it is a place where so many different end market demand comes together. So if we think of why auto kind of got caught off guard, they pulled orders back during the pandemic when car sales were down. But at that point, electronic sales were up, so PCs, phones were increasing their orders. So that capacity got shifted to other parts, other end markets. And there’s only a set amount of capacity, which, as I said, takes time to increase. So as they’re starting to shift that capacity around, auto’s starting to get more, it’s just overall demand right now is really high. And it is a place where all of the demand across so many different end markets shares this set capacity. So I think they are looking to increase capacity. GlobalFoundries has announced new capacity going into Singapore, which will help, and companies are trying to do a better job of communicating future demand to the suppliers, so having that visibility throughout the supply chain will help, but also just additional capacity will start to help. – When you look at the largest chip maker, Taiwan Semi TSMC, it sort of points to what you just mentioned. You look at the breakdown of where their revenue is by end market, it is overwhelmingly for smartphones. You think that mix is going to start to shift as a result of the shortage that we’ve seen play out? ANNE HOECKER: So TSMC, which is the largest foundry manufacturer of semis, very heavily mobile. A lot of that would be driven by companies such as Apple. They are also starting to see just a lot of their revenue from more compute, so AMD Nvidia. Auto is actually a very small portion of their total. It’s about 10% of total revenue in the foundry market goes to auto.
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