SHOPSMART AUTOS – CUSTOMER INFORMATION – DECEMBER 8, 2021-1
Chip shortage will last ‘well into 2022’and the impact will go beyond cars
Bain & Company Partner and Head of America’s Technology Practice Anne Hoecker joins Yahoo Finance Live to discuss how the semiconductor shortage is impacting auto production. Well, the global chip shortage has led to a $60 billion hit to car makers already. But a new report out from Bain and Company says things are about to get a lot worse, with a chip shortage expected to last well into next year. And the impact is going to spread well beyond the car space. Let’s bring Anne Hoecker, Partner and Head of America’s Technology Practice at Bain & Company. Anne, it’s good to talk to you. This is a really fascinating report because you really got into the weeds here on supply chains for the chip space globally. We’ve heard about the shortage. How far along are we in these companies, these chip makers, being able to meet the demand that’s out there? ANNE HOECKER: Yeah, it’s a good question. We do think, unfortunately, this chip shortage is going to last a lot longer than any of us would like, so lasting well into 2022. And a lot of that is driven because demand for semis is just so strong right now across so many different end markets, and the supply just takes time and money to add. So adding a new leading edge capacity can take two to three years to build a new fab and cost up to $10 billion. What’s really been unique about this shortage is that it’s hitting in different aspects of the semiconductor supply chain. So usually when we think about adding capacity to semiconductors, we think about the leading edge, the newest technology that’s so critical for our data centers and our phones and our PCs. A lot of the shortages here, especially the ones that are hitting auto, are with the more mature technologies, so capacity that’s been around for a while. But demand for that capacity has just gone up with demand for PCs, phones, and auto, so needing to add capacity not only at the leading edge, but at the more mature technologies. And then even recently, we’ve seen some of the shortages are more in the packaging part of the supply chain, so with some of the factories in Vietnam and Malaysia unfortunately shutting down due to some COVID concerns, we’re seeing those shortages pop up in different aspects of the value chain. So it really just highlights what a complex and diverse supply chain semis is. And it all has to work together to get all of the end product out to consumers. And we’re seeing shortages throughout. So companies and governments are starting to pledge big dollars and more capacity in.
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