The catastrophic potential of the microchip shortage...

jelloman

Couch'd Tater...
At this moment there are a reported 50,000 Ford F150s sitting on the lots at the factories waiting for critical components (all containing microchips) to complete assemble. Lots at virtually every car dealership are rapidly emptying of inventory as the car makers slow down or halt production while they wait for parts.

https://www.thedrive.com/news/39868...-after-the-assembly-line-due-to-chip-shortage

As scary as that is it's nothing compared to what is about to happen on the parts and service side of the industry.

The potential catastrophe can be summed up nicely based on what's happening right now with just one part number.

Ford part number AE8z7Z369F is the Transmission Control Module for virtually every Ford Focus built between 2010 and 2019, and it's failure totally disables the car until replaced. Average monthly demand for this part trends between 10,000 and 15,000 per month. At this moment in time there are approximately 20,000 on backorder from Ford, with only about 2,000 in the pipeline to cover them. The merchandiser remarks page for this part reads simply that Ford "is working with suppliers to establish a timeline for production" with no estimated ship dates available.

If the current reporting on the microchip shortage holds true it could be 6 months to a year before the industry starts to catch up with demand. Based on the optimistic projection, by the time product is moving again there could be as many as 95,000 modules on backorder, representing almost as many disabled vehicles stuck on dealership lots. Once product starts to move it will take another month or 2 before they start showing up at the dealership level, adding as many as 30,000 more backorders, assuming that demand matches current trends. There is virtually no way production can fill those backorders immediately. Assuming an accelerated production of let's say 25,000 per month, they will only be able to fill backorders at a rate double that of demand, so the potential for a year-long (or longer) wait for the total backlog to be filled is possible.

AND THAT'S JUST ONE PART! Based on the literally THOUSANDS of performance-critical components that contain microchips and could potentially be affected by the shortage for all vehicle manufacturers, the potential number of vehicles (and by extension their owners) that could be effectively disabled is astronomical.

main-qimg-829f09f5383354ddd4a97119910d084f.webp
 
At one point we had FOUR office roll outs last year that were completely crippled because we couldn't get switches from Cisco. I can only imagine that trend getting worse.
 
Who knew making cars so smart could ever have an Achilles heal.

I was actually talking to my next door neighbor about this over the weekend. he works for GM. Pretty crazy how many cars they have stashed all over town. MSU is making a ton from this.
 
so, it's the toilet paper hoarding game all over again.
Well, that's really a gross oversimplification of an extremely complex problem...

The toilet paper issue worked itself out in relatively short order...the production itself was not interrupted, and the supply caught up to demand quickly enough...

The microchip shortage was originally caused by an increase in demand, yes, but it's been magnified by production issues based on raw material shortages, interruptions due to weather and pandemic caused plant shutdowns, and other related problems...at this moment Taiwan is experiencing a significant drought, and TSMC is anticipating plant shutdowns in all 3 of their campuses due to water rationing...

Hording is only one small part of the overall situation ..
 
Well, that's really a gross oversimplification of an extremely complex problem...

The toilet paper issue worked itself out in relatively short order...the production itself was not interrupted, and the supply caught up to demand quickly enough...

The microchip shortage was originally caused by an increase in demand, yes, but it's been magnified by production issues based on raw material shortages, interruptions due to weather and pandemic caused plant shutdowns, and other related problems...at this moment Taiwan is experiencing a significant drought, and TSMC is anticipating plant shutdowns in all 3 of their campuses due to water rationing...

Hording is only one small part of the overall situation ..

well then, i guess it's a good thing for us guitarists that only play TUBE amps. :facepalm:
 
Where's Bill Gates getting his made for the vaccine?

( Not actually made for any discussion, just for the roll eyes factor)

As you were.
 
  • Like
Reactions: Tig
So what happens to all of those cars if they get to the next model year before this is resolved?

Is there any talk of bring production of the chips to the US or is that not the issue?
 
I've been watching both my wife who works at a major auto manufacturer and my father-in-law who owns an emergency vehicle up-fitting company deal with this exact thing not only in the vehicle inventory and up-fitting components but even office equipment categories. My wife's company said that they didn't expect to see things get back to normal until at least mid-2023 and if we had personal consumer electronic needs that we should take care of them now so I replaced both of our laptops and I am waiting for my new iPad to come back into stock.
 
So what happens to all of those cars if they get to the next model year before this is resolved?

Is there any talk of bring production of the chips to the US or is that not the issue?
I believe I saw something about the government investing in chip production here in the US but that is not going to help short term concerns.
 
The chip shortage is affecting everyone. Even some projects where I work have been impacted. Lead times for parts used to be days or a few weeks, but now they are 6-9 months.

I've been trying to upgrade my GPU on my gaming PC, and it is impossible to find a graphics card at MSRP (lots of scalpers on Ebay charge 2- times MSRP though) due to the perfect storm of this chip shortage, and the explosion in crypto-currency creating even more demand for these cards to use for mining.

TSMC, Samsung, and Intel are investing in more domestic facilities, but these won't be online until late 2022 at the earliest, and they won't have any significant production until 2023. I hope my cars don't break down anytime soon.
 
The Ford Motor Company informed their dealers today that they intend to start shipping their new vehicle allotments in their current unfinished states, to be stored by the dealers and assembly completed by them once the requisite components are available...
 
I believe I saw something about the government investing in chip production here in the US but that is not going to help short term concerns.

Yup. They call it the CHIPS for America Act. The richest companies in the world lobbied the government to spend fifty billion dollars to bring chip production to America so they wouldn’t have to pay for it. Of course they won’t buy American chips anyway because American labor is too expensive.
 
Back
Top