MacBook and iPad production delayed as supply crunch hits Apple
asia.nikkei.com
asia.nikkei.com
the U.S., Japan and Germany have asked Taiwan and South Korea, the two key chip manufacturing economies, to help prioritize chips for the automotive industry, which is crucial to the world economy. This has further squeezed production of semiconductors for consumer electronics and computer products.
Apple alone spends more money on semiconductors than the ENTIRE auto industry. They played stupid games and won stupid prizes with this chip shortage.
Limiting their downside risk was the right call given the information.
Probably the thing that's not another iPad (e.g. the luxury content consumption device).
B) iPad can be used for work, studying and much more, not only consumption
How well did Wisconsin’s deal with FoxConn go? Politicians gave up something in the 7 figures per job that was ostensibly created on that project, but the state went into debt to do lots of the infra and the properties sit idle.
The F-35 is a defense project, but more than that, it is an unkillable jobs program distributed throughout nearly every Congressional district.
Politicians cite jobs created as if every “job” held equal weight. In fact, we have lost lots of salary jobs with benefits in the past decade, mostly replaced with independent contractor hours. Politicians don’t care because they are optimizing for the metric most commonly looked at.
Also, it creates a perverse incentive where no politician feels like they can ignore the bad metric because it is the good sound byte (a la “tough on crime” rhetoric when being consistent on crime is far more effective). Instead of working on healthier long term goals, they work on junk food goals.
> So do computers.
Computers don't directly employ anyone, yet.
Nitpicking aside, the vast bulk of the jobs enabled by computers in the US, Japan, and Germany will be completely unaffected by computer production delays. I'm guessing there's far more auto than computer production in those countries, so auto production difficulties have a more immediate effect.
Computer production is just one part of the economic puzzle. The real question is what economic activity do computers and automobiles enable.
Yes, but auto plants do directly employ people.
Consumer electronics tend to be manufactured elsewhere, so far from these countries' respective electorates that slave labour could assemble them for all they care. Their jobs are not on these countries' list of priorities.
All of this also ignores the larger economic picture— autos transport goods and people, computers are used to do work in nearly every field. They’re both instrumental to the economy.
Crucial as a definition in that the downstream effects are massive.
With electronics it is a bit different, people hoard them and even if someone's tablet breakes there is a good chance that there is another one in the house or you can use a laptop instead or your phone or whatever.
It'd be good to get some clarity from Apple before taking this delay as an established fact. Nikkei overhyped (IMO) the impact to Apple's supply chain in its coverage of iPhone inventory last year, at the very beginning of the pandemic.
2. The so called delay currently running in rumour mill were about "new" MacBook and iPad. aka those running on new 5nm M1 variant silicon. The delay is mostly due to the fact iPhone is selling better and all Apple's 5nm capacity is prioritising to iPhone. Mac and iPad can wait.
3. Somehow those same rumours got passed around enough to become current MacBook and iPad got production delayed.
We spent $63 billion over one year to cover payrolls for airlines in a demand nadir, but we get locked up when it comes to less money over more time toward semiconductors in a demand explosion. It's a textbook moral hazard.
I sure hope those in automotive industry ( which is pretty much everyone except Toyota ) paid a healthy premium for it.
Long way to say yes, this could be part of why it seems like the unannounced but expected Apple event remained unannounced.
I have to admit that I really take for granted how easily it is to spin up additional capacity for projects nowadays. This statement put that into focus for me.
That said, at some point if this continues, the shortages will start to affect AWS, Azure, GCM, DO, Linode, OVH, etc. capacity. And that will get nasty fast.
The pandemic showed us that the supply chain is more frail than we think. I also just finished Wages of Destruction, about economics in Nazi Germany. And at last I explored the nooks and crannies of an abandoned hospital.
It's eye-opening to see how complex a large building is, with all its pipes, wiring, and shafts. That's without considering the satellite buildings, or the specialised equipment on the actual production line.
It's also surprising to see how much depends on components and raw materials produced thousands of kilometres away.
And at last, it becomes obvious that you can't just spin up a new factory, nor can you trivially retool one or re(al)locate thousands of its workers.
Scaling up demands feats of logistics. Scaling down can bring financial ruin to entire regions.
This draws interesting parallels to the production of vaccine. You can't just throw more people at it for the same reasons.
Why not?
I mean... look at the current plague pandemic - we've been listening that you cannot just create more space in hospitals overnight, or build new rooms, and this and that... but it's not overnight... it's been a year now, and if they started building the first time they said "it cannot be done overnight", we'd have a lot of nice empty rooms now.
I remember waiting for some parts in 2002, that were delayed due to many stupid logistic issues in Korea (fifa world cup was there, then), and the excuse was the same... you cannot just make more factories overnight. Graphics card prices are overinflated, ram prices are inflated, ssd prices are inflated.... basically, anyone who starts building any form of production now, will be able to sell whatever the company puts out without issues.
I know I might sound like a conspiracy theorist, but there is either some cartel deal between huge companies (intel, amd, nvidia, qualcomm,...), to keep prices artificially high and blame parts shortage, or they're all incompetent.
So here's what actually happened. Car companies cancelled their orders because there was this thing called COVID. Those slots on fabs got sold to other people in the entertainment industry because at the time it was believed people would just stay at home and the entertainment sector would need the extra fabs.
In a sudden twist of what could be called "irony", it turns out people are scared of getting on public transit during and after covid so everyone who relied on that or uber/lyft started buying cars so demand for cars went up. Car companies tried buying their slots back kicking off a giant demand hike which basically had people buying fab slots for far more than they are worth... the issue is that those ICs aren't like a graphics card.
If you don't have 5nm chips, well that's fine, you can't produce a graphics card per IC, for a car, there could be dozens of different chips. If your 30nm chips are out of stock, it doesn't matter how many 105nm chips you have in stock, you can't sell half of a car.
A semiconductor fab typically needs several of these machines (maybe only one or two of the best machines for the smallest layers, but more of the coarser machines for the less dense layers) in order to produce chips competitively.
https://en.wikipedia.org/wiki/Semiconductor_device_fabricati...
There is a table on the right, and there are rougly 2-3 years between 'generations' - so 2-3 years between starting a new production line of top-of-the-line flagship (eg.) cpus, to making a new production line for even newer, "smaller" (transitors) cpus, and the old line making other, cheaper ones.
I'm not saying that Johnny Sixpack can do it in his garage, but companies like Intel, AMD, samsung, etc. surely could do it in that timeframe, because they're already doing it now.
In the end, making chips just isn't that high on the overall list of things to be able to opt.out of normal market forces. If it looks like customers will pay enough to make rapid expansion and the changes necessary to enable such rapid expansion worth it, it'll happen.
But demand is not actually that much higher than normal, and thus the investment has limits. You can be sure that everyone is working to finish their expansions as fast as possible (hundreds of billions of investment over the next few years) and get their broken-down fabs back online ASAP, but its not like they suddenly can spend massively more resources on it. Compared to big challenges like fighting COVID its overall a minor concern, and as you point out even that did not go as all-out as it could have.
For example Pinole Valley High School https://www.eastbaytimes.com/2016/04/14/west-contra-costa-sc...
Google says Contra Costa County has nine high schools.
The new fab TSMC is building in Arizona is 12 BILLION DOLLARS - for a single fab.
That's 100 of these high schools for the price of a single fab facility.
Having said that, it is pretty remarkable that Apple has gotten themselves in a situation where a supplier has so much leverage over them. TSMC can set the prices and conditions and there isn't a lot anyone can do about it.
https://www.anandtech.com/show/16463/snapdragon-888-vs-exyno...
Half joking
Then they want to use that new economic power and convert it to military power. Then use the military power to restart a civil war and take over peaceful countries like Taiwan.
Sounds kinda dumb to not try to stop that, lol. I don't think you want to live in a purely might makes right world.
There'd be no more "might makes right" with PRC as the biggest superpower compared to the US. Just a different kind.
By what metric? Clearly a country like Nazi Germany would’ve been a bit higher on the “might makes right” scale. Thus if you critically look at the CCP, you could see they are based on autocracy and will spread autocracy.
US is based on democracy with both oligarchal and free market capitalism.
How does Huawei get those new chips at 7nm?
Sanctioning and restricting China is most certainly going to be a catalyst for a rapid development of domestic advancements (including, of course, surreptitiously stealing it from other countries/companies). Anyone who thinks China won't be right with the top makers in a few short years is fooling themselves.
That said I’ll probably trade this in this with an arm model in a year or two after the ecosystem has had time to catch up, but I’m happy to have the Intel model for now.
The car companies did this across the board to their entire supply chain.
In fact, I know some folks who relied on that business and had to close up shop because they basically had machines they bought specifically for auto manufacturers and they cancelled ALL their orders at the same time, with no ETA on when they would place the orders again.
They knew there was a pandemic, they knew the supply chain would be wonky and they just assumed it would start back up without delay when they were ready to make cars. They pushed the risk to their suppliers and when they went to place orders and everyone else had booked their capacity, laid off the employees or suppliers went out of business they were like "OMG HOW DID THIS HAPPEN!?".
Talking to some of the people I know, this is an unmitigated disaster that is entirely the auto manufacturers fault. There should be no sympathy for these idiots.
Definition of “lie”:
> A lie is an assertion that is believed to be false, typically used with the purpose of deceiving someone
The car industry fucked up a forecast and cancelled based on their forecast. That’s not a lie.
Even if what you wrote is true - it's just the market at work. If the car companies can pay enough to get slots in a fab and beat out smaller players so be it.
The demand for semiconductors currently exceeds supply. This means there will be shortages, price increases etc, until further capacity can be brought online or demand is lowered.
I don't think there's any "bad guys" here.
Prices, and the willingness to tolerate an increase in them, is the ultimate signal of what people actually consider important, as opposed to just 'empty words' claims of importance.
Seems like the demand increase and supply disruption would explain a lot of it.
But what happened instead was everyone changed their plans for all of 2020/2021 and cancelled like all their orders. So everyone downstream handles that by shutting stuff down, firing people, etc. But 3 months later everyone shows back up and is like "oh wait no actually give us the normal production back". Meanwhile all your laid off staff is just working elsewhere.
I'm also a layman, but my feeling has been that the "stop everything! no wait start everything back up" has been way more of an issue than the actual production stoppage (which only was a couple of months! Remember how everyone was dragged back into work a couple months into the pandemic?)
I'm sure I'm extremely simplifying things here though and might be outright wrong though.
It wouldn't work like that because demand increased and supply decreased at the same time creating a backlog that one would expect to last longer than the period of decreased supply.
Let's make up some numbers to show this. Imagine normal supply and demand is for 100 units per month. The pandemic hits and supply is now at 0, 25, and 50 for the next three months before returning to normal. Meanwhile demand goes to 75, 100, and then sticks at an elevated demand of 125. In those three months, the industry has produced 75 units, but the market needed 300 units creating a built up demand for an additional 225 units that doesn't simply go away. That backlog can never be satisficed as long as demand stays elevated and supply is normal. The suppliers actually have to increase production beyond both normal demand and current demand. Maybe they are able to adjust and produce 150 units per month starting in month four. That gives them a surplus of 25 units a month which means it is still another 9 months before all the built up demand is satisfied. It would therefore take a full year before the impact of that 3 month disruption dissipates.
That is obviously a rudimentary example, but it shows how a combination of decreased supply and increased demand can cause issues that last longer than the change on either side of the market.
The other issue is the "car industry" doesn't order from fab. They order from a supplier of a module, who orders from a chip designer, who orders from a fab. And that's probably not accurate either as it leaves out plenty of middlemen.
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