Chip shortage: Toyota to cut global production by 40%
bbc.com
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I guess 18 months of doing the extremely heavy lifting for the whole industry has taken its toll and now they're in the same boat.
1) https://www.ntotank.com/blog/resin-material-market-shortages... 2) https://www.wsj.com/articles/supply-chain-bottlenecks-drive-...
We tried to order 100 and were told the lead time was 36 weeks. We got through it with existing stock, scrounging displays from dead boards. Buying different displays and replacing the backlights. Small orders of 10 here, 15 there. And pushing a few customers out a month or two.
And then multiply across everyone in a supply chain for a single product having to deal with waiting to receive giant parts orders from their vendors before they could start their own giant order to supply their customers.
Think of each stage of the system, not just the components you bring in but also the partially assembled components you produce along the way as well as the finished product. US auto manufactures (in particular) had an operating method where they kept inventories high at all stages. This wasn't entirely deliberate. They weren't saying, "We need 5000 car doors just sitting here." They were, instead, saying, "We can't stop making doors just because everything else down the line is stopped due to <event> so keep churning them out and pile them up." The tail end inventory of "complete" vehicles were sitting there due, often, to quality issues (misaligned assemblies, missing parts, whatever the reason may be).
So inventory piles up everywhere along the chain, which also worked because there was a large turnaround period when retooling and equipment downtime (not always planned). Because Nobody Ever Gets Credit for Problems that Never Happened [0] there was an underinvestment in maintenance and improvement efforts. High inventory across the line papers over this issue. Lean discourages high inventory in order to make these issues apparent so that they can get the attention that they deserve. Also, rework is viewed as waste so quality issues should be addressed when they're discovered, not by assembling hundreds or thousands of vehicles incorrectly and then fixing them, fix the assembly line issues causing that misassembly.
[0] https://web.mit.edu/nelsonr/www/Repenning=Sterman_CMR_su01_....
Basically if a part can only be produced by one or two parties there is too much risk of that source going away and disrupt everything else. This also applies all the way down the chain so if you got part A that can be made by 20 contractors but if all of those contractors depend on the same source then that part is also on the list of "stockpile this part enough to get over most disruptions"
Instead you either stop/slow production or shove them in your products and hope for the best.
JIT, in Lean, does not mean no buffer, it means as little of a buffer as you can get away with. If you have issues with delivery like this on a regular basis, then you'd increase the buffer size (at least temporarily) and also take your suppliers to task for sending the wrong thing over and over.
The buffer size should be increased if any upstream supply issues exist that regularly cause a shortage. Ideally, you should address those issues themselves, but if you have and they can't (or won't) be fixed then you increase your buffer to accommodate reality. However, the shortage is itself a signal. Too high an inventory permits supply issues to persist without being addressed for a long time because you never get the signal about the issues with them (the downstream production slowdowns).
Eh... I would argue that JIT means making that buffer someone else's problem.
I was doing EDI at a logistics firm that contracted with Seagate who provided HDDs to Hitachi for their SANs around 2006. Hitachi was doing JIT for their manufacturing, Seagate however was just speculating Hitachi's demand and literally stockpiled HDDs in this firms warehouses geolocated next to Hitachi's factories.
We would pickup stock from Seagate and ship it to these warehouses where they would remain Seagate's property until Hitachi requested it, then we would simply transfer ownership to Hitachi.
Interestingly, we used rail shipping as a buffer to reduce warehouse size by sending freight on slow/cheap/indirect routes.
EDIT: What you describe sounds more like VMI, vendor managed inventory, than JIT. Both require half way reliable forecasts and collaborative planning so to worl properly. Have to agree so that both solutions tend to push inventory risk to suppliers. Done correctly, overall inventory does decrease so.
The interesting thing was that Seagate avoided managing inventory by outsourcing to the logistics firm. The stock was technically Seagate's until it was ordered by Hitachi but the logistics company took immediate possession as pallets rolled out of the factory.
> The last bit works, as long as the slow transportation is closely controlled.
It didn't need to be controlled, just scheduled. You knew you need x units by d. The factory output n per week, so you could stagger shipments by way of different lines.
All of the inventory was tracked by serial numbers and it was interesting to watch it move because supply was often delivered to the warehouse out of order or shipments weeks apart arrived simultaneously.
If Hitachi couldn't consume your delivered HDDs as fast as they were delivered and anticipated any kind of delay/disruption could ever happen, they'd have some buffer of their own.
The logistics firm was the buffer allowing Seagate's product rate and Hitachi's consumption to be asymmetric in nature.
Yeah, spot on. One of my college professors used to compare it to a river with rocks in it. If you want to safely sail on the river, you can either a) keep the water level high enough or b) remove the rocks. In a production system inventories/buffers are the water level and variance is the rocks. The philosophy of JIT is to remove as much variance from your system as possible so you can lower your buffers. If you have identified areas of high variance you're forced to keep buffers until you've removed enough variance to lower your buffers.
No they don't, automotive semiconductors suppliers have an "obligation" to manufacture the component for at least 15 years, which makes managing the production output planning, spare parts etc. much easier. It's not like walking into your supermarket and finding out that your favorite brand of chocolate is no longer available. There are minor exceptions, and sudden changes in the demand might affect the immediate availability, but at the very least the part is almost guaranteed to be produced for 15 years with defined notice policies. Microcontrollers don't have a pin-compatible drop in replacement when they get discounted, but many different ICs do, like power supplies, transistors etc., so discounting them is not a big deal.
e.g.: https://www.nxp.com/products/product-information/nxp-product...
> Participating products are available for a minimum of 10 years from product launch (15 years from product launch for many products developed for the automotive, telecom and medical segments), and are supported by standard end-of-life notification policies.
Toyota and a lot of the concepts that come out of Toyota are ideals to strive for. It doesn’t mean everything is like that, which is hard to understand from just reading the lean literature.
It is smart to project to the world that just in time manufacturing is effective and then stockpile parts. This will get you ahead of competition if there is a problem like we experience now.
One criticism of Toyota's production system is that they aren't so much "just in time" as it sounds on the surface, rather they just force their suppliers to run the warehouse instead of them. Which still makes sense - Toyota wants to be in the car business, not the warehouse and logistics businesses.
And a related question: modern cars are full of tech because that's what market demands. Can we expect the trend to reverse at some point?
For compact/subcompact sedans/hatches and midsize sedans the OEMs typically make a super stripped down variant so they can advertise an insanely low "starting at" MSRP. Dealers don't typically buy a lot of them so they're very hard to find and you'll likely have little room to haggle on price.
Nowadays there's a pretty long list of mandatory electronics and everything has at least one bus network in it but if you want to minimize the number of extraneous modules on that network then a stripped down economy car is your best bet.
Rear view cameras are mandatory since ~2014 so I don't think this is possible.
No, they are nice to haves. anyone who is looking to save money on a car will buy a used car with those features because they get the cheaper price and the features.
Go for the Access version and you don't even get a radio.
Cars in, say, the 1960s were not "more reliable in general." It's not all semiconductor-related of course--they also rusted out quickly in areas that got snow--but 5 years/50K miles is about what you were looking at for vehicle lifetime. Also much lower fuel efficiency, to say nothing of lack of what we'd consider routine safety features today.
On that, Availability is the result of all the rest. With the important part of planned Availability, because that excludes stuff like planned maintenance. Arguably modern cars beat old ones in that category.
What's probably true is that older cars that aren't rusted out can probably be kept running by people with the appropriate mechanical skills even in the absence of proper factory/3rd party parts for longer than modern vehicles can. Given intact supply chains, modern vehicles are more available overall. But, to the point of the article, modern vehicles are more susceptible to lack of parts.
That being said, if I'd go on a 2k + mile trip I would put in some work to get the car fit for this. Looking at my dads VW camper, I'll just fill up drinking water, maybe gas and fuel. Without a serious amount of preventive maintenance those cars do have a tendency to break down so. I guess we are just not used to this kind cars or machinery anymore.
The chip-ification of cars has been going on for a really, really long time.
I think that is the largest appeal to me of older cars. There are only so many parts that can fail, and they are all repairable with some time and hand tools(and maybe a Haynes manual!).
(for people unfamiliar, a Haynes manual is a 3rd party manual customized for most makes/models of automobiles. It describes with pictures how to perform [almost] any repair.)
I don't remember how far my 1965 Austin Mini van had done by the time I scrapped it in 1978 but I'm quite sure it was much more than 50 k miles.
Is that true though? Average length of car ownership is at an all-time high of over 8 years. It was under 5 years just 20 years ago. Maybe length of ownership doesn't correlate to length of car life, but seems like a strong signal that car quality and lifespan is going up.
I merely added a small counter argument to the idea that cars of the period were necessarily short lived.
And you can also add laser eye and cosmetic surgery: have advanced by leaps and bounds in terms of safety and quality, while actually becoming less costly for the consumer.
That would be hard to pull off without chips. Although I guess you could keep it completely isolated from the rest of the car.
(Including by people who've been disqualified...)
Wouldn’t even power steering use it? Headlights?
Engines would have engine control units running some kind of real-time OS, anti lock brakes, anti traction systems, airbags, power locks with wireless keys. Climate control vs just “AC fan on”
Even some ignition systems have chips that do some kind of key exchange to start the car. (Yes you can bypass it but now you’re making a car that’s easier to steal)
There must be hundreds of chips in a modern car: Engine, ABS, wireless key, cruise control, radio, audio, electric windows, gps, battery management, airbags, seat-belt check, sensors, climate control, ...
possibly climate control (not needed for short rides, a fan will do), maybe even radio (can always add later) and electric windows
I'd buy that car if it was cheaper... I'd need AWD though, trailer hitch...
And they were actually much more reliable and efficient. Fuel injection was light years ahead of carburetors.
And I’d argue it would be impossible to meet emissions without computer control of the engine.
We went line down last week due to shortage of a chip for our component.
In reality, the shortage is somewhat self-inflicted, like toilet paper a year ago, but for whatever combination of real demand + hoarding, we can't get chips.
Extra points by diversifying from China/Taiwan
In direct opposition, Auto makers approach of minimizing inventory and producing "just-in-time" caused them to be vulnerable to supply chain or big market shifts
> New cars often include dozens of microchips but Toyota benefited from having built a larger stockpile of chips - also called semiconductors - as part of a revamp to its business continuity plan, developed in the wake of the Fukushima earthquake and tsunami a decade ago.
Take a look on the linkedin jobs in Shenzhen.
The trend IS NOT towards diversification. In the last 5 years since Trump's election, US multinationals were increasing their presence in China, not decreasing.
Google for example said to open "a small representative office" in Shenzhen 2 years ago, now it's a full giant RnD centre in the Ping An Tower where they shipped all of Pixel's development.
Apple had RnD offices in China for more than a decade, but they barely acknowledged their existence. Their people in the Kerry Plaza were prohibited by their contract to even show their employment for Apple in their LinkedIn profiles. Their Shenzhen RnD centre is where AirPods were developed, along with many other iPad, and iPhone sub-assemblies. Apple's VR goggles project had its start in Shenzhen as well.
Amazon had no presence whatsoever in China besides a failed Chinese Amazon.com launch. They left China, and then returned to move the whole of their Kindle, and Echo device development to Shenzhen. Now they are working on something rather cryptic there. Some suggest VR goggles of their own design.
Facebook... absolutely bizarrely opened their RnD centre in Shenzhen amid the COVID, just a floor below Google I heard.
Dell, Microsoft, Nvidia, Qualcomm, Intel — all conventional hardware makers were here since nineties, but I think they really doubled down on China recently as well too, to one up the dotcom upstarts in hardware.
e.g. Foxconn investing in capacity outside of China (India) and Apple being part of it (as customer)
In other words, the Silicon Valley is still going all in on China, despite 4 years of Trump, public scorn, trade war, rising costs etc.
In other words, they really gave up on any vision where they don't critically depend on China, and can run with critical assets in US only.
Claiming that the results of ag subsidies have been "nightmarish" with no further elaboration or citation does nothing to advance the conversation, it's simply a strongly worded opinion.
While I agree there are definitively some downsides to ag subsidies, I think the real question is if the interventionist downsides are worse than the non-subsidized downsides. As bad as they are, I'm not sure that incentivizing unhealthy food is actual worse than famine.
https://reason.com/2019/03/02/thanks-to-decades-of-governmen...
Maybe there’s an argument that we’ve moved passed the era of food scarcity when those policies were enacted and they should be modified. But I think a blanket claim that food subsidies are an inherent bad policy misses their point.
>The nightmarish results of agricultural subsidies in the US is an excellent reason to not involve the government
This sure sounds like you think it's a claim of subsidies being bad policy.
>The made claim was that the ineptitude and mishandling of agricultural subsidies is reason to reconsider
How do you combine the view that "ag subsidies aren't bad" with "the government shouldn't be in the business of managing subsidies" when the definition of subsidy involves the government? At first take, this comes across as back-peddling to avoid dogmatic cognitive dissonance.
But I'll be generous and assume you did not mean that ag subsidies are bad in and of themselves, but the way they are handled is poor. So what do think is a more proper way to handle them? Should the focus be on different products? If so, which ones?
The point has already been made that ag subsidies are operating as intended and the downsides you refer to are downsides of abundance. I have a feeling that most people who have actually lived with food scarcity would find them preferable to the actual "nightmarish results" of too little food.
I don’t know if we’re just talking past each other, but it’s hard to make sense of your stance. If you think subsidies are a viable solution to some problems but the US govt can’t manage subsidies, are you implying the US should not use subsidies, even on the problems they would solve? If so, can you elaborate on govts that have used subsidies to solve similar problems by better implementation? When govt is, by definition, who wields subsidies these are difficult points to reconcile.
Pointing out less than perfect implementation isn’t really helpful unless you can figure out a way to improve it. Just saying “the govt is inept” isn’t helpful when they are literally the only organization who provides subsidies.
I don’t disagree with the problems you point out but they come across as flippant “see!? See how bad the govt is!?” Dogmatic axioms might make someone feel good without actually addressing the problem.
I’ll give an example. I think subsidies need to have clear metrics to measure effectiveness and sunset clauses. This would help prevent things like alpaca subsidies meant to assist in the Korean War somehow staying in place until the mid 1990s.
The point of the subsidies was national security, not “protecting the family farmer” or “minimizing food waste.” To that end, they worked.
The U.S. government has decided that it's in our national security interest to remain a net exporter of crops.
If World War III broke out and all the borders shut down, America would still be able to feed herself. The U.K. wouldn't. There would be mass starvation in much of the first world, and people would say "the government should've done something."
All the diabetes is a pretty rough unintended consequence, I'll give you that, but shifting some chip fabs to our shores as a matter of national security doesn't sound like too bad of an idea.
Time and capital investment. It's like this generation of people have never heard of production and supply disruptions, and were oblivious to such things being possible. Frankly, this doesn't matter very much, it's not a critical situation.
The auto market malfunctioning short-term due to a pandemic doesn't present a strong argument for government intervention. Tesla can't make batteries fast enough, there isn't enough supply, its restraining their auto production, the government must step in and fix the problem! It's nonsense. The government should not step in every time there is a short-term problem in a market.
Toyota won't sell as many vehicles. So what.
I know, I know, but what if people have to make due with a three year old vehicle. What if they have to suffer and endure those vehicles being made to last for five or six years. Ten years! The horror.
Toyota won't die. Time will pass, during which necessary investments and adjustments will be made. Supply will be increased. The problem will be fixed. It's as simple as some time and capital investment. The companies that maneuver the best will come out ahead, gaining an advantage on their competitors. And the world keeps on spinning.
Toyota has generated something like $90-$100 billion in operating income the past five years. They have the resources - and then some - to fix the problem. If they choose not to or can't that's their own incompetence, their competitors will eat their lunch. Never feel bad for a corporation earning $20 billion a year. If they can't get their production corrected, someone else will figure it out and reap the benefits.
It does not matter as much as is being portrayed. This is not an important problem and does not warrant the government burning its time and resources to step in and fix (assuming they can help at all). Governments have a lot of other far more important things to be focused on.
Thousands of employees lose their livelihoods as factories shut down?
I am by no means against government intervention. Companies have short memories, and market forces will force eventually pressure a return to JIT. But now is the exact wrong time to intervene.
The Fed was established by Congress and the Chair is appointed by the President, however the Fed is still a private institution. That independence makes it a very different organization than what most people mean by government.
If you're going to point a finger, the Federal Reserve is a very good institution to point at.
The cycles only make sense because people like and want them. I.e. they love the scarcity of money. For example, in a depression the return on money is greater than the return on labor, people logically flock to money rather than labor even though real wealth is eroding as people stop working.
http://rootbug.com/how-could-it-be-solved/taxing-money-throu...
Let me put it in my own words:
If republicans think that unemployment benefits compete with private businesses on labor, then I get to think that 0% interest money competes with labor for capital.
The fundamental problem is that the 0% lower bound combined with a deposit guarantee represents not only a minimum wage for capital. It also presents a job guarantee. A minimum wage doesn't guarantee you a job.
So yes, the Federal Reserve is not responding to market conditions at all. It's artificially holding up interest rates at zero or above. This is causing massive distortions in the economy that can only be fixed by a swiss-army knife of policies. Among one of the needed responses is "free and open printing of money". The world economy is already flirting with disinflation (a reduction in inflation). If you don't have negative interest rates you will need a whole load of "money printing" to keep the system standing in place.
The assumption that a scarce money system (i.e. guaranteed non negative interest) has a fixed velocity of money is absurd. Put interest at -5% and just watch everyone withdraw cash from their bank account. The velocity of cash would be basically be zero and the velocity of money on bank accounts would be extremely high. As the government is doing deficit spending all the money just piles up somewhere and ends up doing nothing. QE is even worse because you cannot spend centralbank reserves to buy groceries.
Ok, let's do the negative interest thing. It sounds like a big hassle right? Just think about the benefits: The first step after negative interest ratess would be to adjust the inflation target to 0% meaning perfect price stability. Actually, you wouldn't target inflation at all because the negative interest rate completely replaces the need for inflation. You would target the CPI itself meaning your goal as the government would be to maintain a CPI of 100 for all eternity. Any deviation would become inexcusable. Meanwhile today inflation is a hack to make a broken money system work.
Don't blame the fed. Blame the money.
The government needs to recognize the fact that semiconductors are essential to national security and ensure we have the capability to produce our own.
I might be more time efficient by speeding everywhere, but that efficiency gain needs to be understood in terms of how much additional risk it incurs.
That's also obvious: the inefficiency in governments originates largely from coordination overhead between many competing entities with overlapping responsibilities. Self-regulating systems like markets do not eliminate that overhead, they just use other means of coordination that trade some of the complexity overhead for a time overhead - instead of having to coordinate a complex set of rules, you now have to give the system enough time to "find" its stable state. But when time is of the essence, an intelligent, singular entity without the need for coordination with anyone besides the entities to be regulated can always outcompete the self-regulating system when it comes to short-term stabilization (though not necessarily with regard to long-term stabilization, but that's not the issue here).
I'd call that quite a lot of "market management". But as everyone could see it resulted in the fastest vaccination ramp-up worldwide (excluding Israel, which was a bit faster, but is also much smaller than the US and which had its own way to get "preferred" access to vaccine produced in the EU).
I'm unfamiliar with this having happened, but if it did as you say that would definitely support your point.
> It then compelled the manufacturers into exclusively servicing the US purchase contracts
Wasn't this just a component of the purchasing contract? I would draw a distinction between cases where the gov was a purchaser and where it was not.
If other countries are implementing protectionist policies, like keeping semiconductors for themselves or supplying other nations first to curry favors or improved relationships, for example, it might be in another nations interest to increase fab capacity with its borders to avoid being vulnerable to those political and diplomatic factors.
There's all kinds of examples, but aerospace is a classic one. There would be no airline industry or commercial space industry if the government wasn't willing to bear a disproportionate amount of the risk when these industries were nascent. There just wasn't enough market demand to incentivize the private sector to do so on their own. So the govt sets up an incentive structure that brings the risk to a level where the private sector is willing to partake. The government is also generally more tolerant of longer-term scenarios than the private sector.
There are market failures where the government needs to step in, but this isn’t one. Even with climate change (where they should step in) the government can’t get to the point of saying it’s ok for gas prices to be high.
We don’t want the government to pick winners and losers when it doesn’t need to.
I guess it's "brand damage" but I feel there would be something more fair and honest if in times of tight supply they ran their own ebay-like store and auctioned them off. It wouldn't feel like a price hike and prices could automatically settle as supply/demand reaches parity.
I've never heard of this brand, are they big in regions outside North America? Or do they function as an ODM for other brands?
> MSI has admitted that one of its subsidiaries has been selling RTX 3080 graphics cards on eBay at almost double the MSRP.
> The controversy first appeared on Reddit, where users accused MSI of scalping its own RTX 3080 graphics cards on eBay under the name Starlit Partner. Since, it’s been confirmed in a Justia Trademarks listing that Starlit Partner operates under MSI Computer Corp and was first set up in 2016.
https://www.techradar.com/uk/news/msi-subsidiary-gets-caught...
They did. There have been at least three major prices increases which rocked entire industries.
There have been reports of people paying 30x the usual price.
https://www.scmp.com/tech/tech-trends/article/3133901/europe...
Now you have a chip shortage, and you can only produce 50 cards. If you charge $200/card, you only sell 10 cards, earning $2,000 in revenue. If you charge $100/card, you'll sell all 50 cards, and earn $5,000 in revenue. So it can still make sense to keep the price lower if it makes you more revenue overall.
What you've described is nothing like a real market. Where are the people in your model who are happy to pay $110? $120? If there are 10 who'd buy it at $200, and 100 who'd buy it at $100, surely there'd be 50 who'd buy it at $130 or so.
That ignores the social aspect entirely, too. How many who were originally willing to pay $100 will later pay $200 when they see others pay that amount for the item and it becomes scarce?
“Omg these [new market entrants] are messing up my ability to take screenshots of my framerate and never enjoy myself”
Well now its back to business use cases!
The scalpers can absorb the rising prices until the desperate companies no longer can afford the increase. That will cause the market crash, which is not good for anyone. I think government should regulate that space so that businesses engaged in scalping could no longer purchase nor sell the chips.
The whole point is for manufacturers to raise the price until desperate companies/consumers can no longer afford it and don't buy them. Im not sure where scalpers come in. If prices are set high enough, scalpers can't make a profit.
2. Price is probably a red herring anyways. I'm willing to bet that fab equipment suppliers are losing out not on price negotiations, but on volume negotiations. I.e., they might even be willing to pay more -- even much more -- than other users, but can't buy in massive quantities so don't go to the front of the line.
3. Is there any (legal) mechanism at the moment that prevents chip makers from increasing prices?
4. Fab equipment producers are small consumers of chips but have such a disproportionately high impact on the rate of future supply. In the midst of a global shortage, we could straight up socialize 0.00...01% of chips produced every year and hand them out for free to fab equipment manufacturers without even effecting the short-term price dynamics. I'm not actually advocating this, but the assertion that earmarking a small number of chips for a particular high-value use fundamentally skew the market in the short-term is probably false.
5. Even if markets can eventually work in this case -- and for the record I'm convinced that this is a perfect example of contract negotiators being extremely myopic -- market dynamics have non-O(1) time complexity and the chip shortage is wrecking havoc on the real economy.
My comment wasn't suggesting price controls or socializing chip fabrication. It was suggesting that we very temporarily give special treatment to a very small consumer of chips that has an outsized impact on production rate, in the midst of a global chip shortage.
Why would we do that if the fabs themselves don't think it is worth paying their equipment manufacturers enough to afford their own chips?
Giving "special treatment" is a price control. It is forcing a transaction that otherwise wouldn't settle at that price.
Because there is a global chip shortage that is making life substantially worse for the vast majority of Americans. And because markets are tools used by man, not the other way around.
Is it really? I don't know anyone who has had substantial impacts. Some prices have gone up, but I don't see the urgency.
> Some prices have gone up
Specifically, prices on new and used cars that most Americans depend on -- for better or worse -- to do basically everything in their lives (including getting to work, getting to school, getting food, etc.)
You're assuming that increased profit margins will automatically increase supply chain buffers. But rather, the same incentive to hire too many financialists that "save the company money" will exist, and the extra profit margin will just go to increased dividends.
And increasing the supply chain buffers won't help much right now either, it has to be done during good times. In fact I'd say most of the shortage is from companies deciding to increase their buffers, in the same way as what happened to toilet paper. "Hoarders" and "speculators" are easy illustrations to point to, but the real demand comes from regular consumers silently buying twice as much as they usually do.
I read GP's comment as increase prices to decrease hoarding, which in theory could provide the slack in the system. Problem might be that certain products may not be viable if prices get too high. Only those with sufficient margins prior.
It's like foodstuffs during the early pandemic - when you finally found something that they had been out of, you didn't particularly care about the price, and you generally bought extra so you wouldn't run out if it went missing again.
That's how it works in econ 101, but not necessarily in practice. Prices on many goods are less flexible than commodities like oil and lumber, for many reasons. Manufacturers may be locked into fixed-price contracts or distribution agreements, for example. Or a scarce component might be shared across "budget" and "premium" product lines, but the budget line is too price sensitive to change so the premium product goes up 10x instead. Or the company just borrows money and eats the loss...
In today's environment debt is cheap, so companies that might otherwise shut off a production line can afford to borrow and bid up the price of parts.
It kicks low value products out of the market and prioritizes the high value products.
"We don’t want the government to pick winners and losers when it doesn’t need to. "
Markets are not even remotely close to as efficient as you're implying.
In a clinch, people are making all sorts of crazy guesses at what the future will bring, making everything very inefficient. Remember that efficient markets depend on rational acting based on good information. We often don't have very good information at the unit level, and, we often act irrationally.
Some company flush with cash, decides to buy things at crazy high prices thereby denying the 'critical sources' (those that support production) access.
Right now there is a lot of parts hoarding - speculators buying up parts to sell them at higher prices. They're adding no net value to the system and causing all sorts of other problems.
The clearing of those prices may happen over time, but not without terrible damage being done.
Supply chains are not like stock markets with clear prices and instant transactions.
You may not need the government stepping in, but you definitely want non-market actions. For example, chip makers may want to work with their supply chains to ensure a kind of absolutism or preferential customer tranches.
FYI this already happens, all the time. Price is not King for parts, like it is on the stock market. Vendors of 'everything' are aware of the long term growth of their business, and will generally want to work with consistent buyers.
So in this FUBAR panic, supply chains have to think not about one thing, about many.
I believe that root causes was already a fait-accompli at the start of the pandemic when a bunch of parts of the supply chain shut down - we're still paying the price of trying to get things going.
Stability ==== good in undergrad engineering, but not here. We DON'T want production rate to be stable when we have a global supply shortage! Here, a negative feedback loop is stabilizing the system in an undesirable equilibrium.
I.e., the function that's being controlled in "supply of chips", the stable state is "saturated supply", and the negative feedback loop that maintains that equilibrium is "starving chip fab suppliers".
(meta: people down-voting comments on control theory terminology by two different experts in this field at least makes me feel a bit better about the signal:noise ratio on the vote counts on my other comments in this thread ;))
One of the most complex pieces of the semiconductor fab is the building itself. Even with plans and permits in hand, it takes years to make one that can output at reason throughput and yield.
This report is from 1999 and it hasn't gotten easier.
https://www.imia.com/wp-content/uploads/2013/05/Construction...
"Typically the product life of a semiconductor chip (nine to 12 months) is less than the time required to construct the facility and install the equipment for manufacturing (24 to 36 months). As such, the construction/commissioning process is a rapid, constantly overlapping and complex set of events. In addition, construction of semiconductor facilities is very complex and costly (about USD 1.2 to 1.5 billion) due to the extraordinarily sophisticated processes and equipment required to manufacture semiconductor chips."
That's an absurd underestimate of market lifetime. I'd bet that fully 80% of the chips available in 1999 when that report was written are still in production today (or would be, if not for the crunch.)
So positive feedback on a falling signal would tend to make it drop more. And positive feedback on a rising signal would cause it to rise more.
So, basically, for any signal S at time t, we would expect something like S(t+1) = S(t) + S'(t) * k, for some k > 0. And blatantly abusing derivatives for "should probably be a delta between S(t) and S(t-1)".
But, then, I am not a control theory specialist, I don't even play one on TV.
If it was negative feedback, the "error" (shortage in production) would lead to an error cancelling signal, and therefore an increase in production. Positive feedback has error leading to larger error, shortage leading to more shortage.
It is like saying that I tested positive for COVID-19 WRT my health because I don't have the virus, it is not what a positive test means and it will confuse anyone who knows the correct terminology.
https://thehill.com/policy/international/392636-schumer-on-c...
The amount of disrespect to highly skilled professionals in this thread working like crazy to respond to a massive exogenous shock, and then following it up with the idea that "well, the government should fix it" with no specific idea of how exactly, the government would fix it, is mind-bending.
Unfortunately, no Western government can do it even if its life depends on it.
German trade officials for example went and completely prostrated themselves in front of Taiwanese govt, and TSMC, offering anything short of switching the recognition of China to Taiwan.
It bounced off without any effect.
It was only a blank cheque from USA that made them to even scratch, and that is still pending that cheque being honoured, and cashed out.
In fact, I wonder how much of this really is chip supply vs general supply. Most articles on this open with headlines about chip supply, but then contains quotes from Toyota about "supply" and "parts" in general.
> The Covid pandemic boosted demand for appliances that use chips, such as phones, TVs and games consoles.
SOCs in phones and game consoles are produced on very different processes than chips used in cars, no? Cars don't need the smallest dies or most energy-efficient chips. These industries are not competing for the same capacity. Or am I missing something?
perhaps the engine ECU is not the chip that is in low supply
Yes, some of them are different. Consumer chips are not industrial norm, they have narrower environmental operating ranges.
The foundries producing automotive chips shifted production to consumer chips during the lockdowns, as the auto production lines were on hold. This caused supply chain disruptions. Add to that US > China IP export bans and you have a black swan event.
[1] https://techtaiwan.com/20210816/tsmc-speciality-technology/
[1] https://www.renesas.com/us/en/about/press-room/notice-regard...
They said their sales were up 50-60% over the last 18 mos, and that raw materials supply is down by a similar margin.
These are shock absorbers, not chips or toilet paper.
It seems like we're seeing the delayed effect on supply chains over the pandemic. There is surely no value in hoarding shock absorbers, and if distributors were the hoarders, they seem to just be sitting on them, not raising prices.
It has lost value against lots of commodities and "real" goods.
The way house prices work, often, is more or less banks determining prices via mortgage eligibility. Banks agree that a house is worth X. They lend X. That becomes the price. Buyers tend to be available.
People are so quick to see that credit expansion fuels price inflation in other areas, even the economy at large, but somehow diminish or ignore this with housing.
Obviously, supply constraints avoidable or otherwise, affect supply. In any given year though, the supply of housing does not change a ton. Where they do, you don't tend to have wild inflation... though you do often see bigger houses.
It's impossible to decouple housing from monetary policy. Housing is one of the few ways that buying power gets from A to B, where B is not a financial institution or direct spending.
There is a significant voice that would like to price cars out of private ownership. Traffic, pollution, safety, urban sprawl ... pick your evil and someone wants to eliminate private cars for that reason.
I regularly read about how the next wave of cars will all be somehow "shared", that we will whistle and they will appear at our doorsteps ready to carry us off to our 9-to-5 jobs in shiny glass office towers. I just don't see that happening anytime soon. Total conversion to electric cars in 10 years, maybe. Conversion to total ride-sharing and/or mass transit, doubtful in 30.
I'd prefer it if ICE cars were as expensive as possible in order for the planet not to burst into flames.
The wish to inflate housing prices causes NIMBY-ism!
I've tried to diversify to more international mutual funds, but they also tend to have higher fees.
I'm not sure they are really diversification though. The major US companies have a lot of international exposure already so you don't gain much diversification. And of course they don't really protect you from a collapse of the US government (odds are either they are hit as well, or you can't prove you own them anymore)
Which is exactly the point being made by the parent comment that you can't capitalize on the upside. You'd have to sell and step out for a while.
Today, they are worth x+y% of a new car.
If you trade up now, you will pay less for the new car than if you traded up two years ago.
Similar situation for houses. Even if we assume all houses have inflated by the same rate, you can still downsize and cash out. Your existing $600K house is inflated 25% and you can sell for $750k. You downsize to a $400k house which is inflated to $500k. You oversold for $150k, but only overpaid by $100k and you pocket the difference.
Sure, my purchase costs went up some, but no where close to the additional value I got over normal for my sale. Put it this way, I paid a few hundred dollars, maybe a thousand dollars more for the car than I would normally, but I sold my old car for thousands more than I normally would have been able too.
That's capitalizing on the upside for sure.
Heard of someone who sold while the real estate market here is superheated and plans to rent until it drops. Personally, I don't expect it to drop for a while yet (it hasn't really dropped for decades here).
And that's to say nothing of the opportunistic catalytic converter thefts if you park your car on the street overnight.
With a bike you don't expect it to be there after locking it in the street for more than 15 minutes. I don't know anybody personally whose car was stolen.
Is there similar plans in the US or at least some states?
I use one of these: https://yubabikes.com/cargobikestore/electric-boda-boda/
A relative uses one of these in the Boston area, year round:
https://www.ternbicycles.com/us/bikes/472/gsd
A friend loves this for their family:
https://www.r-m.de/en-us/bikes/packster-70/
Not cheap, but an order of magnitude less than a car ($10k/year by AAA’s numbers) over the lifetime of the bike.
It wasn’t cheap initially ($7000 CAD), but the cost per km drops enormously every year while the bike still rides as well as ever. The kids have all loved it, too. My youngest is disappointed when we drive places - he wants to walk or ride all year.
We do have a temperate climate which helps. Our cold days in winter are typically around 5 degrees outside of cold snaps, but even then we rarely dip below 0.
It’s a major quality of life improvement for us. They’re amazing grocery getters, you don’t get all sweaty on them, kids tend to love it, and they’re quite a bit easier to buy, maintain, and park than a car.
We went with the spicy curry because of its insane cargo capacity (we’ve used it for its full capacity many times, especially while bike camping), but you can spend far less if you don’t need to carry that weight.
When you weigh the pros and cons though, the condo can be alright. It's not my ideal at all but the things like the yuba can make that lifestyle so much more livable. More time with the family, more time to get out of the home if we want to, quick grocery shops, less money on commuting, etc - I think it could be alright. We fortunately live in a small city where you're only an hour drive from nature, so I suppose we could turn that into our "yard".
The last thing I want is my kids sitting in a car for 30-60 minutes every morning on their way to school. Or on a public transit bus, transferring and rushing around so they can sit in school for 6 hours only to bus back the same way. I know plenty of kids do it and they're fine, it's all fine, but it's not what I want for them. I wouldn't want it for myself. There's something to be said about shedding ideals (especially with living situations) but letting my kids be kids is one I don't want to compromise on.
(Amsterdam, Copenhagen, Malmö)
Something else is the problem. Maybe infrastructure or terrain.
I don't know that I'd do it again. The number of avoided-death-by-split-second close calls that I racked up in about five years is just too high... Now that I'm a bit older and have children, seems irresponsible.
This is in a city with relatively developed bike infrastructure, including separated lanes in some places. (Some) drivers just don't give a damn, and while I wish it was different, I don't see it changing any time soon either.
the worst part is our government is rewarding them for bad behavior, the article mentions the billion dollar chip subsidy program. So these companies made money outsourcing and will now make more by bringing it back. Instead they should put a massive tariff on any chip not made in the US. Companies that invested here would be rewarded for loyalty
Moreover the chips were never outsourced. Toyota never made its own chips, nor is it feasible to. You seem to have some sort of idealized view where a company internally manufactures everything it needs starting from raw materials. That’s not how it works, and that’s never how it worked.
Toyota is just a symptom, every other car manufacturer and other industries are facing shortages as well. The US economy is now strangled because our supply chain got outsourced for "efficiency" that didn't account for potential disruptions
Voters would have rewarded politicians who supported these tariffs by voting them out of office for making all their toys more expensive. Everyone likes cheaper stuff and more stuff in the short term.
- shareholders (more profit)
- consumers (lower prices)
Second, you could say shareholders == Wall Street, but you could just as well say that shareholders are pension holders, banks, insurances and small private investors. All of these simply want to have return on their investment that is as high as possible. If that's good or bad is an interesting question, but the bottom line is that very few people are without blame here.
plenty of people have been warning for decades how the reliance on manufacturing from other countries could have major consequences. The fact that a small island like Taiwan is probably the most important geo-political issue in the world could have been prevented with a little bit of long term planning
I am older than that (40 and my wife is 35) and while we have been independent professionals for a while, we now have a 1 year old so this summer for the first time in our lives we bought a house and a car.
It was definitely harder to find a house (mainly less availability driving competitive bidding) and it took a little longer to find a car and we ended up having to pay MSRP.
However the thing I can say is - the incremental cost/hassle of having to do these things during the pandemic supply crunch is almost irrelevant compared to having to do this stuff at all. We paid say 3% more for the car and ok maybe 10/20% for the house than we would have otherwise, obviously that's painful but if I was "just stepping into adulthood and financial responsibility" I'd look to avoid this stuff altogether.
EG: do you need to own a house? If you're a single person, "throwing away" money on a relatively inexpensive rental might be much wiser than "investing" in a house in a seller's market. Likewise, if you're young and single then you should relatively easily (depending on where you live of course) arrange your life to not need a car. It was very easy for us in NYC, of course may be different for you.
The point is that in my mind, "adulthood and financial responsibility" don't have to translate "got my own house and car" but simply "making wise financial decisions given my situation" so if there's room to be flexible, be flexible.
"Roofing Industry Faces Unprecedented Supply Disruption" (April 27, 2021)
https://www.roofingcontractor.com/articles/95590-roofing-ind...
As for housing, it's perfectly normal to rent for a while until you know you want to settle down in a location for an extended period of time.
The market is so screwed up that even a crash that halved the price would still be 4 times price back then.
Second, you may not be doing proper calculations. I would not have - before I bought a house. Do you count property taxes, upkeep, larger water and electricity bills, possibly longer commute times/needing a car, relative lack of mobility, air conditioner/heating/roofing/siding/repair, lawn maintenance, etc.
Yes sure, if I bought this house 10 years ago, it would have been great. But I wouldn't know 10 years ago that I'd want this house, and for example dealing with all the above shit as a single man would have been stupid. There were also points in my life where I was very open to relocation for the right job, something home ownership would have put friction on.
it's very common to think of only a pro or a con of a decision (if I bought earlier, it would have only cost X) but you're not factoring the risk that existed at the time, nor the commitment you're creating on yourself, not the carrying costs I described above.
May not be relevant to you but I feel fine about "losing out" on 20 years of house appreciation (if I bought at 20 not 40) because I avoided all that stuff for 20 years, too.
My parents bought a detatched home at 20 with minimum wage jobs. I bought a townhouse at 40 with a high paying career. My kid is going to be 60 by the time he can afford a home.
It's fucked. Buy now.
Ok you certainly should go for it, but I'll give you one analysis that I have. We bought in a NYC suburb (for a bunch of reasons) and here's what I think constitutes price risk for me.
At the end of the day, a house is worth what someone can and is willing to pay for it. Right now, there's reasons the demand is high for near-NYC housing because (a) people aren't sure they need to be near NYC long-run and don't want to risk it (b) it's an easiest move to make to leave the city and not go far (c) supply is low because with covid, fewer people are willing to have an open house (d) now everyone is in a rush to upsize so space is at a premium.
All of these are demand factors that can change. EG: (a) it may become clear in 1-2 years that permanent remote is an option for many people, relieving demand pressure on NYC and the area. (b) once people are comfortable with leaving the city they may be comfortable moving further afield. (c) the pent-up supply of folks who didn't sell in 2020/2021 may come to market, especially if a and b occur, causing people to want to sell before it's "too late" (d) everyone who needed up upsize may have done it, relieving that pressure.
Also, for New York state specifically, with the number of wealthy people leaving the states, it feels inevitable that state and property taxes will rise, making all of this even less attractive.
And finally, interest rates are ridiculously low right now, rising rates will be a damper on prices when that happens.
Obviously there plenty of reasons it could also go up, but if your model is so simple "it's fucked so it's always goes up" you may get fucked too.
Don't forget: Cities actually allowing housing stock to increase. Very unlikely but hopefully not impossible...
They're not making any more of them, and demand and prices only go up (until maybe one day they don't, I don't know).
You can say that about anything - limited run beanie babies, bitcoin, whatever. It's all true until it's not.
In the case of classic Porsches, next time you hear someone say that, ask them (a) what's gonna happen once boomers die out. Do genX/Z/millenials give a shit about a classic Porsche the way a boomer would? (b) what happens if/when we replace ICEs with electric and the gas station infrastructure goes away (not saying it will happen but it's one likely future path.) In the world where you can't get gasoline, is a classic car still valuable?
I don't know the answers to these questions but unless the person who is giving you advice has modeled this out, their advice is of no value.
On the other hand, if you're in politics, finance, or executive business management, it's been a really, really great last 40+ years.
The timing of my life events is one of the things I am most grateful of.
I graduated in 2014 and within a couple years I bought a house. Strong job market for an employee and low interest rate.
I know people that were getting PhDs, because they started undergrad in the aftermath of the housing bubble and couldn't find jobs when finished. I also know people that decided to buy a house before the bubble and are still stuck underwater, preventing them to pursue opportunities not in their area. I also know people that went into medicine as tuition became ridiculous and have no way of servicing their student loans.
I guess what I'm getting at is count your blessings. Others may not be as fortunate as you.
If the supply of these chips causes a loss in supply of in demand items, like cars, then it will cause an increase in the price of cars.
The thoughts are that this is temporary, until the components that are in low supply can catch up and meet the demand.
But if the lack of supply lasts for too long then people become used to the increase price and manufacturers can just keep the price there at the inflated price. Now it's permanent inflation. Or that can happen if the supply doesn't keep up with the demand.
If supply goes down, prices go up. If money supply grows, prices go up. If money velocity (number of times money changes hands in a given period) goes down, prices go down, etc.
(It's worth noting that in 2020 when money supply exploded, money velocity fell by a lot, which is why GDP fell, and why there wasn't that much inflation)
edit: s/inflation/prices/
Inflation can be caused by many things: reduced supply, increased demand, expectation of future price increases, degradation in the quality/desirability of alternative products (eg bond yields), and, yes, an increase in the amount of dollars chasing an asset class/product/service.
Re: your original question, to be a bit pedantic, the supply of money on its own cannot cause inflation in consumer goods except via extremely odd channels (e.g., inflation expectations). A trillion dollars sitting in a bank account has approximately no effect on prices. Like a bullet in a chamber, money at rest has no effect on consumers' experience of inflation until it's propelled forward.
But it's important not to conflate causes with definitions. Also, attributing causes of inflation to particular instances of inflation is often extremely and inherently political. The inflation we've seen in consumer goods is a complex phenomenon with many disparate causes. Beware of anyone selling you a "just-so" story for the cause of inflation in a few dozen disconnected goods and services.
Especially if that story aligns perfectly with their ideology/product/investment/political campaign.
And even more especially if they start the story by conflating one possible cause of inflation with the very definition of the thing.
If you give the bottom 80% of the income distribution more money, they will spend it right away like a river. If you give the 81-90%, portion of it will be saved in their lake(say, a 401k) and they will spend some of it. And if you give the top 10% more money, they save all of it in their reservoir.
The way that we have been introducing new money into the system is not by melting ice in the middle of the ocean. We also haven't been raining all over. The key way that new money has been introduced over the past 50 years is by lowering the interest rate. When you lower the interest rate, what happens is that people refinance, and suddenly they can pay less, but quickly realize, oh, I can also borrow more, so they do.
I'll show you a few numbers, which I got by going to the zillow housing affordability page with default settings. I only modified the interest rate, all other values stay the same.
Year | Average Interest Rate 30 Year Fixed | Home you can Afford
1981 | 18.39 | $124,797
1991 | 9.00 | $200,862
2010 | 6.26 | $244,531
2020 | 2.67 | $328,569
And so what we see people and REITs and companies doing is taking out larger and larger loans, and putting those dollars into assets. Companies take out a bond and buy back their own stock. And why wouldn't they, it's profitable because the environment makes it so. And that money flows throughout the system. We can track the inflow of all of this money by looking at say.. the M2. This seems to be the crux of your point, if the amount of money in the M2 has gone up by 40x since 1971, why is inflation not out of control?
The CPI is a measure for inflation that does not track the oceans water level. The M2 tracks that, and as you can see the M2 is out of control. The CPI doesn't track stock purchases. If the CPI were to track stocks weighted at 1971 levels, inflation WOULD be out of control. The CPI tracks, specifically, an average of tangible items that the bottom 80% spends their money on. Therefore the inflation number is based on the height of certain rivers. Now that's an important figure to keep in mind, after all if you get inflation in that bracket and income isn't rising, you quickly run into a revolution. And so that's what the FED has found, if you track the CPI you get the perfect amount of heating to boil the frog without them noticing.
But when you introduce money into the system by lowering interest rates, you are in effect giving the money in proportion to the assets already owned. Someone bought that home in 1981, and someone with the same exact income would bid 328k for it today. You basically tripled(and it was a leveraged sale, so 15x!) that home owners asset, without any need to compare anything else, like actual income rises, or for instance SF has moved upmarket which would also effect prices. And so if you don't have much assets, it's a desert. If you do, it's a rain forest. And because the wealthy already have all that they want, demand for those items that the bottom 80% spend their money on doesn't change. So the supply and demand of those items don't change. So the CPI value stays the same. But money was introduced. If you take a look at the velocity of the M2, the M2V, you can see this take place. The wealthy get the gains of the new M2 dollars, and store it away. The more dollars created, the lower the velocity.
The lower the velocity, the lower inflation. But that rain is being stored in the reservoirs. If inflation causes stored wealth to lose value it's like a dam bursts and the wealthy start to spend and not save their money, it starts as a trickle and ends in a tsunami.
"In July, some of these sectors (used cars in particular) experienced a big deceleration in inflation, bolstering the argument"
https://news.yahoo.com/us-used-car-bubble-burst-141009925.ht...
"The price index for used vehicles rose 0.2% in July, after having risen at least 7.3% in each of the previous three months. The category was one of the few, along with hotel rooms and airfares, that drove recent inflation, the economist Paul Krugman pointed out on Twitter. “Combined, these three sectors account for…more than 1/2 [half] of inflation over the past three months,” Krugman wrote. In May, in fact, a full third of the overall price rise was due to the surge in used car prices."
Car dealership inventory was very low due to currency controls and wait times at car dealerships increased to months.
A slightly used car, inmediately available for sale, was more expensive one than a new one with months wait.
Inflation is the systemic increase in all costs of what a household would buy as money itself become less valuable.
Prices 'inflating' on a single product because there's a shortage of... base materials or whatever is not inflation as an economic term.
A lot of the people screaming about inflation were doing so using the argument that there's too much spending and the "excess" money supply will cause the US to turn into Zimbabwe (Fed printers go brrrrrr): demand-pull inflation.
The price fluctuations caused pandemic-related supply issues (cost-push inflation) don't have much to do with money supply and stimulus packages.
* https://en.wikipedia.org/wiki/Inflation#Keynesian_view
If things get too hot, it's easy enough for interest rates to be pulled up, but given un/employment isn't at pre-pandemic levels, policy makers may let things ride for a while.
Economists who study these phenomena tend to be a better guide than reporting that is in the middle of reacting to dramatic signals like shortages and fast price changes.
Just a month ago, HN was rife with lumber apocalypse.
In mine, dairy is a strategic industry that is coddled by government so that we can have a local source. But every country thinks that so there’s foes and allies that can supply us UHT or powder milk on a moment’s notice. And if our milk supply disappeared tomorrow, everyone over 1y could substitute with 10000000 different things for nutrition.
Cars are another. Every country props up its auto industry, so why worry about a domestic supply?
Meanwhile, there are critical components, pharma ingredients or other inputs built in 1 factory in a country we could likely end up in a big dispute with.
Just goes to show that industry protection has nothing to do with risk/dependence on that product, and everything to do with picking and choosing which industries are important voting bases.
I read some year ago that there were laws in US which at least somehow discouraged the pharma from shipping manufacturing abroad, and it was the big pharma itself which lobbied these laws out.
This is how China held US at gunpoint in the early days of COVID — "Stay put, or we pull 90%+ of your antibiotics supply"
And on a bribes and corruption basis, to some extent, too?
For example, I never thought about what are the strategic industries, when voting.
You're clearly not a dairy producer in Wisconsin, a military contractor in Virginia/Maryland, or a property owner in Southern Pines, NC.
But he also saw the job as a lifetime career, which is partly generational and partly just a different mindset because a lot (most?) of the engineers there were former military.
I will say, though, that his mindset generally made for a very friendly and nurturing team experience.
I was just giving it as an example of how whole tertiary industries that aren't directly part of the military-industrial complex will none-the-less vote (R) like their lifestyle depends on it, and for the same reason as contractors.
West Virginia has "Friends of Coal" license plates. Indiana has IUOE license plates. etc.
Wow, I had no idea
I work with software, maybe in a way then I'm in a happy bubble
War. In the event a war breaks out, a running auto plant can be re-tooled relatively rapidly into a light and heavy armor plant. It's not even a question of whether allies could supply tanks and troop transports; it's about having domestic capacity to make them because enemies could execute blockades and disrupt allied resource supply.
> whether light and heavy armor is actually of military worth in an era of drones and air power is a question I don't have the military training or knowledge to answer.
On this point, it obviously depends on what kind of war we're fighting. The British used unarmoured and open top Land Rovers with 50cals mounted on the rear for the first few years in Afghanistan until the government got its act together (they looked cool, but were IED death traps). There's a similar story with the Humvee.
Nonetheless, civilian style vehicles had their use.
One scary fact that I learned is that, in war games between China and the USA, China almost always wins due to superior production capacity. Those $100B American battle carriers and $40MM advanced fighter jets can be taken out by $50,000 rockets/missiles produced at a rate of hundreds or thousands per day.
Plus, any destroyer launching these at targets deep in Chinese territory will be within range of Chinese missiles. And, as we saw in Syria, Russian air defense systems are pretty effective against Tomahawks, and we should expect Chinese systems to be at least as effective.
No they aren't. They were designed with the assumption that GPS wouldn't be available and instead will rely on terrain tracking.
>Plus, any destroyer launching these at targets deep in Chinese territory will be within range of Chinese missiles. And, as we saw in Syria, Russian air defense systems are pretty effective against Tomahawks, and we should expect Chinese systems to be at least as effective.
What are you talking about? We had satellite imagery with holes in the ground that disproved the Russian claims that they shot down most of it.
Nothing you said is factual.
> The issue is that China needs energy and other natural resources to sustain production which the US and allies can effectively blockade.
You just answered your own question.
They are so hostile, and aggressive exactly because of that immense insecurity, and fear.
It's the mental model you pickup growing in any red country: you never acknowledge your weaknesses, lest you want them being instantaneously exploited.
On other hand, you feign a polar opposite. It's everywhere in China:
— Far from rich people in small towns buying fake Ferraris
— Dumb companies hiring fake "big name foreign executives" to mumbo jumbo their plans to investors
— "Advance to retreat" tactic
— Chinese businessmen hiring a service of "fake thugs" and tatooing themselves to appear "tough mafia men" to scare off actual mafias
The US loses many war-games against China in the short term as China has local numerical superiority of weapons. US armed forces are spread all around the world while almost all of the PLA is near mainland China. In the opening salvos of a Taiwan conflict China would flatten US bases in the region which would be devastating.
But long term China is effectively an Island. Its geography means that it imports nearly everything it needs by Sea. It imports 10 Million barrels of oil a day. It is not food secure. It imports nearly all of the raw materials it needs. While the PLAN could dominate their near shore, they cannot escort super tankers from the Middle East all the way back to China. The USN has had a carrier strike group in the Persian Gulf for decades.
The missile argument is also just nonsense.
US has enough nuclear munitions to outright defeat 1 equal superpower in a first strike scenario.
I wouldn't call half the population of the US dying in 30 minutes, and most of the other half over the next 30 days to be much of a 'victory', and I don't want the DoD to even consider employing anyone who would.
Also, US China conflict depends on entirely 'where' and 'over what' and what each nation is holding up it's sleeve.
China does not have $50K rockets that it can use to down 'reasonably stealthy fighters' and as we have seen before, tactics combined with good tech gives overwhelming odds. For example, if (big 'if' but entirely plausible) the US can maintain air superiority in a particular region ... then it will basically maul whatever is before it. As just one example.
China is building 100 subs that are a pretty big threat to any navy ... but we also don't know about advanced US tech that may render them completely moot.
If there is no huge leverage by one side, it happens on land, and over a long time ... the then 'home team' will win.
Stealth is a lot easier in water than it is in the air.
The funny thing about a centrally-planned dairy system is that it takes very little disruption to destabilize it.
Car factories might not make good tanks, but the mechanical engineers and tooling knowledge is invaluable and can't be scaled up overnight.
Same with solar panels, there's a reason both Obama and Trump imposed protective tariffs. One of the few areas both parties agree to. PV panels are the future of energy, so you need to have domestic factories no matter the cost.
Another benefit of domestic factories is domestic innovation. It's much harder for an engineer coming out of university and going through their career working at an office computer terminal to ever make a breakthrough innovation, if they can't step inside the factory to see how things are really done.
If that factory is down the street, it's much easier to do an apprenticeship, get a tour, or chat with the manager about their pain points. If it's in another country, you'll have to schedule a formal visit and you'll probably need to be a very important customer for that to happen.
Grad students coming out of a research lab would tend to focus on getting an extra 0.2% cell efficiency, but it's more likely that the innovation that makes PV competitive is something like reducing the scrap rate, or figuring out how to run cells through the QC machines more quickly.
What would the land be doing without subsidies?
Worst? Really? You think corn fields survive nuclear war? An asteroid the size of you know what?
The stuff is so specialized and automated now that even the workers probably wouldn't have much translatable knowledge as WW2 days. You would i guess have a supply of welders to lean on at least that would ramp up faster than someone fresh.
But I doubt a factory that makes modern cars can handle making M1 Abrams without so much additional tooling and extra equipment that you are halfway to making a new factory anyways. (they could probably handle making light vehicles like cars and bikes at least)
Maybe if we had mass production style designs that were built purpose first to get cranked out. But we don't, and there isn't profit in that for the Military Industrial Complex.
Especially in capital intensive industries, say cars, all of the competing countries are propping up or bailing out their auto industries. So even if companies should theoretically die and get replaced, there is a structural disadvantage as the competition in other countries has an insurance policy against companies failing (bailout / subsidy / tariffs / strategic protection / etc).
I figure there are also different definitions of strategic depending on the size and capability of an economy. The US is large and geographically fortunate enough that it theoretically "could" be almost entirely self-sustaining if it set its mind to it. Fuel, semiconductors, transport, lumber, food, guns.
Did you consider that it's because people need an income to survive? Employment is objectively a basic need for anyone who doesn't own sufficient capital being that they have nothing else to sell but their labor.
The population can relate just fine. It's just there's no one rich and powerful who wants to make the investment that is making it an issue.
You may say "But semiconductors are used in far more devices than phones and computers", but I'm not sure the average person realizes that. Well maybe they are now when they can't buy the car they want because it's delayed due to semiconductor availability.
> wait, I paid thousands of dollars for my phone and computer, why are we paying them to build plants here, don't we pay them enough
This line of reasoning isn’t generally extended to any other area of production, so I don’t see why it would apply here.
https://foundersbroadsheet.com/does-the-semiconductor-indust...
Supply and demand shocks will work themselves out fairly quickly if just left to market forces without government involvement. But a large section of the US population is under the delusion that if there’s a problem, only government can fix it.
https://thehill.com/opinion/international/560338-government-...
One part of the legislation, the CHIPS Act, allocates $52 billion to subsidize the construction of new chip factories in the United States. Officials believe it could result in seven to 10 new U.S. factories. Although a national security case can be made for it, too much subsidy can do more harm than good.
Using a simple example people understand they can't get consumer electronics like Xboxs, Playstations, and Switches because of the electronics shortage. People understand there is a car part shortage due to electronics. These aren't high information people talking to me about this. It's understood there's a chip shortage right now by the general population.
People are fine with and nobody really argues that America should support a steel industry. Frame the argument the same way and most people would be ok with supporting a technology infrastructure local to America.
The other issue that hasn't been touched on is that a chip subsidy will probably only benefit 1 or 2 states, where as agriculture and other commodity level subsidies get spread out so there's less political will to make it happen. (along with a zero sum attitude in politics that if X state is getting money it means my state is not getting that money)
It's actually a pretty critical geopolitical issue, sense there's a real chance that China makes a move on Taiwan soon (soon being within the next 10 years), which will result in either the destruction of alot of the chip infrastructure or China with global control over chip infrastructure.
I'm kinda surprised countries like Japan and Korea aren't making moves to address this by starting their own fabs. (Maybe there are?)
Canon is the other major vendor of chip lithography equipment, but I don’t know where their EUV processes are, or what the major chip manufacturing companies are in Japan that they would be sourcing for.
Japan really has no presence in this business. Japanese automotive chip makers like Renesas had fabbed chips in-house, but decided to outsource everything to TSMC back in 2018. In fact, most automotive chip makers, such as Infineon and NXP also use TSMC -- the company has something like 70% of the market share.
Now, the real issue here is that the automotive chip business is fairly low-tech and low-margin business. TSMC has been around and has been making MCUs used in cars for a long time, but it seems others are less willing to jump in b/c it's going to take years to recoup their investment.
According to this page, sorting by cost, https://en.wikipedia.org/wiki/List_of_semiconductor_fabricat...
the most expensive fab is 33 Giga$. TSMC is 17G$. pennies on the dollar in our 1-3Trillion infrastructure bill.
Make america fab again.
EDIT: it appears this is in the 2T infrastructure bill. https://www.eetimes.com/biden-ups-ante-to-50-billion-for-chi...
Given that they will return
It's also 3 years away from opening in AZ (2024). Then they have to fine tune the equipment and processes over x runs. New plants tend to have low yields until those processes are smoothed out and perfected. You don't just set up a plant and start churning out chips with 98% success rate at 5nm once the factory is built. It probably takes 5-6 years from construction start to churning out quality chips in numbers that are actually profitable.
ASML has engineers who go out and spend months or a year or more, just taking various measurements of the location inside the building at the site where the machine will be operating. Then those engineers go back to Eindhoven to oversee the building of that machine from the ground up, and run through proving cycles. Then the whole thing has to be taken apart and shipped and then rebuilt at the site. And then there are months afterwards as the team does further work and testing before they can finally use that machine for production purposes.
The Saturn V rocket was much easier to build and move. Nothing the rocket industry has can compare to the difficulty of building and moving these machines.
Disclaimer: I worked as a consultant at ASML for several months, helping them to rebuild their Unix infrastructure systems that they used to support the engineers who did all that design and build work.
But, if we assume they were, just double the cost as a sign-on bonus for all the engineers and poach away.
This is problem that can be solved with money, and not a lot of it in the grand scheme of things.
The US is subsidizing a TSMC plant here, which should help the situation, as it'll give us access to their engineers and cross pollination. But it's still tiny compared to the need if we want to move the majority of our chip imports to domestic.
Running such a production is difficult.
Making chips seems to be quite a bit more complicated than making and launching rockets, I don't think even Elon Musk could do it.
Tbf, many (most?) government websites are built and maintained by private companies. Remember the ACA website debacle a few years back? The government was mad at the contractor for building a shoddy product. They claimed they would take action against them but I’m not sure anything happened. If the government should be held to task on anything it should be an inability to write good contracts or hold companies feet to the fire. I’ve heard civil servants are unwilling to to the latter because they don’t want to hurt businesses or are afraid of legal protests.
var a = 1; a = 2;
Before I got any further they blurted out “that’s false! The second line is false” and this was someone who had been writing production code for the government for the last five years.
I honestly just felt really bad for them, more than anything.
I’ve seen some orgs rely on rely bad programmers because they were relatively cheap. Programmers who make changes on the fly in meetings to live production systems or say their test plan is to push it to production and just wait for customers to send in work tickets when they encounter a bug. Or blatantly lie about feasibility because they would prefer to work in an antiquated framework rather than learn a new one.
The govt owns some responsibility for lack of technical oversight but I can’t help but think a lot of it is due to business contracting incentives.
Exports won't offset operating costs here in the USA, but perhaps we could apply some ingenuity to that through national research investments and the ensuing startup ecology. The ancillary benefits of funding research and small business infrastructure around the big fabs would be huge.
Sandia national labs has a ~3.5 annual Giga$ budget! That's _entirely_ publicly funded and represents about half of TSMC's operating budget (https://investor.tsmc.com/english/encrypt/files/encrypt_file... , looking at 50% profit yielding ~12 G$)
https://www.youtube.com/watch?v=TuW4oGKzVKc
That's what a president sounds like.
Politicians like MTG and Boebert are part of the system just to cheapen it. The crazier they are, the more off-tilt they are, the better the strategy works, the more it weakens the average Americans faith in the system. This strategy started with Trump, but it's started permeating every level of politics. The more wild they act, the more they can insist that the other side is being just as crazy.
But look what he did against racism vs Johnson (not that much compared to J.), and they both still pushed the Vietnam war. Kennedy had to work around the edges on entrenched racism to maintain his Democratic majority with southern votes. At least the parties are more honest about their proclivities today.
Another part is lax environmental laws. Hillsboro Oregon is embroiled in a suit with Intel where Intel dumped 100x the fluorine into the air that they claimed when D1X was first pitched. Don't need to worry about that stuff in Asia (for now).
Also, lead time. The x-ray litho machines take years to build and test. There are only two companies that make Intel's testers, and the lead time is years. So a "quick fix" isn't possible.
Speaking opinion: in the long term, it is mostly rich people trying to get richer that caused this. If greedy CEOs and shareholders would just be humans for once and think about the future we wouldn't have this trainwreck. That ain't ever gonna happen.
And the chips in question exist in the first place because...?
Prices in many foreign countries are wonky though, because of different cultural & economic systems. You can have a good lunch out (the equivalent of fast-casual; most eateries are like that) in Taiwan for about USD$2-4, and because the expectation is that you live with your parents until you get married, housing expenses are minimal. There's also a big oversupply of 20-30something labor, because the older engineers who built the company (and get paid significantly more) aren't retiring and so those skilled jobs aren't opening up. That's behind both the low prices for food (many young Taiwanese open small restaurants) and for entry-level fab engineer jobs.
[1] https://www.glassdoor.com/Monthly-Pay/TSMC-Process-Engineer-...
Edit: my source (potus) was mistaken apparently. A better source is below and involves non poaching and different restaurants (not McDonald’s as far as I can tell)
> About 80 percent of fast-food workers are constricted by no-poaching clauses, according to Healey's office. The other fast-food chains targeted by the states' investigation are Arby's, Five Guys, Little Caesars and Popeyes Louisiana Kitchen.
https://www.washingtonpost.com/news/wonk/wp/2018/07/09/11-st...
See:
https://www.factcheck.org/2020/07/bidens-false-claim-about-m...
https://www.politifact.com/factchecks/2020/jul/28/joe-biden/...
You should just adjust for PPP. The world bank estimates taiwan's GDP (nominal) to be 759M, but adjusted for PPP it's 1,403B. If we do the same adjustment for wages, we get $3165 per month, or $18.19/hr.
source: Parents are from Taiwan, and I have relatives in Taiwan who tell me similar price estimates.
https://focustaiwan.tw/business/202106300017
"The median employee salary at Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, reached NT$1.81 million (US$64,874) in 2020, up from NT$1.63 million a year earlier."
https://www.glassdoor.com/Salary/TSMC-Salaries-E4130.htm
Process engineer is like $73K/yr
So these, very skilled, employees probably get like ~15% less in Taiwan. No idea what Taiwan's employer tax situation looks like.
Sure, we can do small scale cutting edge prototype fabs, but the few production fabs we have here are not TSMC quality (go ask Intel), and they are already fully allocated. Many of those might not exist here in the country at all, if it weren’t for the requirements from the US military and certain other classified customers to have certain types of chips made here domestically.
We used to have a lot more fab engineers here in the US, but we outsourced those jobs and sent them overseas. And the people who used to do that work have moved on to other careers, or retired.
And the reason why Silicon Valley has so many EPA disaster area cleanup sites is because of the fabs(and related businesses) that used to be endemic in that part of the country. Fabs aren’t clean businesses to run. You’re going to have to find a place where you can run those dirty kinds of businesses, and that’s either going to be extraordinarily expensive, or even impossible, due to legal restrictions on the use of toxic chemicals, etc….
There’s a reason why those fabs are overseas. And all those reasons are why it’s going to be extraordinarily hard for us to pull that work back. There’s a reason why Steve Jobs and Tim Cook have both said “those jobs aren’t coming back”.
If staffing costs are 5% of of marginal costs, then making them 10% is fine if your residual income/profit is high enough.
I suspect you put a fab in Asia because you get higher profitability, not necessarily because you wouldn’t make a profit at all in the US.
Can anyone comment on what percentage of costs for say TSMC go on staffing?
America does fab. However not newest nodes at high capacity. It just doesn't take building an identical factory and hiring away engineers. There is a complete supply chain of specialist companies which produce or fix the part the part that goes into a machine that that ... . Not mentioning that those construction costs are at economies of scale of building factories.
Such a thing can't be build in the US as every state needs a piece of the pie. An US run copy will be more expensive even when you ignore wages. Extra spare capacity for emergencies is not sound either.
EU has lately been thinking about localizing chip production here, but they seem to be stuck in the same fallacy: we need a huge, gleaming fab on our soil. No, that is just the tip of the iceberg, unfortunately.
I think this time is quite a bit far off. But eventually will have sourcing price of just the raw materials. That said and regarding your next point -
"Ferrari and Rayban? Near-zero market value tomorrow."
On this I disagree strongly. Current trend is that IP becomes constantly more important. So that while manufacturing costs for said items may tumble, IP laws likely protect the sale of items branded as such. And the price difference does not likely result in cheaper prices, but in a bigger revenues.
For auto - companies do not exist in isolation. They're a huge pillar for other things, especially the local economy.
If you were the CEO of a 'region' that actually owned all of the businesses, this would show up in your balance sheet: it would be perfectly acceptable to lose money in your auto-making 'division' if it meant that the 'education division', 'healthcare division', 'civic division' were made profitable.
Japan also makes a ton of money exporting it's cars so it's valuable.
Finance, telecoms, farming and entertainment all have different reasons for being supported but the impetus in most cases is rational.
If anything we probably need more high end fabs and this whole 'single source with 24/7 operations' is maybe not worth it, we might just have to be paying a little more for our chips.
I say, take a step back, take some time and really automate plastic-bar production (yes, even the oil wells and refineries, and don't just put rocks in a container, belt them over there like a grown-up)
Only after producting enough for a full red belt, should you continue expanding into other branches, like robots and faster belts.
Don't they teach this stuff anymore?
You go through basic product planning and design, first quick MVP, then some feedback loops where you recognize some needed design changes, etc. Then once you have it figured out, you want more.
So you start scaling up. That scaling often necessitates refactoring, because it necessitates space and time management (no sense having a bottleneck in your system which limits your growth potential).
Then you have the aliens which represent unexpected problems and failures.
A while back someone posted about playing Factorio with job candidates as a way to see how they thing and solve problems. This is probably much better than most tech interviews. If you can be decent at Factorio, you can probably be pretty decent as a software developer.
Yup, Factorio is a nice way to learn about supply chains.
Unfortunately, like almost all videogames, it assumes the whole system is run by a benevolent dictator (i.e. the player). In real life, most of the complexity and most of the waste comes from the system being built incrementally and operated by great many parties in a mix of cooperative and competitive relationships.
I feel like the world could use a series of Katherine of Sky-narrated video tutorials on how to build out real-world infrastructure and supply chains.
"...and now let's see if we can get our shipping container shortage worked out; wait, what's this? Oh no, we've got a ship stuck sideways in the Suez, and all of the stuff and all of the things are stuck in a traffic jam in the Mediterranean and the Red sea. The sadness is real."
There is software in too many consumer goods, usually with very little benefit to the end user, beyond marketing and being able to justify a higher price tag (oooh, it's a "smart" toaster). I don't need the Toyota equivalent of an iPad on my dashboard.
I'm not aware of how you can do emissions monitoring through canbus (required) without chips. not sure how you can do rearview monitors (required) without chips. there are countless other things that are regulated that require chips. and competitor pressure for assisted driving technology like lane assist, blonde side monitoring, navigation/gps/etc all require chips.
the dream of going back to a chipless is a nice one imo, but they are just not legal.
I'm pretty sure you could design a car with few or no computers in it that would be on par with most cars on the road today in terms of safety. Sure, you'd lose some safety features like backup cams, but nothing that huge compared with earlier safety improvements.
One fallout of this is the rise in prices of old / used cars. To give you an idea, a 2018 Toyota/Honda minivan is Canadian dollars 10,000 higher than pre-covid times.
It's ok for folks who have a newish car and want to buy another used car as their current car prices would have increased. But if you are like me, who drives a 15+ year rusty old car and is desperate to buy a 3-4 year old car, then good luck. Not only are the prices much higher (and your car's value is junk) but at the same time, inventory (even for used cars) is super low.
I would have loved to live in a City / Country where car is not necessary but this city I live is built for cars...
Purely as a joke:
Maybe car manufacturers should revive the production lines to produce 1980s Toyota Cressidas, Camrys and Chevy Impalas.
My bigger question is: Why is there not a thriving "small business" chip fab industry?
There's a thriving small business design industry, but the manufacturing is a classical capital-intensive manufacturing business that also requires very specialist staff.
I think in general all chip manufacturers are at capacity and it comes down to getting in line. And I'm sure many chip manufacturers are trying to expand their capacity. I can't imagine they're sitting there thinking this will last forever.
Surely they're beyond worthless to anyone but the manufacturer and Toyota themselves?
> designed to go in to Toyota cars?
Chips rarely are designed for a specific car, and a car will also contain quite a few that are not strictly specific to automotive.
It's not a winning strategy.
Rushing to compete with them when they had a 4-5 years headstart is not a wise decision.
It depends which parts are in short supply. A lot of automotive parts are still on 20+ year old nodes. 90nm to 130 or even 180nm. I would guess those are not the parts experiencing shortages though. So that leaves the fancy stuff. Bummer if a car can't be built because the infotainment SoC can't be obtained because it's competing for production with crypto mining GPUs.
That's a big opportunity in itself.
Not really. Chip fabrication requires enormous upstart cost - IIRC, TSMC plans with something like 10-20 billion $ - and a lot of time, to the tune of three years at least (https://pr.tsmc.com/english/news/2033). There are not many companies in the world who have that amount of cash lying around, and even the ones who do like Apple still resort to using TSMC.
Not to mention it's not just the machines from ASML and a host of other vendors plus the cost of building factory-sized ultra clean rooms, but you also need the expert staff trained to operate the entire setup and a lot of fine tuning of parameters which are closely guarded secrets...
Which is why establishing a chip fab to me seems like an obvious national goal. It's a booming market with costs of entry that few private companies can afford, why not make it a national capability? Resilience and profitability in one package.
It takes years to setup a fab, but in the end it is a lot more cost effective, which is nobody is bothering to do the manual process even though we know it will work.
https://asia.nikkei.com/Business/Automobiles/Toyota-to-cut-g...
On the other hand, Tesla is tiny compared to Toyota but is probably more flexible and can adapt faster, e.g by using alt chips with new firmware and by using fewer chips per vehicles (to be proven, but we know Model Y has half the number of ECUs of Mach E / ID.4 for instance).
Also, without dealers, Tesla could better manage their build-to-order system and pricing (to push customers towards high margin vehicles and forgo volume growth while the shortage continues)
Wait, isn't this what people tell us is wrong with dealerships, and why the Tesla method is superior?
It's almost as if we would need to lean into this, reducing growth and producing fewer cars would be in line with efforts to mitigate the drivers of climate change.
What if car manufacturers pivoted their KPIs and focused on making long-lasting, serviceable vehicles? Toyota is already the worldwide leader in these, as evidenced anywhere that's not smoothly paved suburbia-land.
Scarcity drives prices up putting things out of their reach.
The developing world also makes cars. India - to name just one - is among the largest exporters of vehicles to several countries in Africa.
No, people in the developing world do not drive hand-me-downs from the West.
Well, to provide a different perspective, there are car plants around the US that have been shutdown for months and the people formerly employed there haven't been able to work.
Not necessarily arguing that more cars are better, just its not only shareholders and executives who are hurt by the chip shortage.
Newer cars pollute far less than old cars.
>What if car manufacturers pivoted their KPIs and focused on making long-lasting, serviceable vehicles?
They do make long-lasting, serviceable vehicles. Where have you been?
More cars pollute more than fewer cars.
It must be nice to live in a sunny place where you can walk or bike to work.
Unfortunately, the rest of the world, including that which services fancy "green" neighbourhoods, require vehicles.
I tried renting a car and despite being sold out in the vast majority of places well ahead of time it was 2x the normal base price.
They typical car lasts 10-15 years. Cell phones about 2. More people have a cell phone than a car. Sure the car has more chips, but not by enough to make them bigger than phones. (Phones and cars mostly don't use the same process)
Still no info on the order, except that the factory in France is on shutdown in August till the 23rd. Except:
> Until now, Toyota had managed to avoid doing the same, with the exception of extending summer shutdowns by a week in France
Which means it reopens in September...
> Toyota is to slash worldwide vehicle production by 40% in September because of the global microchip shortage.
Oh boy. Hopefully my order is in one of the first in the queue.
I can't help but think that this massive shortage is setting up and equal an opposite reaction 2-3 years down the road: a glut as all this new capacity comes online. Especially given that because companies are now scrambling for chips, they're likely to over-order to ensure future supply.
Not all cars have that, manufactures have been using the above to stop theft for years.
Is there an officially designated cost/reduced risk ratio that policy makers can go by to determine if a regulation is worth while?
Is a regulation that costs 1 billion dollars to save 10 lives at 100 million a life considered worthwhile?
Is a regulation that costs 1 billion dollars to save 1 million lives at a cost of 1000 a life worthwhile?
Is there even an officially designated cost per life saved for new safety regulations?
If not it seems like a slippery slope, and the government can never overreach as long as it can justify the regulation by saying it saves a single life.
Reference: https://time.com/6086981/bipartisan-infrastructure-bill-brea...
My original point is what's the cost benefit ratio boundary of enforced safety laws?
[1]: https://www.nhtsa.gov/staticfiles/administration/pdf/Value_o...
Let’s reduce safety regulations because people want new cars?
Let’s reduce safety regulations to save corporations money?
https://www.eetimes.com/the-chips-are-down-with-no-relief-in...
1. I’m not sure how much of this has been independently verified but this commenter blames the auto manufacturers heavily: https://news.ycombinator.com/item?id=26931498
200mm had 12 month lead times before COVID, now we talk about years.
We are now witnessing the effects of our modern hyper-efficient just-in-time global manufacturing system.
Toyota is one of the last automaker to reduce production due to the current chip shortage, because they had enough chips for 18-24 months of production.
Edit: It seems some of Toyota factories in Southeast Asia have shutdown due to Covid spread in those countries resulting in shortage of parts supplied to factories in Japan. Reported to be 40% reduction in production.
Edit, what the other poster said.
> This drive for efficiency leads to brittle systems that function properly when everything is normal but break under stress. And when they break, everyone suffers. The less fortunate suffer and die. The more fortunate are merely hurt, and perhaps lose their freedoms or their future. But even the extremely fortunate suffer — maybe not in the short term, but in the long term from the constriction of the rest of society.
https://www.schneier.com/blog/archives/2020/07/the_security_...
when Supply cant meet demand we get higher prices, what am i missing here ?
(Currently, a lot of different prices are going up, and current inflation is high. But you can't just point to Toyota raising prices and say "See? This is what inflation looks like!" That is what inflation looks like, but it's also what not-inflation looks like.)
What do you mean "this is not reported"? Are you actually looking at the BLS inflation reports?
The fact is, semi-conductor price increases make up a tiny proportion of the average person's cost of living.
Do a massive push to target a different chip or even a FPGA. There must be something out there to run the software.
Most well known car brands have great electric cars now, but Toyota and their oil lobby buddies are trying to halt the progress. The decline of Toyota sales is good news for the world.
[1] https://www.nytimes.com/2021/07/25/climate/toyota-electric-h...
[2] https://insideevs.com/features/524481/toyota-hybrid-pioneer-...
Drop the authoritarianism it's unbecoming. There's a great country I can suggest you to move to if you want government control over everyone, feel free to PM me for details.
Edit: Alright, maybe declining trend: https://electrek.co/2017/08/22/tesla-model-3-body-alloy-mix/
Toyota been saying "don't worry guys, we fixed the rust issues, the new ones won't be rusting out" every year since 1985 and running a more or less rolling recall since the 00s.
Or was that not the implication of your comparison?
Teslas will last a long time because the most important indicator of vehicle reliability is one that they share more or less 1:1 with Toyota, customers who who put very easy miles on vehicles and dutifully maintain them.
That said, I fully agree that we have nowhere near the length of data set we need to know how Teslas will fare in terms of reliability and longevity (not the same thing) after adjusting for how they are used.
The implication of my post is Toyota operates on a different scale than Tesla, and due to insufficient time having passed since the advent of Tesla, a claim cannot yet be made. I referenced Toyota because of its objectively highly ranked reliability based on resale price and famously low maintenance costs.
Like all the Toyota trucks used in military operations around the world? Those kind of "easy miles"? Comparing these two companies, with vastly different scales of operation, is kind of silly.
The edge between manufacturers in any given measurable attribute of vehicle performance is far, far smaller than a bunch of screeching fanboys on the internet would have you believe. If it weren't you'd see far less diversity of vehicles on the road.
The humvee is also used by militaries all around the world. It's not known for particularly great reliability. Militaries have a much difference set of objectives when it comes to labor vs supply chain complexity vs cost than civilian entities and individuals do.
Poor countries in Africa and the middle east use Toyotas a lot for the same reason they still use 7.62 intermediate cartridges a lot. It's what they have, it's what their supply chains are tuned for. It does the job they need, not necessarily with maximal efficiency but well enough they can't justify the cost of switching.
Meanwhile in the civilian market Toyotas cost more, don't do good incentives/rebates and financing is more limited. This drives people on a budget to other brands. This means Toyotas wind up in the hands of people who treat them proportionally nicer. A Tacoma rolls off the lot and into an upscale garage. A Colorado rolls off the dealer lot and into a commercial fleet where it will be driven by a bunch of people who aren't paid enough to care. A Camry will have one ass in one seat for the first 100k and it will go from home to work and home to work. An Altima will spend its first 100k dragging a family of four all of the places they need to go. A Sienna's first owner will go to home Depot, buy 3000lb of pavers and rent the truck to drive it home. A Town and Country's first owner will put that in the van without thinking twice.
See what I'm getting at here? Being expensive up front means that only people who can afford to be nice to things get their hands on them, at least initially, that means the vehicles rack up more miles and years before they see hard use. Any vehicle not fundamentally flawed to begin with can look reliable in the hands of these people. I can present other examples of this if Toyota is too emotional of a topic for people to discuss.
Also it should go without saying that we're talking in broad generalizations here.
I do agree with you that the scale difference between Tesla and Toyota is massive and comparison between them is silly.
Toyota did not start expensive, and even now it is not the most expensive ($/mile). They earned that reputation over many years, and while they may have raised prices, the resale market does not show any evidence of the quality slipping.
It is a very massive material effect.
>The people that are not going to put pavers in their car because they can afford not to and want to keep it nice are buying Denali Yukons or other more expensive, luxury vehicles.
That's exactly the point.
Look at how the Eddie Baur trim 90s Fords SUVs were/are over-represented on the used market for a very long time. They didn't get rode hard and put away wet like the lower trim ones. Look at the market for used GM sedans. The Caddys are pretty much always in better shape at a given age than their downmarket equivalents.
The difference is that Toyota, because of their unwillingness to readily offer good financing and incentives (driving up the effective "out the door" cost) ensures that the buyers of their vehicles are wealthier than those of comparable brands. Even at low price points this holds. You don't see a lot of Echos and Yaris's street parked in low rent neighborhoods whereas the Soul, Sentra and Focus are staples.
Other brands have the same effect going on (Volvo is a good example) but Toyota's is massive and they lean into it much more than anyone else.
>Toyota did not start expensive,
It has always been expensive, at least as far back as the 80s. Compare MSRPs to comparable cars from the domestics.
>the resale market does not show any evidence of the quality slipping.
The market is based on consumer perceptions that are driven mostly by out of doubt hearsay. It is unwise to trust the market to show much of anything.
I do not understand what this means. But I am simply stating that the data for ICE vehicles is far longer and the dataset larger, especially for Toyota and other reputable brands, to make a conclusive claim that Tesla’s reliability (and even maintenance) is less over the whole life of the vehicle.
Although I do not doubt that it is possible for electric vehicles to achieve this claim, and maybe Tesla already has.
Regular people definitely care how well their cars are put together, right after they care about the car's 1) price and 2) look.
Toyota has a lot invested in the hybrid architecture. I doubt they’ll go full electric for some time and frankly it won’t make sense to do so for another 10 years.
Still, there are a lot of great options out there right now. For example, the Bolt from GM is a great little car. I inspected one up close two weeks ago side by side with a new Model 3. While not a great comparison in terms of function, the build quality in the GM model was just vastly superior by nearly every measure.
The electrical infrastructures of the US and the EU are not able to support a total adoption of EVs, especially not LBEVs. Consumers appear to be choosing LBEVs, not small-battery EVs. They want range even though most people need only a range of less than 100km. [1]
Toyota's (or anyone else's) hybrid vehicles are a better choice for combination short-range/long-range drivers, where short trips are clean, and long trips use the energy density of petrol.
IMHO what Toyota should be doing is adding a larger battery to its hybrids, e.g. 17 kWh instead of 8.8 kWh. I believe the Honda Clarity has a 17 kWh battery.
From your articles:
“Toyota’s view is also that countries are jumping in with the idea of the electric-vehicle endgame without a real plan, and it’s more political showmanship than sound planning,” Mr. Liker said.
Toyota will inevitably be marketing EVs, though.
"For one, China, an important market for Toyota, has moved aggressively to require automakers there to make electric vehicles. That has spurred Toyota to start producing electric cars under a joint venture."
[1] https://www.greencarreports.com/news/1128626_why-you-really-...