Chip shortage leads carmaker Opel to shut German plant until 2022
reuters.com
reuters.com
Every IC is being bought up by new 3rd party distributors to scalp to desperate electronics manufacturers.
Take a look at this chip we are just now crossing as an example, click on 'Non-authorized stocking distributors':
https://octopart.com/tps2052bdgnr-texas+instruments-699312?r...
Win Source has a bunch, but you will pay 6x the cost. We have been quoted even 100x the list price for some ICs on our boards.
Luckily as a small company we are nimble and can mostly cross to similar components, and have been for months now, but a whole board assembly run can be stopped with a single component being impossible to find out of hundreds on the BOM.
Having scalpers in the mix raising the price for all components worries me that the chip shortage might not end for many years, as they can self-fund by raising their prices to stock up on new supply. Not to mention the higher number of random failures as counterfeits easily find their way into the supply chain without 'authorized' distributors.
If there's a legitimate demand that will be used, then there's a good case for production to be increased to meet such demand, and all parties who need something would have their needs met.
At no point to scalpers make this system more efficient – they just serve to extract a greater profit from consumers and businesses for their own benefit by the aforementioned artificial scarcity that they make. This is also known as cornering the market, a well-known and despised practice that has been frequently used by morally corrupt individuals who sought only to benefit themselves. Nowhere can nor should the argument be made that scalpers help anyone but themselves.
There's no "artificial" demand. Think about it - the "scalper" isn't going to buy something that they can't sell on, they'd just lose money that way. (Maybe some of them make bad judgements - but they'll naturally go out of business in that case).
> If there's a legitimate demand that will be used, then there's a good case for production to be increased to meet such demand, and all parties who need something would have their needs met.
"Scalpers" improve the quality of that signal and make it easier to increase production with confidence.
> This is also known as cornering the market, a well-known and despised practice
Views on true corners are certainly mixed (there's an argument that it punishes dishonest market makers), but in any case it only applies to buying up the whole supply, which no individual "scalper" does or can.
The only reason they can sell something on is because they created an artificial scarcity of the thing. If widget X has a well-matched supply and demand, and a scalper decides to buy 10% of widget X, then 10% of the demand is now unmet, some of the buyers go out of business, and the maker of widget X now has 90 something % of their previous market.
If that happens, then the price drops, and the "scalper" loses money - demand has some elasticity, and a healthy market has some slack in it. Momentum-trading speculation works sometimes, but anyone who uses it as their sole strategy will go bankrupt sooner or later.
That assumes they have perfect information which they don’t they can only estimate demand. It’s perfectly rational for a scalper to regularly purchase more tickets than they sell due to the kind of markup their looking for. At say 4x they could on average sell 1/2 the tickets while doubling their investment.
And of course that assumes they never run into logistical issues.
True, but in that case they've added more value than they've subtracted. That artists insist on pricing every concert to sell out is a big part of the problem here; you'd get a more functional market by accepting a few empty seats to give some slack.
2. Who do you think will consistently have better information than someone whose sole goal is to sell these tickets?
3. If they are consistently losing money scalping and not selling tickets they won't be a scalper much longer.
4. This is a dynamic process which can account for changing variables regarding supply and demand quickly as opposed to rules and regulations which do not.
5. If they only sell half the tickets at 4x then they could sell the last half at an extreme discount and make even more than double their investment! Do you think they would rather make more money or less?
Scarcity can drive price upwards in an exponential way that ends up making it optimal to not sell all inventory. Sure in an ideal world you would sell everything you can for the maximum price but in the real world the buyer is incentivized to wait until you offer your minimal price.
When speculators don’t screw up, one fewer part being sold now means one more part that can be bought later. Delaying sales of some parts makes the shortage worse earlier and better later. Keeping inventory is a service to people who didn’t plan ahead.
Sometimes people do screw up, buying things that are never used, so they lose money due to the waste. But you can’t assume they’re all screwups.
Airline seats are a better comparison. Airlines keep raising prices as inventory gets sold and flights near. However, that approach means they generally fly with significant unused excess capacity. The reverse approach where prices got cheaper as the flight neared would result in increased occupancy though significantly less total revenue.
The discrepancy shows up because buyers may be willing to pay radically different prices. A business traveler may be willing to book a last minute seat at 3x the price a holiday traveler who’s booking 6 months in advance. Hypothetically, making a 50/50 bet on a 3x sale is clearly a good idea but it means 50% of the time that seat sits unused.
What raises the difficulty is that tickets expire - not a problem with selling electronic parts, though they do eventually become obsolete.
In fact, the whole "lets not sell our inventory, we'll make higher profits!" idea here is suspect. The idea that having unsold inventory in the model is a good idea is just false; having inventory left over is always undesirable. If it was sold at the last minute then they would have more profits. The scalpers are incentivised to minimise leftover inventory to the point where it isn't going to be a big deal.
[0] https://www.travelperk.com/blog/overbooking-airlines-quick-g...
Pre pandemic to get a normal picture: https://www.airlineratings.com/news/packed-planes-new-normal...
Low cost US carriers have a load factor of 90% that’s a trade off between fixed aircraft size and variable demand. However, US carriers only average a load factor of 86.5% meaning legacy carriers like American Airlines have a below 86.5% capacity factor and that difference between 90% and ~85% is exactly the optimization I am talking about.
85% capacity use of an asset is really quite high. If they managed to achieve mid-high 90s that would be startling given how good humans are at missing flights and changing plans.
To repeat myself, if the plan is to leave your capital unutilised for 15% of the time, on purpose, when there is an alternative, then the planner is a lousy capitalist and doomed to soon be a broke one.
No, it’s a difference in business models. Low cost carriers approach things very differently. https://youtu.be/1-uNMj57Y4c
It’s not that their wasting this 15% of their unused seats airlines are simply more profitable with this pricing model.
“While you might expect the airlines to lower their prices a few days before the departure day to occupy the last seats, the opposite is true: Selling 20% of the remaining seats for $1,500 is more profitable than selling half of them for the regular fare of $550.” https://flightfox.com/tradecraft/how-do-airlines-set-prices
Further that’s a statistical average, they might not have any last minute travelers on flight X or they might sell out flight Y 1 hour before departure. As airlines can’t both raise and lower prices at the last minute they A reserve seats for the possibility and B frequency lose the gamble.
The hypothetical in that article would make more money if they sold 80 seats at $495, 15 seats at 900 and then 5 at $1500 (that makes $60,600). There are strong incentives here to fill the seats.
And they are doing the scalpers trick where someone desperate to get on the flight can. As opposed to when the good would be overbought and someone willing to pay $1,500 has to start paying off passengers for their booking instead of giving more money to the people who put planes in the sky.
Plus, if we're both running this strategy, I have huge incentives to offer $1,495 seats to steal your high paying customers off you. It just doesn't work as a strategy unless it is already impossible to fill the plane - which is quite likely the case.
If you designate say 75% of your ticks at a lower price of X then some people willing to pay more will just buy at that price. Essentially the trick is to minimize people who are willing to pay more who end up buying cheaper tickets. And it turns out people booking close to the flight are generally willing to pay more. Sure six months out they still sell off up to 75% of tickets at ~100$ raising or lowering prices based on demand so their losses are limited if nobody else buys the ticket the flight is still mostly full. But at that 75% they start the ramp up and they also ramp things up as the flight gets close.
2 weeks out they say all tickets are 200$ even if some of those 75% are unsold. At the last day bump it to 400$. If over 1 month we can ignore seats at 100$ because that’s unchanged. Sell 1,000 seats at 200$, and 500 seats at 400$ and fly with say 1500 empty seats that’s 400,000$ where you would only make 300,000$ if all 3,000 seats where sold for 100$. But what if they dropped prices at the last hour? Well most of the time they have empty seats so many would avoid the 400$ ticket and would tend to wait around for that window especially for flights from A to B leaving every hour. Peak prices are a game of chicken and they can’t blink or they lose billions in revenue.
This is of course heavily simplified but it does demonstrate the basic trick I am talking about where they extract value from unsold inventory.
I can tell you why the airlines would be planning on having empty seats in practice - because there are sometimes literally not enough people interested in travelling to fill the aircraft, so they adopt a strategy of leaving empty seats because they have no other option. If you've ever flown some god-awful connecting flight at 2am you might have seen that in action yourself. But that isn't because the airline is choosing to reserve seats, they'd much rather have more passengers - that just isn't an option.
How and or when exactly to you plan to sell those tickets?
Do it after the price hike and people will just wait.
Do it before and you need to see the future to know how many seats will eventually be sold otherwise you just traded a 400$ ticket for a 100$ ticket. It’s no more a viable option than suggesting it’s easy to win the lottery just pick the correct numbers.
Your strategy has the same problem - you have to predict how many last minute travellers there are too. If you just leave an unnecessary buffer then the strategy fails. The one of us who does a better job of putting exactly 100 bodies in 100 seats - none left over - is going to have a more profitable airline. That is somewhat core to the argument us pedant capitalists make.
It’s just the math works out so on the margin having even slightly better than a 1 in 4 chance of selling at 4x the prices is a net gain. Suppose their reserving 50 seats and have a 26% chance of selling all 50, only a 50% chance of selling 20 or more.
That means on 1/2 of flights their intentionally flying with 30 or more empty seats, but reserving even 49 seats rather than 50 loses them money.
Why do we praise people betting on actors being hurt by bad decisions like (https://en.wikipedia.org/wiki/Michael_Burry) but condemn the same behavior on the smaller scale of physical products?
Especially as otherwise, those parts would just get sold to the car manufacturers and would be used to make ethically questionable products.
In the consumer space, there are many ways for vendors and retailers to combat scalpers, but their motivation to do so is minimal. They make the same money off a GPU or PlayStation regardless of who buys it.
The ant planned ahead for the winter, the grasshopper didn’t, and the scalper provides a service to the grasshopper, for a price.
Scalping exists when there is a discrepancy between a marked price and the market price of an item. If scalpers were not a thing, you would have shortages. With scalpers, you still have shortages, but you can acquire the good by paying a higher, market clearing price.
That higher price either makes it so that rich people can get the thing (most don't like this), or that people who really need it can get it (i.e. lifesaving medication etc). So your view of scalpers might be influenced by the distribution of (1) and (2) going on.
And yes they can suck up profits, that’s their whole thing. Are you saying that profits can’t exist in a functioning market?
The ethics depends on the exact case study provided. If it's a rich person buying an xbox (not price sensitive) - that's one thing, and most people would not support it. If it's someone needing an IC for a heart monitor to stay alive (inelastic demand), most would say that providing them an IC over someone who wants to play the latest video game is a good service.
Scalpers do both (1) and (2).
I’m willing to bet that scalpers starve critical applications of goods far more than they provide them. Providers of critical services are usually poorly funded.
There seems to be an assumption in the discussions about the market that people don't do stupid shit with money. That the same good cannot be both life-critical for one, and a source of cheap entertainment for another. That people only ever spend money to make more money. That they are perfectly consistent over time. That nothing is ever time-critical, it may be only time-discounted.
But the reality is, people are irrational, things take time, and markets have inertia. In a scalper-managed shortage of critical medication, it's perfectly possible for a rich person who watched one too many end-of-the-world movies to buy up the supply at high markup, to stock their fallout shelter, and have it rot there while people who need it die. It takes time for a chip scalper to insert themselves into the market, buy up the supply and advertise their existence - in that time, the factories might be wasting megadollars of money.
It's not "waste", it's the people who are willing to spend the most money, which are presumably the people who want/need the thing most, so it's better than allocating the thing at random.
> And why should this involve people spending more money, and all the delta going to the person who was first in line or in lucky position to secure a loan and buy off all the supply?
The person who makes a good judgement about what things are underpriced is selling a service to the market and earning their cut. A seller who's paying attention should see the rush and raise their prices (and ideally increase production to match that).
It’s not a waste, but it’s not best allocation either. It seems like the chips will go to established players with large and cheap credit lines and ossify the market even more.
The scalpers are not like market makers who are regulated, provide both bid and ask, and whose spread is usually quite small in comparison to scalpers.
Credit is cheap, and there's no particular barrier to entry (unless we're talking about things like backroom deals with concert promoters, which I'm sure does happen, but isn't an essential part of the business), so I'd expect this to be a fairly competitive market.
> The scalpers are not like market makers who are regulated, provide both bid and ask, and whose spread is usually quite small in comparison to scalpers.
Market maker regulation is relatively recent, and market making is recognised as having served a beneficial function long before that. Many of these ticket sites do list bid prices for your tickets as well. The spread is pretty wide compared to listed equities that trade hundreds of times a second, sure, but if you compare a single concert's ticket with a stock or bond that trades at a similar rate (which would be, like, the bottom end of the pink sheets) it's not so bad.
True - they also take on some risk of being stuck with inventory that they can't resell at a profit (if prices drop between when they buy and sell).
Ethically scalping feels wrong, but I think ethics aside, scalping does provide a service to the market.
Yeah fuck ethics, there's profit to be made.
/s
They're taking advantage of some fluxuations to make money for themselves. That isn't helpful for the producer nor for the purchaser of the goods.
This isn't people setting up futures for 555 timers. This is people scooping up PS5s and immediately selling them for an extra $200.
Of course it's nobody's god-given right to own a PS5 but there's not value being produced here.
Maybe this makes sense in that theoretical world - where there's no inertia, no friction, no capital investment, no jobs and livelihoods tied to the outcome. But in reality, scalping seems to be the purest form of parasitism. In a crisis, scalpers' activities may kill perfectly fine companies (or people) who would've otherwise limped through the rough times and survived, upsetting an industry long-term, and it forces everyone to waste their money.
And even if you think that this kind of market culling is fine, I'm not seeing why all that money should go to the first asshole who managed to secure a large loan in time to buy off the entire stock of some good.
The big question economically is whether these assumptions are generally correct. We have evidence in both directions, enough that most people can comfortably stick to their opinions and learned assumptions and political tribes. But is there a way to demonstrate that the money wasted is greater with hoarding/scalping than without, and under what conditions?
I really should read Wealth of Nations…
Think about hospitals paying 10 times more for antiseptic and performing surgeries, instead of someone drenching their driveway with that 10$ antiseptic while someone else dies without a needed surgery. By raising the price and pocketing $90, the scalper has prevented resource waste and supplied to the patient and hospital a service worth hundreds of thousands.
If a scalper becomes a monopoly, they can extract a monopoly rent and really bleed everyone dry - but so can a producer in the same situation, so the problem is low competition not intermediaries.
No. That’s an extreme, just like your idea of what you call a “social service” performed by scalpers.
There’s a middle ground, and it’s certainly possible to regulate a market to mitigate the most pathological consequences of capitalism without Stalinism. In fact, that happens all the time.
- cheaper access to masks for the general population
- no mask shortages in critical infrastructure such as hospitals or other health care institutions
- general better handling and health outcomes during the pandemic
Leave it to the Americans that would consider sound policy and good health outcomes stalinist or communist recipes.
1. You want the government to control production of some resources.
2. Stalin controlled production of some resources
3. Stalin killed millions of people
4. Therefore, you want to kill millions of people
See here https://news.ycombinator.com/item?id=19970544 for an example that illustrates the point nicely.
When they finally made that step it did help. Incompetence caused scalpers to rise and profit while the rest suffered until the Government finally got their heads out of their asses.
Nothing about stalinism or communism in here. Just general incompetence.
So people bought ventilators completely useless for them make supply shortages on them much worse. And unlike scalpers these people who do something like that due to panic are unlikely to sell them back to market when they're most needed.
Good luck finding anyone willing to recognize this absurd point.
> "the problem is low competition"
Tell that to the GPU market.
Such grubby people.
In basically all my hobbies, scalping has become the norm now. Computers, Japanese cars, tabletop games, hell even kids toys. It does feel like there's been a massive increase in the number of people with enough capital to see a trend and basically buy the market out with the intention of making a profit.
Scalpers at least ensure you can get it of you really need it (that is willing to pay a lot).
Indeed, most people are pathologically incapable of performing utilitarian reasoning and have a very hard time with this point. Very unfortunate, because that's what informs most economic policy.
Do you mean that you think it's absurd but you don't disagree that scalpers perform a social service?
If price sky rocket, investors will increases production until prices are lower.
Government can mess with this by limit prices causing investors to stay away, meaning fewer chips get built, thus ensuing a temporary problem gets worse.
Those assembly lines are highly specialized and extremely efficient. After all this time, the best they can do is 1% extra efficiency per month.
A short term (1-5) year problem is no reason to takes steps to ensure a generational problem.
Free market is brutal about improving efficiency and growing with demand.
A civilized society works when supply and demand intersection determines the price of goods and services.
Governments should interfere for specific cases (life emergency, masks, etc) and there are laws prohibiting scalping for these commodities - rightfully so.
Your idea of government intervention would assume that government is a rational entity. The truth couldn’t be further from it. Bribes and political favors from large companies would leave everything worse than it was before.
Imagine you're a low volume medical instrument maker and you need a dozen STM32 chips for your life saving device. Scalpers make sure that these chips are available and ready to ship, albeit at a premium which the company is happy to pay for given the circumstances.
Your thoughts on that?
1) People with more money to spend get first pick of stuff.
2) Lottery / people who get to the store-front first.
Both of those are legitimate, although #1 does have a lot of support and theoretical backing in practice. Most of the third ways that get tried devolve back into one of those 2.
While the fundamental issue is indeed price discovery, even in the most abstract market -- stocks/fx/derivatives there are numerous regulations in place to limit the predatory behavior of certain speculators.
It is astonishing we have no such regulation for real-life items.
Scalpers are compounding a problem, by reselling something at 5X the price they invite others to do the same, they create artificial demand and speculation.
> Think about hospitals paying 10 times more
No, think somali pirates in terms of transportation costs. If you only look at it throught the autistic-economical lens, they are entrepreneurs helping the market find the right price for transportation.
> the problem is low competition not intermediaries
The problem is inelastic markets and high moats. Think New York real estate market where mobsters around the world inflate property price and will destroy the local economy.
Think about drug cartels and drug prices.
Think about the USD and its status as a global currency and its relationship to the Military Industrial Complex.
We have something close for emergency situations. It’s illegal to price gouge during something like the aftermath of a hurricane.
It’s a well intentioned law. But for some things, it really may be best to let market forces dictate. For example, generators are in high demand and short supply during a hurricane. Folks snap them up so they can play Nintendo. Because they’re inexpensive due to gouging laws, they sell out fast. Now, someone who actually needs that generator for important, possibly life-saving work is SOL. And there isn’t a price incentive to expedite bringing in more supply.
Edit: I still think the scalpers are scumbags. Just wanted to point out an argument I found compelling in the past.
However, my impression is that consumers would view this in a negative light, and that the harms to the seller’s reputation would be enough to outweigh the initially increased income. This seems to be the source of the inefficiencies that scalpers exploit/address.
This leads me to an idea which, I don’t believe is typically done, but which I don’t know why not: Why wouldn’t a company just, list a price that they are “going to sell it at”, and then “sell” a large proportion of them at that price to an entity which isn’t publicly connected to the company, and then that organization sells the items via auction (and returns a large proportion of the profits back to the company).
While on the one hand, I don’t see how I’d be able to tell if this was what was done, and therefore don’t see how to confirm that this isn’t what is being done in the cases where there are scalpers, I don’t think this is being done, and don’t know why.
If there were only a single consumer, a monopsony, they would have a large degree of influence on the price.
Building a public consensus on what prices are reasonable and what prices are "too high" allows for exerting similar pressures on the price, as if there were an organization which represented a large portion of the consumers and which would make a single decision for all of that portion (like, a purchasing union thing).
I hadn't realized this.
The other thing NVidia could do is keep all their GPUs for themselves and mine crypto.
Who says they are not already doing that in some capacity?
Nvidia is already a money printing machine, and their margins are growing. I doubt it’s worth the time investment and risk exposure to the crypto markets for Nvidia. Better off using that time a money inventing better money printers.
That's often how a lot of today's "scalping" is done - AIUI a lot of "secondary market" tickets on StubHub etc. are sold by an entity that's owned by TicketHub or whoever, so that the artists can sell their tickets at the price the market will bear but put a low face price on them for the sake of their reputation.
- basket size limited to IIRC a maximum of five tickets for the same concert,
- name of the buyer is linked to (idk, maybe even printed on) the tickets AND
- the named buyer would have to be there with the group to enter the venue.
I think this would probably be pretty effective in countering that bottom-feeding scum called scalper.
This arrangement works great: the reputation hit is very successfully outsourced to what you call “bottom feeding scum”. The band benefits from higher profit than they would otherwise be able to get if they tried to sell all their tickets at the publicly advertised price, which quite apparently is below the market clearing price. Ticket availability is increased: instead of having to fight to book the tickets in 8 seconds after the registration is opened, everyone can buy tickets at their leisure, simply paying more for convenience when they buy from scalpers.
Let me ask you this: for the band you are talking about, despite all the measures you describe, you still could buy tickets on StubHub, no?
At least this way parasitic scalpers would not benefit.
(this assumes that charity would be some actual charity, not just existing to transfer money to family of CEO or something similar)
Very well said, but I'd go even further -- scalpers know other scalpers will do the same and create artificial shortage so they are actually preying on legitimate customers, so there's an adversarial component to the behavior of scalpers as well.
We rationed toilet paper during the lockdowns and there was a legitimate reason people were hoarding it, but we do nothing about scalpers who have no legitimate reason for their behavior.
Without going into motivation behind why ($$$), they will sell any share in demand at the prevailing market rate. As long as they later buy the same number of shares that they sold into the market, everything continues to work. By internalizing and batching orders, they can also exhert force on the price to ensure they don't lose on these 'market making shorts'.
For your example to be equiavlent, scalpers would need to sell parts that they don't have, which falls apart as an analogy as such games would fall apart quite quickly during a supply crunch.
How do you feel about scalpers who do not act in scarcity but instead create the scarcity themselves. Like those who buy up land in popular cities?
On a macro level this doesn't change anything (besides distribution in a limited way), as this doesn't increase production, or am I missing something?
Personally, I believe it's manufacturers not asking for the price the market is willing to pay and scalpers taking advantage of that. Charging real prices also can prevent hording in certain emergencies.
1. nepotism: they know someone who works at or owns part of the venue, or the performer, or the performer's manager, etc
2. they reliably buy in bulk
3. corruption: they pay off someone on the inside.
so which is it here?
This is what wholesalers do: they buy large quantities at low prices and then sell small quantities at high prices.
There is no such thing as "price gouging".
It just so happens that at this moment the price of things is higher than it usually is due to increased demand and reduced supply.
Traditionally it referred to traditional survival items though, not just any item.
This shortage is so big that the 3rd party scalpers are insignificant contributor to it.
How do the scalpers get the supply before someone else gets it? What do the scalpers do when IC manufacturers increase supply and electronics manufacturers decrease demand by switching to similar components? What if one of the scalpers panics, dumps its inventory, and causes a price drop?
The whole situation could just as quickly turn into the opposite when production returns to normal.
Tough. Then run a fab or start carrying inventory.
Just-in-time and fabless had risks that everybody simply ignored over and over. I'm happy to see companies taking it in the shorts for that.
Everybody loves the "free market" when it works in their favor and whines when the same winds turn around and bite them in the ass, personally.
https://rabbitsbynight.notion.site/Scalping-vs-price-gouging...
https://news.ycombinator.com/item?id=26931498
Curious if this is true for all manufacturers.
When I was a kid, the urban legend question was: What if all of the Chinese jumped off a platform at the same time? Would it shake the other side of the world?
It's why major supply chain issues cause catastrophic manufacturing problems.
I also see some of these ideas, tacted assembly lines for example, as far back the Venetian Arsenal cranking out Galleons and Galleasses in unprecedented numbers in the 16th (?) century.
Hindsight in 20/20, just imagine the automotive OEMs would have gotten rid of the JIT for chips and Covid (and all the other things causing the shortages) wouldn't have affected chips but, say, certain raw materials like Aluminium.
Or run a fab. Fabless isn't a God-given right. Vertical integration is a thing.
Vertical integration got a bad reputation because financial engineering dipshits like Carl Icahn would come in and strip mine your company for the single super profitable division and destroy the rest (see: Mesta Machinery).
TI doesn't care about that 50 cent part that's holding up your ability to produce a car. They're going to run every chip first whose profit per chip is higher than yours.
On the other hand, your own managers will have lots of incentive to produce that 50 cent chip if it is in the way of several thousand dollars of profit from selling a new vehicle.
200/150mm wafer at 180/150nm node fabs are not that expensive to run and maintain. But they have annual capex and MBA types don't like that.
In addition, that fab probably won't compete well in the general market so it's effectively a captive fab. However, you'll have internal managers complaining that they have to use the internal chip which is more expensive than the one from TSMC because their bonus depends upon getting 5% cost savings next quarter and who the hell cares about keeping our fab filled so it's around when everything goes pear-shaped--that's somebody else's problem after I've been promoted and gone.
Which works, until your supplier is simply willing to go bankrupt. And you still have no chips and can't ship anything.
> most have to compete on cost, and there every cent counts.
Until you can't ship and everything grinds to a halt. Risk reduction has a cost and nobody is willing to pay it because it doesn't enter the balance sheet.
Because of those extremely hostile contract terms, the carmakers could just turn around and go "oh yeah, all that stock we said we'd order this year, you can make it if you like but we're not going to take deliveries or pay for it" which is what set this whole pile of bullshit in motion. At that point, their suppliers were holding and/or producing lots of stock for them, but got informed they would not be getting paid for it, had to cut their losses, and this ended up disrupting manufacturing for months as lines had to be reconfigured mid-batch and a lot of product got scrapped. While this was happening, the automotive fuckers changed their minds and requested more, meaning the suppliers had to scramble to produce with now limited resources because the scrapped stuff was still clogging the pipeline, so resources got redirected away from every other part.
In short, religious JIT could only have this kind of impact here because the automotive companies are absolute shits to their suppliers and could force them to jump one way and then the other, causing disruption upstream which then spread downstream to everyone using electronics. This is a purely artificial crisis caused by the car manufacturers and is not an inevitable consequence of either the pandemic or the logistics disruption. Air cargo is barely affected and semiconductors and their precursors (except for water) are light and easily transportable by air, and certainly valuable enough that this does not impact their cost. This is a problem that would not have existed without the automotive industry, covid or no covid. They brought this upon themselves, and now everyone else is suffering (and auto execs go on TV and blame work-from-home and remote education for the shortage, which is just adding insult to injury). Screw them.
Seriously, I don't know what kind of axe you have to grind with automotive and JIT. It does seem to be a larger issue if it is affecting all industries, and all companies. Chip shortages are affecting Aerospace, Google reportedly has issues getting chips as well for things like the Pixel 4a.
Also I am not sure if you have hands on experience with SCM or procurement, automotive or otherwise.
And yes, I happen to have hands on experience with procurement and sourcing. I've been redesigning customer projects around missing parts all year. Every industry is affected, but it's automotive which started it, and caused suppliers so much damage. This is what suppliers tell me and I have no reason to distrust them. My axe to grind is that I'm now dealing with the fallout.
That us in SCM and logistics, incl. procurement, have tendency to push issues down to lower tiers is true. it is also true that logistics and transportation is offloading a lot on public infrastructure. Does it have to be that way? On the one hand, yes. Roads are public, railway lines more often that not as well (to an extent that is). That's what taxes are there for, because indirectly everyone if profiting from a running economy. Again, that is less the case in developing countries and should change. I also agree, and that is maybe even more important when it come to the environment at large, SCM should prioritize environmental and climate protection more, along with social standards. That won't happen so until it is financially beneficial to do so. This is a general issue with capitalism running rampant so. Chemical plants giving a shit about worker health and safety or the environment is as old as chemical manufacturing., just as an example.
They figured that would've been enough to survive another incident of similar scale.
So they had no problem with car inventory for a half a year longer than every other automaker, until their additional buffer of chips also ran out.
It wasn't enough it seems.
Everyone had an incentive to do JIT, and it improved efficiency in each individual company, but it did so by inflating a systemic risk that could be easily triggered by a “black swan”.
Of course. No amount of stockpiling will account for a moon-sized asteroid collision.
> JIT is not to blame here.
Kind of. JIT isn't to blame, but the pressures that reward making every level of industry maximize efficiency, such as by using JIT, is. That is the reason for the supply chain crisis.
The market and tax laws pressure companies to optimize for efficiency as much as possible with their supply chains. Another alternative would be to optimize for robustness, but that would naturally be inefficient and would still be unlikely to endure a 100-year catastrophe unless it were completely unable to survive in a competitive market.
That doesn't mean that we need to change anything, necessarily, but it does mean that we have structured our economy to be less resilient than it could be with potentially very little actual upside.
Even so, some supply chains, like food and clean water, really should be robust rather than efficient. Emergency medical supplies, too, should probably be robust rather than efficient. That's why the Obama pandemic plan included warehouses of medical supplies [0] and FEMA stockpiles food and water.
Utility systems, too, should probably favor robustness. Texas has had a horrific year for it's power industry, and it has revealed how a hypercompetitive marketplace doesn't really serve the public best interest.
Consider civil engineering. We could optimize that for efficiency. That would result in a lot more bridge collapses, structure failures, and so on. Instead, we generally try to overbuild when failure would cause injury or death. The same is true in most engineering contexts. In many cases, industry simply doesn't design for robustness until they are held liable for failures. Notice the rise in corporate insurance rates after computer security audits due to the risk of data loss, and the sudden panic of executives to suddenly have secure systems where before they were more than happy to have databases of plain text passwords and so on.
There are alternatives to profit-motivated business efficiency. We have simply chosen not to do that sort of by accident.
[0]: https://www.npr.org/sections/health-shots/2016/06/27/4830698...
If you have some deeper insight it'd be great to share it.
However, one of the largest triggers for this madness was the miscalculation by the car industry that had an effect on a large portion of chip factories.
Even the comment linked in the parent acknowledges that it's not all about car manufacturing, it's the ensuing madness (that they caused in large part) that is making it worse.
Your comment clashes directly with the reality of multiple car plants closing or slowing down considerably due to the shortage.
A simple, basic car, with the ONLY electronic control being for:
- Valve timing - Fuel injection - Oxygen and throttle - Emissions
There's a market for budget and privacy oriented customers that all carmakers seem to have ignored for two decades now. Give us a simple car with no GPS navigation, ass warmers, tire pressure sensors, telemetry, backup cameras, USB chargers, proximity detectors, traction control, keyless entry, remote climate control, etc.
But instead of addressing this market, these carmakers have decided to throw up their hands and shut down production or pile up unfinished inventory waiting on chips. It makes precisely zero sense.
I understand the re-engineering is a cost. But when you're simply removing existing features, this should be a fairly negligible one.
edit: I wasn't aware any of these luxury features were mandated by governments. Apologies, and disregard.
For 2017 the Mazda6 used an indirect system: https://www.mazdausa.com/static/manuals/2017/mazda6/contents...
For 2020 it's a direct system with in-tire sensors: https://www.mazdausa.com/static/manuals/2020/mazda6/contents...
The EU estimates that half the fatalities on the road will be prevented with these systems. That's 10.000 lives each year. If that's true, increasing the cost marginally is more than worth it (and it really is marginally, budget cars have not noticably increased in price).
Actually, they did. The new Dacia Logan starts at 8500 euros, back in 2009 you could buy an entry-level one at about 5500-6000 euros, which would be around 6400-7000 euros in today's money. At those entry level prices those extra 1500-2000 euros do count.
"Right behind you."
[1]: https://abcnews.go.com/US/cars-us-now-required-backup-camera...
Basically, the more sophisticated a car is, the higher the risk of failure and thus price to fix the failures. Now, I buy inexpensive cars. Maybe if I go for expensive brands, the risk is less.
But also plenty of IRL people complaining about how, for example, they miss their $10k pickup with no power anything that worked great for anytime they needed to haul material X from location M to N, but now you need to drop a minimum of $50k for a vehicle you might use once per weekend to haul gravel, insulation, cement, lumber, furniture, etc.
Trucks are a particularly big market for this idea. It's a vehicle you use when you're already dirty and sweaty from work/projects and don't care about comfort, and serves a primary purpose: moving heavy and/or large items.
But the big carmakers have opted to cater to the market that doesn't actually use trucks for their actual purpose, but rather the market that buys trucks as commuter vehicles.
https://www.bloomberg.com/news/articles/2015-02-19/bigger-pi...
https://www.thedrive.com/news/42523/84-mile-1993-toyota-pick...
But not for 50k
They’ll imagine the $10k from memories but forget the vinyl seats, no AC, and manual windows. But they won’t buy that one n
An old Ford Ranger was 175-200 inches long depending on year and model. The new one is 200-210 inches.
Sort this list by class and you'll see a total of two compact trucks in the US market. Both are debuting either this year or the next: Ford Maverick (200") and Hyundai Santa Cruz (195").
I reminisce about 90s sports cars that I used to dream about too. But then I think about the lack of bluetooth, keyless start, the low power output, poor handling, poor safety, poor fuel economy, and I just buy a modern car instead.
the manufacturers have no choice, it would be like suggesting they sell cars without seatbelts.
Reading in this thread that it's impossible to even buy a car without it is very surprising to me.
For most people, it’s the most dangerous thing you will do today. If you are going to kill someone, it’s with your car.
Yes, because the only reason a person would be willing to part with one at anywhere near that price was if was a lemon.
You could say that's plausible. In a way it even makes sense, that people buy cars and then drive them for as long as they reasonably last. But if you had to, would you guess that this is how the market operates?
They aren't buying a new car on all these new widgets that might be different between one today and one from yesteryear. I bet for the vast majority of people the primary technological wants of a car are cold AC and blutooth. Everything else, your TPMS, your brake alert system that beeps like a missile is locked on when you inch too close in traffic, no one stood up and asked for any of that stuff. The market just saddled it upon us and the higher per unit cost is passed right along to us with markup.
Some people like blind spot monitoring, others are annoyed by it. Some people need to have satellite radio, others never use it. Some people won't buy a car without Apple CarPlay, others would never so much as buy an Apple product. And so on... but for your product to appeal to customers in general, you need all of the features.
But they're not changing their lineups, product design and marketing are expensive and take a long time. I don't think shrine expects the shortage to last that long.
Backup cameras are indeed mandated by law in the US for all new cars and have been since 2018.
One is that neither one of us have any idea of the electronics BOM breakdown between the various parts of the car, and whether the effect of shortage would be mitigated in a meaningful way if the entertainment stuff was simplified. And you can't legally sell a new car in the US without back-up cameras and tire pressure monitoring.
The second issue is that re-designing that part of the car takes more than a year (probably years, given that you need to collaborate with business and marketing to fit it in the existing lineup and e.g. not have it be associated with down-market products)
- Valve timing - Fuel injection - Oxygen and throttle - Emissions
You still need electronics for
- ABS - ESP - Airbags (- Diagnostics)
Because these are mandated.
Buy a cheap Dacia and there won't be much else except electric windows.
> Buy a cheap Dacia and there won't be much else except electric windows.
As mandated by EU law the latest Dacia models already have most of those, they do have back up cameras, for example.
True, but on average ESP is highly effective. Cars with ESP are correlated with 40-50% less running off the road or roll over crashes.[0] Carrie Underwood may sing about Jesus Taking the Wheel[1], but she really has GM Stabilitrak to thank.
[0] https://crashstats.nhtsa.dot.gov/Api/Public/ViewPublication/... [1] https://www.youtube.com/watch?v=lydBPm2KRaU
So out of your list that leaves..
GPS (already optional on most cars) Ass warmers (already optional on most cars) Telemetry (this could be removed from models that have it, not all cars sold today have telemetry) USB chargers (really don't think USB chargers are causing a production shortage at this moment) Proximity Sensors (already optional on budget cars) Keyless entry (could be removed, I doubt many people would buy a new car without keyless entry tho) Remote climate control (already optional on budget cars)
The models without AC mostly exist so they can produce ads saying “available from less than X“
Modern AC also use variable displacement compressors which adjust load according to temperature, so once the cabin is cool they use a constant small amount of engine power rather than toggling to full power on and off like older designs.
Not that I would be against option to periodically rekey the whole system. Generate new pair of private keys and have the car and key swap them with my approval.
WRT keyless entry, I actually have figured it out. Central wireless lock is cool. It's keyless start that I'm opposed to.
Since most cars keys already, from the late 90s, had chips in them, to prevent theft. It was the next step to remove the superfluous metal part.
That thing would work long after a massive solar flare and nuclear apocalypse... If it wasn't rusted to shit.
So yeah, better alloy/treatment for the frame :D
Furthermore, this "simple" car will not last very long. People have forgotten that nowadays, but in the old times of "simple" mechanical cars, cars used to break down much more often and require much more skilled maintenance.
Most people would not know how to use it. Do you think people will be able to handle an unassisted wheel? You know, actually use their muscles to turn the wheel when parking? How about unassisted brakes? You get into a dangerous situation, you slam on the brakes and then it turns out that you have to use your muscles to actually apply sufficient force. How about even getting into the car without a radio key fob. I very much doubt the majority of people will even know how to lock or unlock their rear doors without a central lock/unlock key. They will probably just leave their car unlocked.
But most importantly, it wouldn't sell. Cars nowadays sell based on electronic features. You can see that from the commercials. Even fairly advanced features like navigation and parking sensors are considered a must have now.
> cars used to break down much more often and require much more skilled maintenance.
My '78 John Deere 4640 (not a car I give you that) if it breaks down, I can fix it. If I cannot I can order the part. If I cannot, I can have the part made within a week.
None of that is possible with a 2021 6145M. If it breaks, I have to sit and wait for JD to bless me with their part.
I have less problems with non-electronic equipment than with the electronics enhanced ones.
I venture it is very much the same with personal cars.
i've heard the same complaint about basically every part of an audi except the tires.
That's great, but I don't own a garage, and if my car breaks, it goes to the mechanic. The mechanic needs to eat, and pay the mortgage on her garage, so she will charge $XYZW for repairs.
For all the maintenance and repair work I and my father have had done on our cars, 'Some microchip somewhere crapped out' has never made the list. All the failures have been purely mechanical. Your 70s car proposal solves a problem that few people have, and introduces a lot of new ones.
The problem with fancy electronics is that only a few people chosen, trained and supplied by the manufacturer can work on them. This effectively gives them a monopoly on maintenance. Your mechanic will be cut out of that deal.
This also creates a risk for the second hand market, not just in first world countries, but wherever they inherit cars that don't pass inspection. Some garage in Georgia (the country) won't be kitted out to fix computer issues and keep the car running. They can't expect help from OEM, nor third party replacement parts. It's a great planned obsolescence strategy.
Also, comparing tractors with cars is an extremely dubious proposition; these are different vehicles with different engineering constraints, uses, and consumer expectations. How many OEMs for cars still make parts for the 1978 vehicles? Hell, what percentage of Americans have the space, knowledge, and interest to build up a garage to service their own vehicles?
This situation is exactly the same as the tractor example above. You’re taking a similar but different object built for different use cases and different financial and engineering constraints, and declaring that the outcome of one is predictive of another.
Like putting touch screens on the steering wheel!
If you watch Sandy Munro's videos, he mentions often how his visits with Chinese car manufacturers go, when they discuss architecture options. Customers hold up a cell phone and ask "How can we make it more like this?". The cell phone got rid of separate components a long time ago. Everything's on one PCB, plus the display. And many things that used to be on the PCB but consisted of many chips, are now integrated to a single chip. The car consisting of a lot of OEM boxes connected with wires seems so outdated.
And each box having a separate computer makes it in essence stranded. Instead, if the control is centralized, then it's possible to take the complexity to software and keep managing it much better, features are easier to develop and can be sent to existing cars over the air etc.
This might not be a huge concern for the HN demographic, but it is for developing countries operating whatever vehicles the EU deems too dangerous or polluting for their roads. There are no PCBs making their way to Central Asia.
The problem with black boxes is that they work until they don't. In some cases like fuel injection, they're a significant reliability improvement. In others they're a ticking time bomb that can make the entire vehicle unusable.
This a problem in the motorcycle world. You now have bikes that are dead because of computer issues. Small pebbles if you're near a dealership, possibly deadly if you use adventure bikes for their intended purpose.
The main board on an iphone is taking a really small part of the whole nowadays. https://guide-images.cdn.ifixit.com/igi/JtBACGbyZcYSdBfL.hug... Besides maybe some machine vision things, the computing in a car seems to have very low performance requirements.
Sensors, actuators and controllers etc are another thing then, but they're different.
The reason cars have lots of computers is for price - its cheaper to use a power and CAN data bus rather than have individual wires going from a central computer to each device.
For example, a door module can control the locks, windows and mirrors with just a 2 power wires and 2 thin wires for CAN bus.
Contrast this to old cars which had thick bundles of wires to power the mirror, doorlock and window motors from outside the door.
Yeah, but “skilled maintenance “ was an easy skill. There could only be a handful of things wrong if it didn’t start: e.g. no spark, no fuel. In the case of no spark, you check the plug, see if it’s dirty, change it if so; check the distributor, maybe the points are bad; check the coil or condenser… yeah there were things to check, but you could actually fix it once you learned about it. And yes, you could do this on the side of the road—there were “tool rolls” you could have for such purposes.
Now, you get a check engine light and the code reader says, in so many words: “bring to dealer and pay up”
"If it's got compression, and it's got fuel, and it's got a spark, then it's got to go".
He was right.
Modern cars need an inspection every 30k km and hardly ever break down. When they do, they are usually toast so (at least financially). Older cars are financially toast as well, if you cannot do the work yourself so.
That's funny, because my OBDII reader tells me exactly which sensor logged a fault and what the fault is such as reading too high/low. Sure you can have oddball errors where a bus wire has its insulation melted and is sending noise over the CAN bus or something, but you also had bizarre issues on old engines with weird vacuum leaks in pipes and dashpots and all the other analogue junk that electronics have replaced.
People look at old cars through rose coloured glasses and forget having to clean distributors and adjust timing and fix tuning drift with carburettors.
I don't know if most of these things actually require digital features.
Regardless I do appreciate the simplicity of long past inventions.
Apples to oranges comparison.
However the computer won't crap out on you, and this is now happening with new bikes. Adventure bikes mind you. I wouldn't want my adventure cut short by a computer problem I can't fix in the field.
They still sell bikes without that crap, and they are absurdly reliable.
The engine controle unit plays a major role in emission control and fuel economy.
I also much prefer my phone navigation over the in car system (Android Auto/Apple Carplay would solve this). That said, I wouldn't buy the car GP is suggesting, but I could imagine that if you were price sensitive then you might.
No comment around the older systems, I don't really have the knowledge to agree or disagree there.
You don't know that. I'm pretty sure there is a market for simple cars that don't tell you what to do, don't report you to the authorities, don't shut down unexpectedly because you didn't follow the manufacturer's maintenance schedule, etc.
> How about even getting into the car without a radio key fob. I very much doubt the majority of people will even know how to lock or unlock their rear doors without a central lock/unlock key. They will probably just leave their car unlocked.
I can't tell if this is satire or not, but people who can't open a door with a key and a handle maybe shouldn't be allowed to drive.
why do you think that is?
> There's a market for budget and privacy oriented customers that all carmakers seem to have ignored for two decades now. Give us a simple car with no GPS navigation, ass warmers, tire pressure sensors, telemetry, backup cameras, USB chargers, proximity detectors, traction control, keyless entry, remote climate control, etc.
I feel like you're vastly overestimating the market size. Most non-tech people don't care about their privacy on their phone, their laptop or their TV. Most people don‘t even know that their car actually has the hardware to track them, why would they care about their privacy in their car?
> I understand the re-engineering is a cost. But when you're simply removing existing features, this should be a fairly negligible one.
I would not expect that to be fairly simple re-engineering. Many assistive technologies are mandatory in new vehicles (at least in some regions like the EU) such as automatic emergency calls, etc. Those are not standalone systems but they have many dependencies on sensors, etc. With the supply chains of traditional automakers, chances are the components necessary to integrate one mandatory system aren't even from the same supplier. This makes cherry picking features extremely hard if not impossible.
> these carmakers have decided to throw up their hands and shut down production or pile up unfinished inventory waiting on chips. It makes precisely zero sense.
I don't think it's coincidental that they decide to shut down a plant in Germany (besides the fact that Opel is originally German). In Germany we have something called "Kurzarbeitergeld" which is a support companies in trouble can receive in certain situations to support their employees. Employees continue to work a fraction of the time (50% Kurzarbeit basically means you only work half of your weekly hours, 100% Kurarbeit means you don't work at all for a certain period). The money the employees receive is largely paid for by the Government (the taxpayer).
Usually Kurarbeit comes with a very strict set of rules, but thanks to covid those rules have been loosened a bit and especially carmakers (VW and BMW) take advantage of it (BMW for example sent many of their workers into Kurzarbeit but decided to pay billions of dividends to the Quandt family). So I suspect it was cheapest to shut down the Germany plant.
These are to keep people alive! They aren't luxuries unless you think living is a luxury!
For perspective:
> Combined sales of FCA and PSA totaled 6,206,000 units in 2020, down by 22% compared to 2019 figures. When the two companies announced their decision to merge, they became the world’s 4th largest automaker by sales volume. It was only outsold by Volkswagen Group, Toyota and Renault-Nissan-Mitsubishi alliance. With 7,907,000 vehicles sold in 2019, FCA-PSA (which was not called Stellantis by then), was bigger than GM and Hyundai-Kia. One year later, these two outperformed Stellantis.
https://fiatgroupworld.com/2021/02/14/stellantis-sold-6-2-mi...
If I'm reading this right, pre-pandemic sales were ~8 million. So a cut 1.4 million due to chip shortages represents an 18% drop. But compared to 2020, the drop is 23%.
That's disastrous hit for any company to withstand.
I'm curious how much of this is actually due to chip supply vs. how much could be due to other factors, but blamed on chip supply.
But it's a low margin industry. They can now charge above MSRP. If they aren't stuck paying for parts (or labor) of the units they can't make, they might come out ahead. Fewer units, waaaay more profit per unit.
> “We were able to substitute alternative chips, and then write the firmware in a matter of weeks,” Musk said. “It’s not just a matter of swapping out a chip; you also have to rewrite the software.”
https://www.theverge.com/2021/7/26/22595060/tesla-chip-short...
Even Tesla's basic autopilot is far ahead of competitors and it's already included in base price.
Many companies will rip you off for far more basic cruise control
Depends on how you define "competitors" I guess. It doesn't seem to be ahead of Waymo.
https://www.autocar.co.uk/car-news/industry-news-manufacturi...
Well, it doesn't sound very reassuring to read that they just swapped out some chips here and there and then "hacked" the new firmware in a couple of weeks. It may be the chip for the FM radio or it could be part of the breaking system.
That and the fact they ten times less vehicles than other manufacturers like VW or Toyota per year.
Regardless of Opel popularity, in the US the F-150 was a best selling vehicle and massive cash cow and they had unfinished vehicles sitting out. These chips have GOT to be a relatively low margin / somewhat lower cost item (ie, feature size can be large). What a miss not to have more coverage for them.
On my side, I lost a lot of firmware devs to poaching by companies migrating between microchip brands, and ready to pay just anything, to the point of me myself being tempted.
We tried DHLing prototypes around before, it didn't work out. People still need tons of expensive tooling, go to other specialist companies with these prototypes, etc. Too much pingpong
Simplest thing might be just to pay some part of laid-off workers compensantion.
Normally this would be ridiculous--there are many other parts that were probably more valuable. But now we have people cracking open smashed vehicles like walnuts so they can extract a chip nominally worth a few dollars.
I also cannot find an external link, but the meeting was attended by tens of thousands of Ford employees and contractors.
Perhaps a very convenient chip shortage? Anyhow, why not build a car without electronics, gps, g4, microphones, voice control, tracking and screens. Because that is exactly what I want.
Beyond that, the reality is that these features you decry are very, very popular. Nobody will make a car exactly the way you want, because that’s not where consumers are.
That sounds like what Dacia does.
Absolutely not. Margins on new vehicles are the highest ever.
> Anyhow, why not build a care without electronics… because that’s exactly what I want
You should just buy a low mileage used vehicle
Prices were climbing before the chip shortage, while "technology" (or specifically, features requiring computer chips) has increasingly been an important part of marketing strategy, differentiation and consumer focus in the automotive industry. (Anecdotally, I check reviews for how well they handle things like Android Auto/Apple CarPlay, and in-car software updates.)
The pricing could reflect a lot of things, including inflation, growing consumer wealth (or credit), consumers prioritizing automotive due to a variety of reasons including marketing/image, increased time spent commuting, etc.
What does this supply chain hiccup have to do with your hypothesis?
And they are old, because of many certification requirements set partially by the industry, and a few odd governments.
In reality, most of them are both less reliable, and harder to work with in comparison to open market parts.
The only two things I seen chips with micron scale nodes used in my life were: air conditioner boards, and car parts.
I mean, worst case, when you let go of the starter motor, it creates a huge back EMF. Imagine your chip finding its +5 input suddenly 12 volts below ground for a significant fraction of a second. (Now, it shouldn't be that bad any more. That was back in the bad old days, when chips were just starting to be added to cars. Shielding should be a mostly-solved problem these days. But is it solved well enough for your 7 nm chip, or just well enough for the micron-scale chips? It's something you have to really carefully look at before you move to smaller processes.)
For as long as you talk about digital side, you can. Your smartphone is a way more noisy electrical environment than your car.
Cellphones are are certainly tricky, but in a different way than cars. In my experience with EMF measurement and EMI compliance at Underwriters Labs, cars are uniquely challenging due to the relatively strong EMF generation from the huge number of motors, solenoids, coils other magnetic bits banging around and interacting with each other in hard-to-predict ways.
A smart phone is not a "way more noisy" environment than a car. It has different issues, and frankly a far more constrained and predictable environment. A load dump event in a car can take the 12V supply over 100V. I have never heard of that in cell phone. Long wiring harnesses are a nightmare and require careful design. It is hard to compare a cell phone and car without a clear definition of "noisy", but as someone who has designed systems similar to both, I think the car is a harder set of problems. Just not as constrained noise sources or components.
When a failure can kill someone, you have to take it much more seriously than when a failure slightly inconveniences a user while they restart the app.
Cars still use micron level chips because:
- They still do the job.
- They have enough volume to keep those fabs open.
- Since they end up becoming the only buyer (monopsony), they get cheap rates.
So they pretty much run those fabs to the ground.
Nowadays they make rebadged Peugeot/Citroen cars.
If you listen to the white collar internet you'd think that nobody buys Nissan and FCA (I'm sorry, Stellantis) but that couldn't be further from reality.
The people who historically would have bought Opels or Vauxhalls (thanks to high numbers of UK imports, you used to see both here) now tend to buy Toyotas and Kias mostly today, at least in my country.
Horrible shame, that lack of Opels.
Certainly there's still shared components with BMW, but they've gone back to being more bespoke.
From Wikipedia: "In the 1990s, Opel was considered to be GM's cash cow, with profit margins similar to that of Toyota. Opel's profit helped to offset GM's losses in North America and to fund GM's expansion into Asia"
The GM bankruptcy contributed to Opel downfall.
It makes PSA cars because PSA bought them in 2017.
Here's one "point of entry" (to find the homepage and similar videos and pages): https://youtu.be/IS5ycm7VfXg "Upgraded Homemade Silicon Chips"
On the other hand, good for us, any ICE car or car in general that is not produced is good for the environment.
It's a bet that has probably paid off, even including the current situation.
Let's see how the main EV manufacturers will procure their chips in the coming months.
There are some cases where a foundry is already qualified for an auto grade chip and they make a consumer chip in addition to it on the same equipment. They can stop making the consumer chip and devote 100% of their capacity to the auto grade chip.
If that is a possibility, I am sure it is already happening. But a lot of foundries that make consumer chips simply aren't qualified to make auto grade chips, so they cannot move production.
Less cars is a global good thing.
Maybe old cars being dramatically less fuel efficient was true in the 90s when an "old-car" was from the 70s.
As people return to vacationing and social activities as the vaccine became available, I expected demand to slowly come back down to meet supply, but the problem seems to only be getting worse.
If opinions are downvoted then I do not need to participate.
That's before you get into whether the official number is underestimated (e.g homeowner's equivalent rent, which is a quarter of the CPI basket). Is it significant? Maybe, maybe not.
Besides CPI, the main inflation is actually asset inflation. Look at the huge stock, real estate, etc. price booms since 2020.
If you think those furloughed workers shouldn’t have gotten any money sue it would be “good” for the long term system, then might I suggest as a modest proposal that you simply toss them into a meat grinder? Very simple and removes the people spending too much money from the economy
This is completely wrong and trivial to research: https://www.fool.com/the-ascent/research/average-savings-acc...
Most Americans couldn't handle a $400 emergency. 56% have $5000 or less in savings.
These people have no one to borrow money from. This is one of the most insidious forms of privilege: It's much easier to "pull yourself up by the bootstraps" when you have a rich parent or uncle to loan you O(10000) to start a business or to give you food and shelter when you're down, but the VAST majority of people have no such resources.
Thanks to our moral frameworks we interpret strategies like Keynesian fiscal stimulus as some sort of bad drug that the economy is addicted to and should quit. There is a huge double standard here. People want money and they don't want anyone to go into debt. It's the height of hypocrisy. People demand debt and they vilify it at the same time.
An amoral interpretation of Keynesian stimulus is that it effectively makes the debt market available to the unemployed. The unemployed are in debt in regards to the government which issues treasury bonds and the government is in debt in regards to the savers. In other words, it is decreasing market rigidity and decreasing overall market distortions.
The reason why Keynesian stimulus is a bad idea has nothing to do with morals. Rather, the problem is that using the government to bypass market rigidities shows a deep underlying problem in the labor market that nobody wants to address.
There are people who work more than they demand work and there are people who work less than they demand work. In a perfectly flexible market this should be impossible and you know what, it's impossible in a barter economy. People wouldn't work to pile up money that they don't intend to spend the same way a farmer wouldn't produce and pile up potatoes that they won't sell to the economy.
I don't know if the same statistics apply to Germans, but you at least need a different source to cite.
I didn’t downvote you for your original response but holy hell the entitlement at
> If opinions are downvoted then I do not need to participate.
If you are incapable of accepting that people may disagree with your opinion, then yes you do not need to participate, but I don’t know how you’re gonna get through life if you pull out of any situation where there is disagreement
> Please don't comment about the voting on comments. It never does any good, and it makes boring reading.
However many downvotes you may have gotten initially, most of them are now for this reason.
To the original comment, what exactly was the role of government handling in the automotive industries mishandling of their chip supply chain? How did these automotive industry missteps lead to inflation?
Also regarding laying off people. Germany kept unemployment below 4% during the entire pandemic because of its more flexible labor market mechanism known as Kurzarbeit that allows people to work less during economic crises. The rigid labor market in the USA encourages employers to lay off entire people rather which tends to fuel recessions, make them worse and delay recovery. Just think about how inefficient it is to lay people off, pay them to do nothing, do massive state intervention through a rent moratorium and then hire them again. The unemployed still need housing and food. The idea that there is something more productive than producing food for them is laughable.
>This would have been "mean" in the short-term, but good for the entire society in the mid- and long-term.
I don't get it. Paying people unemployment benefits is the long term strategy. We give people food stamps because if they starve to death they won't be able to work at all. Even if they stay on welfare their children will have a better shot at life. Abandoning them is the height of short term thinking.
[1] https://www.usnews.com/news/best-countries/quality-of-life-r...
Sorry, but not everything is "right wing", except ofc you are one of those "special kids".
> I try to simplify the root cause like this:
> - people kept getting money while not working
> - those people did not work, hence, no goods were produced
> Same amount of money without the goods in the market. Inflation and good shortages. I believe that those government helicopter money was a huge mistake. It would have been better to lay off people; many have money saved to survive a few months; others could have lend some money (and pay it back when employed again). This would have been "mean" in the short-term, but good for the entire society in the mid- and long-term.
Secondly, you're wrong. The shortage has nothing to do with "government helicopter money". It has to do with changing spending habits due to the pandemic plus companies anticipating, wrongly, where those changing habits will lead. And that's topped off by the fact that the electronics supply chain is not agile, so once you change your mind, you can't really go back quickly.
Your opinion is downvoted because you're wrong.