White House warns of 'escalating vulnerabilities' from semiconductor shortage
reuters.com
reuters.com
Usually when I hear shortage I immediately translate it to "the price has reached a level that I don't like". The "labor shortage" was used to justify changes to immigration policy. There's also a "car shortage", but you can buy a car, it'll just be more expensive that a few years ago. Car companies stopped shipping cheaper models because they can move the same amount of the more expensive models with higher margins. Obviously everything is getting more expensive (IMO due to the trillions of dollars of newly created money over the last two years) so we hear a lot about "shortages"
Is there a story behind the semiconductor shortage? People just say it as a matter of fact like bad weather affecting crop prices. Has there been natural occurrences that affect production? Obviously semi-conductor revenue is up a lot, but has the absolute number of semiconductors sold been flat, gone down or not kept up with prior YoY growth? What's going on?
> 1. During the pandemic, consumer durables went from ~10-11% of consumption to ~13%. 3 percentage points of consumption is about half a trillion dollars annually. Many of these durables come with cheap microcontrollers or even high end SoCs now. New vehicles have dozens of cheap microcontrollers. https://fred.stlouisfed.org/graph/fredgraph.png?g=Ktkq
> 2. If you look at that chart, you will see that the decade previous to the pandemic was the worst ever for durable goods demand. Supply chains had adjusted to that.
> 3. Supply chains had also all gone to a JIT model to keep inventories lower. This was a huge source of efficiencies, but made them vulnerable to a demand shock.
> 4. There are new sources of chip demand in EVs.
> 5. There are new sources of chip demand for very cheap ARM and RISC-V chips. High volume, low margin stuff that has been underinvested for manufacturing, like the entire auto chip chain.
> 6. 2019 was a down cycle, and companies were idling capacity.
> 7. When the pandemic hit, companies projected lower demand, and idled more capacity. This put them in a huge hole from which they still have not extricated themselves.
> 8. COVID outbreaks in Asian factories complicate things
> 9. Transportation bottlenecks complicate things