[Mrfunky]

Chip shortage forces automakers to leave out some high-end features
Companies forced to be creative to keep production moving
Bloomberg
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Renault has stopped offering an oversized digital screen behind the steering wheel on its Arkana SUV to save on chips.
When automakers were first hit with chip shortages at the end of last year, they tried idling factories until the trouble passed. But with the crisis stretching into its fifth month and getting worse, they are getting creative to keep at least some production moving forward.

Nissan is leaving navigation systems out of thousands of vehicles that typically would have them because of the shortages. Ram no longer offers its 1500 pickups with a standard “intelligent” rearview mirror that monitors for blind spots. Renault has stopped offering an oversized digital screen behind the steering wheel on its Arkana SUV — also to save on chips.

The crisis is an historic test for the century-old auto industry just as it is trying to accelerate a shift toward smarter, electric vehicles.

For decades, automakers moved steadily to include more and better advanced features, but now they are stripping some of them out — at least temporarily — to salvage their sales.

That rollback underscores the depth of the issues facing the industry. Just last week, BMW, Honda and Ford Motor all flagged worsening problems from chip shortages.

A failure to secure critical supplies is a massive short-term setback — millions of vehicle sales will be lost this year — and is a bad sign for the future as competition from tech-savvy Internet and consumer-electronics companies intensifies.

“This probably gets worse before it gets better,” said Stacy Rasgon, who covers the semiconductor industry for Sanford C. Bernstein. “It just takes a long time to bring this capacity online.”

NXP Semiconductor CEO Kurt Sievers said the shift to EVs is happening faster than anticipated, which has added to the increased demand for automotive chips. NXP plans to ship at least 20 percent more auto chips by revenue in the first half of 2021 compared with the first half of 2019, even though car production has dropped about 10 percent over the period, he said.

Mark Liu, chairman of Taiwan Semiconductor Manufacturing, cautioned the crisis is far from over. His company, which is the world’s most advanced chipmaker and will be critical to any resolution, will begin to meet auto clients’ minimum requirements by June, but expects the car-chip shortages could last until early 2022, he said in an interview with CBS.

Automakers cannot just wait. One reaction to the shortage is to allocate the scarce components to more profitable and better-selling vehicles at the expense of other models — something manufacturers like Renault and Nissan are doing.

Automakers are also building vehicles with less technology.

Peugeot is going back to old-fashioned analog speedometers for its 308 hatchbacks, rather than use digital versions that need hard-to-find chips.
General Motors said it built some Chevrolet Silverado pickup trucks without a certain fuel-economy module, costing drivers about 1 mile (1.6 km) per gallon (4.5 liters).
Nissan is cutting the number of vehicles with pre-installed navigation systems by about a third, according to a person familiar with the matter.

BLOOMBERG
Reaching out to new suppliers
Nissan, which in early January became one of the first automakers to warn of an impending shortage, is also prioritizing chip supply to the two best-selling models in each major market, the person said.

In one instance, Nissan flew chip supplies from India to the U.S. on a chartered cargo flight to help production move forward there. A representative for Nissan declined to comment.

Buyers of Renault’s Arkana now have to settle for a smaller display without a navigation map and forgo an option for a phone charger by induction.

Stellantis has modified the Ram 1500 pickup so that the digital rearview mirror that usually comes standard is now available only as an upgrade option, according to a person familiar with the matter. The manufacturer is also using parts that do not require chips from its more basic Ram Classic truck to keep the pricier version moving down the assembly line.

“Given the fluid nature of this complex issue, Stellantis employees across the enterprise are finding creative solutions every day to minimize the impact to our vehicles so we can build the most in-demand products as possible,” spokeswoman Jodi Tinson said in an email.

The car industry’s predicament dates back to poor planning during the pandemic and limited chipmaking capacity, but it’s been compounded by shrinking available cargo space as the global economy recovers from COVID-19. When automakers can secure orders, their chips often cannot ship.

That bottleneck is compounded by the fact that major car-chip makers NXP, Infineon Technologies and Renesas Electronics account for just 40 percent of supply, with the remaining 60 percent split between tens of thousands of smaller designers. Those smaller players often lack the influence to get their chips manufactured at foundries when capacity is tight.

In at least one case, automakers are asking a major chipmaker to send microcontrollers that do not meet standard specifications, a person familiar with the matter said. Those sub-standard chips would not jeopardize safety essentials, like brakes, the person said, but they could mean in-car entertainment or emissions monitoring systems are more likely to malfunction in extreme weather.

Automakers and suppliers can accept whatever chips are available and rewrite the software to give them a new task, said Sig Huber, a consultant at Conway MacKenzie and a former head of purchasing at Fiat Chrysler. Tesla said last week it alleviated issues by reaching out to new semiconductor suppliers and then quickly writing new firmware for those chips.

Stellantis is working on more standardization across its vehicle lineup rather than having to use specific chips for some models, Chief Financial Officer Richard Palmer said on a call with reporters this week.

“More standardization and flexibility, which is key when we have supply constraints,” he said. “We are managing scarcity.”

Automakers are also stocking incomplete cars, or “building shy” in industry parlance, to keep production lines humming.

In Hamtramck, greater Detroit, an area stretching several blocks is filled with Ford F-150 pickup trucks without some chips. General Motors said it is also storing unfinished vehicles while awaiting semiconductors.

BLOOMBERG
Legal means
Meanwhile, behind the scenes, suppliers are going to unusual lengths to try to secure chips. A Stellantis partner called JVIS-USA LLC tried to sue NXP in a Michigan court in April in an attempt to get more chips, but a judge rejected its request.

Visteon flagged that automakers may seek compensation because of the shortages. In Japan, Toyota President Akio Toyoda visited a Renesas plant that had suffered a fire to hasten its return to production.

Yet no relief is in sight, with even Apple, whose high-specification iPhones and aggressive demands typically place it at the front of the chip-customer line, saying last week it’s starting to feel the pinch. That may leave automakers wanting even when chip manufacturers eventually manage to increase capacity.

“This has the potential to be a longer-term issue,” said Anna-Marie Baisden, an automotive analyst at Fitch Solutions. “This will only be exacerbated as vehicles become technologically advanced and use more chips.”

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Topic

[Appleman]

this will go on for some time,factories keep closing for a few days at a time,so we will have to wait longer for a car,longer than the 3 months motability allow,worth a try a couple of months before with a dealer to order car for you and then put it into motability system on the date you can,at least you will be 2 months into order.

[ChrisK]

Smaller infotainment screens, less tech and what was standard is now an upgrade so can we expect some price slashing?

Just like the conning tricks of reducing cans of beans and soups from 440 grams to 400grams cans in supermarkets for the same price as the old 440g price so probably not. ?

 

[Des]

So they are stripping back on the tech to help new sales? I really don’t see how that could help tbh. If I walked into a dealership and there was two cars, one was the new model with less tech at say 30k and just over the forecourt was the same model with all the tech and due to being 3yo was selling for say 20k I know which one I would be buying.

[Karl]

@Appleman I wasn’t aware that Motability only allowed 3 months for delivery, is it on the website?

[vinalspin]

You can only order a new car 12 weeks before your current lease end date, Motability write to you when it is time.

With the last couple of years delays (WLTP, Covid etc) the wait times for new build cars has been almost double the 12 weeks but as usual Motability is always so far behind the curve that by the time they allow you to order with 5-6 months left on your lease the delays will have passed!

[Appleman]

They dont only allow 3 months for delivery Karl, if you order early you may be lucky and get new car on the date your old lease ends ,if not you just have to wait longer till it arrives, they only allow you to order 3 months before your current lease ends, not really long enough any more,not delivery there is no control over that

[Richard]

This isn’t going to end any time soon. TSMC makes just about decent piece of silicon now

AMD CPUS including the chips for both Xbox & PS5. Due to Intel bitching their own process modes they’re sniffing around trying to get their latest chips made by TSMC too.

Once you get away from TSMC who are now running nodes down to 5nm you have Intel stuck at 14nm (arguably maybe 10nm now) and then you get other companies who can’t keep up with the billions to keep shrinking stuff like Global Foundries, bigger chips use more silicon, fewer chips cut per wafer, puts costs up, causes electrical inefficiency (heat) and of course slows production.

Even Samsung can’t keep up producing Nvidia chips for their video cards

New foundries cost billions & take years to bring online so that’s not a short term answer either.

Car manufacturers tend to order fixed amounts & up till recently purchase extra space as needed unfortunately now there’s simply no space available so they can’t get orders placed & have to join a queue. Part of this problem is car manufacturers not planning ahead adequately because up till now its not been a problem, right?

Also going to a different foundry isn’t possible as each process node works differently so you can’t take the plans for your silicon on 7nm TSMC and ask Global Foundries to make it for you on 28nm. To do that you have to completely relay the chip out effectively starting again this takes 6-9 months so again not a short term option.

I suspect now Intel is opening their foundries to external contracts within 12 months we could see problems ease providing their prices aren’t too steep & providing they can deliver. Up till recently Intel foundries made Intel products but now investors are so heavily annoyed with Intel for dropping the ball year after year after year with node improvements (they’ve been stuck on 14nm for years now) that these investors are forcing kntel to look for additional revenue. I’m really hoping this is going to help ease production of silicon.

Unfortunately there are other issues not mentioned so far like raw supplies, quality silica, substrate materials etc so it’s really a conjunction of inconvenience.

[Rico]

Being a tech guy ill explain what is happening here, for the past few years the two major wafer factories the TWO major ones are SAMSUNG and TSMC who produce most of the chips for cars, graphics ect ect, the other 3 micron, sk hynix and kioxia/WD (kioxia is toshiba rembranded to seperate the companies) the last 3 manufacture memory wafers, the main two manufacture wafers for car computer, tv computers, computer parts etc etc, these wafers then get turned into chips etc.

Before the Pandemic their schedule was pretty much 10 months on  months off for maintenance, they are also both building new plants as well which requires more wafer than a probably a whole quarter of car orders, so when we had the 1st lockdown globally the car brands and sales were hit naturally, this meant car companies had over ordered (in the computer industry they thought people would by less as they were not working) Then when we had the second global wave the car manufacture in all their wisdom seemed to think well lets not order as much chips, which then means the chip brands order less wafers as no one in likes to hold stock.

but suddenly people were buying cars, they did not want to travel on public transport etc, so they wanted more chips… the trouble was the factory had already sold the wafer making time (almost like an allocation to chip makers for laptops etc who were seeing a massive uptern in sales) they also decided with the other time that they would make the left over time to do wafers for their new factories.

The result is no time for car chip wafers and no time for high end computer product wafers either, they were fully booked and working around the clock with crazy demands.

 

[Author]

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