The "core shortage tide" is escalating, and the automotive industry is most affected, and home appliances such as washing machines are also affected

According to CNBC reports, the severity of global chip shortages has risen by a level in the past few weeks, and it now appears that millions of people worldwide will be affected.

With the advancement of technology, the application range of semiconductor chips has spread from computers and automobiles to electric toothbrushes, tumble dryers and other massive products.

At present, the imbalance between supply and demand of chips and the situation of short supply is becoming more and more serious, and automobile manufacturing is no longer the only industry affected.

South Korean technology giant Samsung (Samsung) said last week that chip shortages are affecting the production of TVs and home appliances. At the same time, LG Group said that the shortage of chips will bring risks.

Ben Suh, head of investor relations at Samsung, said in a phone call with analysts: "Due to the global semiconductor shortage, we are also affected, especially in the production of certain specific products and displays. We are discussing supply plans with retailers and major channels. , In order to prioritize the allocation of chips to products that are more urgent or have higher priority in terms of supply."

Samsung's co-CEO and head of mobile business Koh Dong-jin (Koh Dong-jin) said at the shareholders meeting in March that the supply and demand of chips in the IT field are seriously out of balance. At the same time, the company said that the next Galaxy Note smartphone may skip tickets.

According to the “Financial Times” report, LG Group stated that it “is paying close attention to this situation. If this problem persists, no manufacturer will be spared.”

"Lack of core tide" sweeping daily necessities

The production of low-margin processors, such as weighing components in washing machines or processors used to bake bread in smart toasters, has also been impacted. Although most retailers can still purchase these products, they may face difficulties in the coming months.

According to the Washington Post, the pet dog bath industry has even been affected. Recently, CCSI International, a pet/car cleaning system supplier in Illinois, USA, was notified by its circuit board supplier that commonly used chips were out of stock.

According to reports, CCSI eventually used other chips, but this forced the company to adjust the circuit board, leading to higher costs. CCSI President Russell Caldwell said: "Chip issues affect all aspects of manufacturing, from small people to large companies."

Many companies are increasing chip inventories to weather this storm, but this makes it more difficult for other companies to obtain chips.

The automotive industry is still the hardest hit

From computer management of engines to driver assistance systems, everything in the automotive industry relies on chips. Therefore, the automotive industry is still the industry most affected by the "core shortage". Companies such as Ford, Volkswagen and Jaguar Land Rover closed some factories, laid off workers, and slashed auto production.

Stellattis, the world's fourth-largest automaker, recently stated that the chip shortage has become more serious in the last quarter. Its chief financial officer Richard Palmer warned that the chip shortage may continue until 2022.

A Bloomberg report on Thursday showed that due to chip shortages, some automakers are giving up high-end features.

According to reports, some Nissan models are no longer equipped with navigation systems, Ram Trucks has stopped equipping Ram 1500 pickups with standard "smart" rearview mirrors, and some Renault models no longer have large digital screens behind the steering wheel.

According to a Bloomberg report on Tuesday, car rental companies are also affected, and such companies cannot buy the new cars they want. The traditional profit model of Hertz and Enterprise is to buy a large number of new cars and rent them out, but currently they are turning to auctions to buy used cars.

A Hertz spokesperson said: "The global shortage of microchips has affected the ability of the entire car rental industry to receive new car orders as soon as possible."

An Enterprise spokesperson said that the global chip shortage "has affected the supply and delivery of new vehicles throughout the industry under the circumstances of high demand for automobiles."

When will the chip shortage stop?

Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest chip manufacturer, previously stated that it expects to meet the minimum demand for automotive chips in June.

But Patrick Armstrong, CIO of Plurimi Investment Management Company, said the timetable is more aggressive. He believes that the shortage of automotive chips will continue for 18 months.

Reinhard Ploss, CEO of German chip manufacturer Infineon, said, "Obviously, it takes time to achieve a balance between chip supply and demand. I think two years may be too long, but the core shortage will definitely continue until 2022. I expect chip supply and demand next year The situation can be slightly balanced."

Original link: https://www.cnbc.com/2021/05/07/chip-shortage-is-starting-to-have-major-real-world-consequences.html