Chip shortage

[lostpacket]

Nobody wants to invest the billions in capital it takes to build these chips for fear of the auto industry iterating into a need for more powerful/smaller chips. The problem isn't simply that the foundries reallocated the chips to other industry. Its that when the auto companies cancelled their alotments, the foundries got out of the business of making the low margin chipsets---and rebuilt their lines to manufacture the newer architecture (HIGHER MARGIN) chips.

I wonder if something like this will be taught in business school. It probably seemed prudent to auto makers to reduce their orders in the face of what seemed like an immiment recession and they may have even known that their suppliers wanted to pivot away from low margin chips, but I wonder if they realized there would be so much demand for the higher margin chips that their suppliers would be unable or unwilling to pivot back.

Seems like a considerable risk to just in time manufacturing.

Sponsored

 

[Max]

Yep, it's a good thing. And Rivian will likely be chucking better hardware into future iterations of the R1 platform (and the R2+) as the years go by. The challenge will be backward compatibility for early adopters like the people on this forum. If I get my truck in March 2022, will the hardware included in my truck be capable of running the latest and greatest Rivian software five years from now? Tesla owners have already experienced this issue. I don't know that much can be done about this, but it is one of the gotchas of the over-the-air upgrade era. I can imagine a time in the future when cars are designed to have processing components that are readily swappable, so that the main vehicle platform can continue its life while the computing guts get upgraded every few years.

I have no problem if my R1 stop updating at some point if the last update has not screwed something up or if I could roll back. The problem is with a lot of my mobile device updates, the new versions are not well tested and there is often either something gets messed up or the new software is tested only on new hardware and old hardware can not handle the processing demand and things slow down to the point you have to replace your device. In this case an $80K device. Rivian handling OTAs well is my main concern.

 

[E.S.]

I wonder if something like this will be taught in business school. It probably seemed prudent to auto makers to reduce their orders in the face of what seemed like an immiment recession and they may have even known that their suppliers wanted to pivot away from low margin chips, but I wonder if they realized there would be so much demand for the higher margin chips that their suppliers would be unable or unwilling to pivot back.

Seems like a considerable risk to just in time manufacturing.

That or stop depending on international sources as the main recourse to a highly needed component.

 

[KiloV]

Seems like a considerable risk to just in time manufacturing.

The whole pandemic thing brought into specific relief the reality that the more efficient a supply chain is, the more fragile it is. We spent decades trying to figure out how to do just-in-time manufacturing for optimal cost-effectiveness. It worked well, but it made us super vulnerable to supply chain disruption. Even a few days of disruption causes chaos. Months of pandemic-juiced disruption has been a shit show inside a train wreck during a tornado. I wanna audit some of the business classes that come out this whole mess.

 

[Zoidz]

After now two years of this issue, you would think that these massive multi-billion dollar manufacturing companies would have learned a way to build their own "chips". Amazing that one factor is the common denominator delaying production of vehicles from all manufacturers. This well above my pay grade, but just seems like, with the resources these huge manufacturers have, they could have figured out how to build their own "chips" by now??

It takes billions of dollars and multiple years to build a foundry, and it would not be cost effective/efficient for a vehicle manufacturer, probably even someone as big as GM or Ford, to operate their own foundry. They would then also need a staff to design the chips. Running an in-house silicon foundry would be a major deviation and distraction from the core business of designing and building vehicles.

As an analogy, you might compare it to the home construction industry. The largest homebuilder in the country would not build a sawmill to make their own lumber.

 

[crashmtb]

It takes billions of dollars and multiple years to build a foundry, and it would not be cost effective/efficient for a vehicle manufacturer, probably even someone as big as GM or Ford, to operate their own foundry. They would then also need a staff to design the chips. Running an in-house silicon foundry would be a major deviation and distraction from the core business of designing and building vehicles.

As an analogy, you might compare it to the home construction industry. The largest homebuilder in the country would not build a sawmill to make their own lumber.

I could see there being a teeeny tiny remote as Mars chance of a consortium of auto/machinery makers getting together to build a chip fab. But that doesn’t resolve the time constraint.

 

[DuoRivian]

I’ve been wondering about this too! I’ve noticed a lot of automakers removing or changing features because of chip shortages. For example, my friend was looking at a new Land Rover and found out that a few options had been removed due to the chip supply issues. It’s definitely frustrating, especially when you’ve got your heart set on certain features.

Why restart a near three year old thread??

 

[Riviot]

Why restart a near three year old thread??

Why respond to a resurrection attempt? ?‍

Sponsored