Plague, fire & ice hinder chips, then those who need them

The hardest-hit victims of the global chip shortage surely include auto workers idled at assembly plants and car sales personnel who do not have vehicles to sell.

Others include disappointed buyers seeking certain models and the tier 1 and tier 2 auto suppliers who are frustrated they cannot forward needed chips to assembly lines.

That’s not to say that auto executives at Ford or GM and other large vehicle manufacturers are any happier. Chip executives have had to answer constant questions of when chip supplies will begin to meet demand. 

The chip shortage is broader than the auto industry, although the auto industry is worst off. Even dogs needing baths have suffered, a little. CCSI International, a maker of electronic dog washing booths, has had to change its circuit boards as a result of the standard chips it uses being out of stock.

Ford CEO Jim Farley last week said the second quarter will be the low point, noting that the chip shortage concern “will get worse before it gets better.” VW agreed.

RELATED: Chip shortage impact to get worse in the second quarter, Ford and other carmakers say

Farley predicted a full recovery for the auto sector will stretch into 2022.

More recently, Intel CEO Pat Gelsinger recently said the shortages will last another two years, a view shared earlier by Nvidia CEO Jensen Huang, among others. Taiwan-based TSMC produces more auto-related chips more than either Intel or Nvidia, and TSMC Chairman Mark Liu said with the company’s stepped-up auto chip production efforts, the shortage could ease in eight months or by the end of 2021.

RELATED: TSMC chair balks on efforts to move chip output to U.S.

On Thursday, analyst firm IDC predicted supply constraints for the auto semiconductor market for some products will last through 2021. IDC noted that other factors have come into play: A fire hit a Renesas fab in Japan in April and a power outage in Texas during February temporarily shut down fabs in Austin for companies making chips for vehicles and other products: Samsung, NXP Semiconductors and Infineon Technologies.

If fire and ice are not enough to blame for the chip shortage, the big daddy was our modern plague, COVID-19—the entire world’s convenient excuse for everything bad.

Even Liu mentioned the pandemic as the cause for the collapse of auto sales a year ago and the resulting shortage of chips when vehicle sales resumed last December. It takes six months in some cases to make an advanced chip. Even older chips in the 28 nm size for auto power trains are difficult to produce with a shortage of equipment needed for that size.

”The shortage will happen no matter where the production is located because its due to the Covid,” he said.  It isn’t comforting to realize that billions of dollars in relief proposed by the Biden administration will take months to materialize, if ever, and it takes years to build a $10 billion fab.

While some chip shortages have reportedly affected production of medical devices, no reports have apparently surfaced of any dire medical consequences. When COVID-19 first struck, there was a global shortage of ventilators and a crush to produce more.

If frustration levels over the shortage  lead to stress and medical outcomes, there is plenty of that. Frank McKay, chief procurement officer at Jabil, an electronics product assembly company with 280,000 employees, eloquently told the New York Times in April, “It’s hell on earth right now.”

McKay is surely marking the days until things improve, although it isn’t clear whether that date should be sometime this December or in December 2022 or as late as May 2023 or...