[genmud]

And yet, the majority of the auto industry decided they should cancel their chip orders as soon as the pandemic hit because it might be an economic downturn.

Apple alone spends more money on semiconductors than the ENTIRE auto industry. They played stupid games and won stupid prizes with this chip shortage.

[jdsully]

Their margins are much tighter than Apple’s. This outcome is far better than having a ton of unsold stock depreciating in dealer yards. That quickly leads to bankruptcy as it did in ‘08.

Limiting their downside risk was the right call given the information.

[tonyedgecombe]

So now the auto manufacturers know they don't need to worry the next time it looks like there will be a downturn. They can cancel orders and if they turn out to be wrong just get on the phone to their favourite politician.

[profquail]

Maybe more like: next time there’s a downturn, keep the orders if they can afford to. Having the chips on hand when the market picks up again could be a great investment, since they’ll be able to produce vehicles when their competitors can’t. Or they can sell some of the chips they’re holding to their competitors (at the going market rate).

[detaro]

and then what? TSMC falls over itself because oh no, Merkel sent a letter, full focus on automotive chips? I doubt that has very much influence in how production is balanced.