[hourislate]

When you expect your materials to arrive daily for that days production and keep almost zero inventory and relying on "Just in Time Delivery", then cancel all your orders overnight and then expect them to start again on whim, on the day you decide without any heads up to your suppliers...what could possibly go wrong? Can you imagine if Apple behaved this way? If iPhone sales drop one quarter, cancelling all their chip production until sales picked up again?

Auto manufactures are spoiled, they get anything they want whenever they want from the Government every time they start crying. Whether it's multi billion dollar tax breaks (Ford, Oakville, GM Oshawa, etc), multi billion dollar Gov programs (cash for clunkers) at the tax payers expense or being allowed to screw their suppliers for billions through bankruptcy (GM).

Don't excuse their poor management, forecasting, greed for frailty of the global supply chain. It's not like a asteroid hit Taiwan.

[mywittyname]

>being allowed to screw their suppliers for billions through bankruptcy (GM).

This is 100% of the issue. Those other two are issues with large business in general (tax breaks) or car dealerships (who pushed c4c).

The Big Three have been able to run their suppliers ragged through collusion because, for many suppliers, all they produce are car parts sold to The Big Three. Which means their production figures, profit margins, and general growth are completely at the whims of automakers. The few critical suppliers with a chance to get out of the industry are acquired.

The Big Three are learning the hard way that they don't have the kind of influence over chip makers that they do over their other suppliers.

[totalZero]

It's convenient to blame automakers for what's happening in the semiconductor market right now, but I think it's an oversimplification. They're not the only ones affected by shortages, and about a year has passed since the rebound in new auto sales. The reality is that we need more semiconductor fabs because the shape of the market has changed. It's not just a perturbation from the auto sector. It's demand creation.

[genmud]

Those are separate issues. It is convenient to blame automakers for the chip shortages because they are 100% at fault here for their stupidity with the automotive rated semiconductor segment.

Additionally, their lack of planning and foresight contributed to the larger semiconductor industry going into a panic, causing a purchasing frenzy that dried up all the channels.

People in the larger industry saw what happened with the automotive semiconductor segment and went, well... maybe I should just keep 1 year of all my critical ICs on hand just to be safe.

I agree with you that we need more fabs, but they need to be thought of as (from a US centric viewpoint) national security assets. The reality is that if we want significant infrastructure, we need to do major investment from the US Government to ensure they are built here in the US. There are either production minimum guarantees, subsidies on the construction or operational costs to basically cover the costs of having excess capacity.

[cptskippy]

> They're not the only ones affected by shortages

I think it's also disingenuous to continue to refer to increased demand as shortages because the implication is that there was a shortfall in production. The reality is that there was an increase in demand and limited capacity.

[totalZero]

I think "shortage" means "scarcity," while "shortfall" means "deficit." Just because you have a shortage doesn't mean you have a shortfall whereby suppliers somehow failed. Of course, there have also been shortfalls....when a plant catches fire or production gets delayed due to power outages, that results in a shortfall.

Overall I'd say you're right. Capacity has so much inertia that it lags beyond the created demand. That isn't the fault of the foundries, it's just an artifact of unpredictable market behavior.

[bsder]

> Can you imagine if Apple behaved this way? If iPhone sales drop one quarter, cancelling all their chip production until sales picked up again?

Actually, Apple HAS done this. And it can kill a company.

For example: Peregrine Semiconductor who got bought by Murata in the aftermath.

[my123]

For Peregrine, it’s different. They had even replaced with another supplier.

(From https://www.benzinga.com/tech/14/08/4808511/peregrine-ceo-ji...)