[funnyflamigo]

All the big industries got scared when COVID hit thinking consumer spending was going to plummet so they drastically cut orders.

Meanwhile the IoT space has been growing rapidly in the past few years, and those suppliers didn't cut their orders. IoT devices like the ESP8266 can sit in a warehouse for the next few years before being sold for use in some smart lightbulb, but automotives will lose their value as they become last year's model.

With the supply chain disruptions and increasing consumer spending automotive industries basically lost their reserved spots are struggling to claw back their manufacturing and shipping capacity.

So basically in this game of musical chairs the automotive industries stood up while the IoT space stayed sitting, and then the supply chain disruption removed the chair the automotive industries had been sitting in before...

[topper-123]

This doesn’t serm right. The car manufacturers would surely just buy their way into the front of the line, if it was just this. Chips are a fraction of a car’s value and the cost of stopping car production lines must be a lot higher than buying slots in s chip production facility.

[CamperBob2]

"Buying your way to the front of the line" may work if it involves paying $18 for a part that normally costs $15. (Even so, the automakers will scream bloody murder over much less.)

That's not what's happening. What's happening is that the $15 part now costs $150, and is only available from sketchy Asian brokers that aren't on anyone's list of approved vendors.

The semiconductor houses had better unfuck themselves SOON, or 2022 will go down in history next to 1929. I don't think anyone understands how serious this situation is getting.

[fragmede]

Between flooding and Covid-19 lockdowns, the semiconductor houses aren't, like, choosing to be shut, they're closed because of global climate change. This is only going to get worse as the climate changes dramatically within our lifetimes.

[ElectricalUnion]

> The car manufacturers would surely just buy their way into the front of the line, if it was just this.

Those older nodes "chairs" that the automotive industry used are less profitable in general. One doesn't simply spin down and spin up a semiconductor fabrication plant.

>> the supply chain disruption removed the chair the automotive industries had been sitting in before...

Replacing the (old) chair is easily in the billions of dollars. Not everyone can foot that kind of bill.

[topper-123]

In that case it was an incredibly stupid move for car manufacturers to wind down orders for semiconductors, even in the face of covid. The down side risk is huge.

[HeyLaughingBoy]

A charitable interpretation of that decision would account for the fact that they have more information than you do about the situation.

[CamperBob2]

Well, they may have had more information, but it certainly wasn't good information.

[curryst]

> The car manufacturers would surely just buy their way into the front of the line, if it was just this. Chips are a fraction of a car’s value and the cost of stopping car production lines must be a lot higher than buying slots in s chip production facility.

There is no excess capacity at fabs, so if someone buys their way to the front of the line, the fab is going to miss delivery dates on all the contracts it currently has.

Fabs do have that option, but it's going to cost an enormous amount. Automakers have to pay enough that the fab makes enough money to compensate for the loss of reputation (it won't be a secret that they let someone skip the line), even after subtracting any contractual fees brought about by missing delivery dates on other contracts. That's why you aren't paying slightly more, you're paying orders of magnitude more. I would also be unsurprised if everyone who can get in an order is paying a little extra to raise the contractual fees for missing a delivery date.

A single jumped order can make 100 other contracts deliver late. That's a lot of fees.