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Re: Toyota Busts The Car Microchip Shortage


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Posted by MarkB_MI on November 24, 2021 at 14:47:48 from (174.211.2.147):

In Reply to: Toyota Busts The Car Microchip Shortage posted by Geo-TH,In on November 24, 2021 at 12:26:21:

It doesn't say what Toyota did different than the other manufacturers, but I can guess. The main thing is that OEMs buy few, if any, microchips directly from the chip makers. Instead, they purchase components made by Tier 1 and Tier 2 suppliers that contain the microelectronic devices. And the chips used by those suppliers are made by a relatively small number of foundries. When OEMs canceled component orders with their suppliers, most didn't understand the ripple effect this would have on the microelectronic manufacturers. The OEMs thought they were just making small cutbacks to with their Tier 1 suppliers, but because all the different component suppliers use microcircuits made by the same chip foundries, those cutbacks cascaded into huge cancellations for the chip foundries.

When the chip foundries saw the huge drop in orders from the automotive suppliers, they naturally looked at other markets. The microcontrollers used in so many automotive devices are not particularly profitable; they're mostly decades-old technology and they're churned out in huge volumes. So the chip foundries retooled to make more profitable devices, such as the CPUs and GPUs used in desktop computers. These devices retail for over a hundred bucks apiece, and were in great demand by folks staying at home and using their computers for work and play. Once demand picked back up for microcontrollers, chip foundries were slow to retool for the less-profitable devices.

I think Toyota must have a better grasp of what is going on with their Tier 1, 2 and 3 suppliers than the other OEMs, and realized the potential for the chip shortage. Most of the OEMs view suppliers as a tap they can turn on or off at will. The OEMs should have learned their lesson back when the tsunami wiped out Japanese component suppliers back in 2011. It seems Toyota did, and their competitors did not.

The article at the link below discusses the 2011 disruption. From the article: It turns out, says Toyotas Nolasco, 'That there are often cases in which multiple tier ones procure parts or materials from the same tier two supplier. And if that tier two supplier should encounter trouble, the multiple tier one suppliers would all be in the same boat, meaning that the diversification of our direct sources, alone, would not solve anything.'



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