The Global Chip Shortage Is Taking Hold

Illustration for article titled The Global Chip Shortage Is Taking Hold
Photo: Subaru

It is the season of earnings reports, Tesla might be going to Indonesia, and this chip shortage is something else. All that and more in The Morning Shift for February 5, 2021.

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1st Gear: Subaru Reports Its Earnings (And Lack Of Chips)

The company did all right in the last part of 2020, as did more than a few automakers. The rising tide in this case was many people going back to buying cars thanks to pent-up demand, though Subaru is also deeply worried about the global semiconductor shortage.

From Automotive News:

Subaru reported a 17 percent profit increase in the latest quarter as the automaker rebounded from the pandemic slump and booked lower warranty costs.

In the fiscal third quarter ended Dec. 31, Subaru’s operating profit climbed to 67.6 billion yen ($654.8 million), from 57.8 billion yen ($559.9 million) the previous year.

In reporting financial results on Friday, the automaker also said net income increased 16 percent to 50.5 billion ($489.2 million) in the three months, from the year before.

[...]

Another looming uncertainty is the global shortage of automotive microprocessors, [CFO Toshiaki Okada] said. Subaru has already suspended operations for two days because of it. The company expects to lose 48,000 units of output in the fiscal year to March 31 because of the shortage, he added.

“As our models are mainly in the C-segment and D-segment and these models use a number of electronically control parts. What’s more, we have a limited lineup and use a number of common parts. That’s why we are susceptible to a parts shortage,” Okada said. “For a company our size, it is not so easy to source parts from a range of suppliers. So, we will take a hard look at how much parts inventory we should have. Honestly, we don’t know how long this impact will last.”

Semiconductor shortage is bad!

2nd Gear: Also Fiat Chrysler And Jeep

A factory in Italy will temporarily close because of the chip shortage and weak demand, according to Automotive News.

Stellantis will pause production at a factory in Italy that builds Fiat and Jeep vehicles because of reduced demand, and a shortage of microchips and other parts, Italian union sources said.

More than 7,000 workers at the plant in Melfi, southern Italy, will be furloughed for a week starting Monday, union sources said.

The factory builds the Jeep Compass and Renegade compact SUVs and the Fiat 500X compact crossover.

Stellantis, the parent company of Jeep and Fiat, confirmed the planned stoppage and said it was due to “market fluctuations” and other issues linked to the coronavirus crisis.

In a statement sent to Automotive News Europe, Stellantis said it was adapting its industrial activity “daily, plant by plant, to automotive market trends and by taking into account the different situations we are facing,” such as parts supply and pandemic confinements.

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It is still strange to read “Stellantis.”

3rd Gear: The Semiconductor Shortage Has Also Awoken The Germans

Automaker supply chains are very finely-tuned things, and essential to their businesses, which is to say that any disruption is pretty unusual, like how in Vegas any closure of the casinos is a non-starter. But the recent chip shortage has really thrown them for a loop.

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From the Financial Times:

German carmakers are considering building up semiconductor stockpiles to prevent a repeat of the crippling chip shortages that brought assembly lines to a standstill and stalled the production of hundreds of thousands of vehicles worldwide.

The move could prompt an overhaul of the industry’s finely tuned “just-in-time” supply chain, which has been used for decades and relies on daily deliveries to preserve cash. The system also allows for last-minute bidding wars between parts makers.

The bosses of Mercedes-Benz maker Daimler and Volkswagen’s Porsche told the Financial Times that their companies were looking at the change to prevent further bottlenecks.

“We do have to think about increasing inventory,” said Porsche’s Oliver Blume. “But inventory costs money, so that is the last option to take.”

Daimler’s Ola Källenius said: “If it makes sense in the future to go into more levels of safety stock, it is something we would entertain.”

[...]

More than 670,000 fewer cars will be produced in the first quarter of the year as a result of the shortages, according to research by data provider IHS Markit.

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This comes a few weeks after a German official sent the Taiwanese government a letter asking for help on the semiconductor issue and Taiwan claimed to have not received it.

This will all be worked out in due time, but it’s strange to see every automaker caught so flat-footed.

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4th Gear: Tesla And Indonesia

Tesla is in the electric car business, you might have heard, and thus has an interest in batteries. Thus, nickel-rich Indonesia.

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From Reuters:

Indonesia has received an investment proposal from U.S. electric vehicle (EV) maker Tesla, the country’s deputy head for investment and mining coordination, Septian Hario Seto, told reporters on Friday.

Indonesia is the world’s biggest nickel producer, a material crucial for EV batteries, and has been publicly wooing Tesla to invest in the country to help develop its ambitious EV and battery industry plans.

“I received their proposal yesterday morning... next week we will meet them (virtually) to get an official explanation,” Septian said.

Septian said he could not give details of the proposal due to a non-disclosure agreement, but said that the focus of their discussions had been on batteries and energy storage solutions.

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Someday I will sit down and meditate about the growth of Tesla. Today is not the day.

5th Gear: Bruce Springsteen And Jeep

Ad Age says that The Boss could be in Jeep’s Super Bowl ads, which is upsetting because Bruce has never really done ads. Why sell out now for ... Jeep?

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Anyway:

Bruce Springsteen — notorious for avoiding ad appearances — might finally be in a big one: The Boss appears poised to star in Jeep’s Super Bowl ad.

Local media reports out of Nebraska documented his travels in the state in recent days that appear to be related to shooting a big game ad for the car brand. NTV, an ABC affiliate in the state, on Wednesday cited a now-deleted tweet from an airport in Hastings, Neb., that stated “Bruce ‘The Boss’ Springsteen lands in Hastings to film a Jeep commercial in Blue Hill for the Super Bowl,” referring to a small town south of the city.

Also on Wednesday, an Associated Press report picked up by the Lincoln Journal Star speculated about a chartered jet landing at the Hastings airport early Sunday, after a three-hour trip from New Jersey. The report also cited social media posts from area residents who were “quick to identify the mystery visitor.” The AP also stated that a local sheriff confirmed that “a film crew shot something on the Republican River bridge south of Red Cloud and had hired a couple of off-duty deputies for security.”

A spokeswoman for Jeep owner Stellantis told Ad Age that “we don’t comment on speculation.” The company, formerly Fiat Chrysler Automobiles, on Wednesday confirmed that Jeep would run an ad in the second half of Sunday’s game, but did not provide details.

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Bruce please call your office.

Reverse: Trains? Trains!

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Neutral: How Are You?

It’s Friday, finally.

News Editor at Jalopnik. 2008 Honda Fit Sport.

DISCUSSION

yeardley68
hoser68

Neutral:  Stuck in a Zoom meeting all day (well until 3 pm).  Then stuck in ANOTHER zoom meeting at 3:30.   I’m not sure I like this Friday.