Odd Lots This Is How the World Ended up with a Shortage of Semiconductors
Feb 22, 2021
Stacy Rasgon, a managing director at Bernstein Research with a deep focus on the semiconductor industry, dives into the global chip shortage crisis. He explains how pandemic disruptions and long-term structural issues have left industries like automotive reeling from production declines. The conversation highlights the crucial role of key manufacturers like TSMC and explores the competitive landscape of semiconductor allocation. Rasgon emphasizes the need for diversifying supply chains and making significant investments to meet skyrocketing demand in our digitized world.
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Auto Industry Chip Shortage
- The automotive industry's chip shortage is partly self-inflicted due to order cancellations during the initial COVID-19 demand drop.
- When demand rebounded, chip production couldn't keep up, leading to significant losses.
Just-in-Time Inventory Risks
- The auto industry's just-in-time inventory management leaves little room for error.
- Chip shortages cause significant production losses, impacting revenue and the entire supply chain.
Chip Order Allocation
- Chipmakers prioritize orders based on volume and existing relationships.
- TSMC, a major chip manufacturer, prioritizes high-volume clients like Apple, given auto's small contribution to their business.