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Chipmaker Explains How Every Little Hiccup Causes a Production Nightmare

Everybody expects the chip shortage to ease off in the second half of the year, but the whole thing still appears to depend on a series of factors, including every little problem that could cause a production disruption.
Carmakers have been hit hard by the lack of chips 6 photos
Photo: GM
GM's Flint assembly plantGM's Flint assembly plantGM's Flint assembly plantGM's Flint assembly plantGM's Flint assembly plant
Speaking at the Morgan Stanley tech conference, NXP chief financial officer Bill Betz warned that such production disruptions could be caused by any little hiccup that eventually translates to important delays hitting the market.

Betz commented on a recent power outage in Taiwan, explaining that its factory in the country had to stop production for a few hours, and this obviously caused an interruption in the supply chain. Because the manufacturing runs at full speed, every little problem like a small power outage leads to impacts that are eventually hitting its partners and, at one point, customers too.

NXP’s executive revealed that the demand for chips continues to be at record levels, and at this point, it’s hard to talk about the level of the inventory because there’s no such thing in the first place.

Betz pointed out that chipmakers have no time to create any sort of inventory because everything they manufacture is sold instantly to customers. “We’re shipping hand to mouth,” the executive noted, therefore emphasizing the demand remains incredibly strong.

It’s hard to tell when the production would finally be aligned with the demand, but right now, all estimates seem to suggest the second half of 2022 would allow carmakers to return to normal manufacturing levels, at least temporarily.

On the other hand, making an accurate forecast is still impossible pretty much because the current chip supply is extremely volatile, and everything can change overnight depending on other global factors.

The chip shortage has long been linked with the global health issue, but the war in Ukraine is also causing additional challenges, especially as the country is one of the largest suppliers of materials for the production of semiconductors.
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About the author: Bogdan Popa
Bogdan Popa profile photo

Bogdan keeps an eye on how technology is taking over the car world. His long-term goals are buying an 18-wheeler because he needs more space for his kid’s toys, and convincing Google and Apple that Android Auto and CarPlay deserve at least as much attention as their phones.
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