Manufacturers Have Less Than Five Days' Supply of Some Computer Chips, Commerce Department Says (washingtonpost.com) 110
Manufacturers and other buyers of computer chips had less than five days' supply of some chips on hand late last year, leaving them vulnerable to any disruptions in deliveries, the Commerce Department reported Tuesday as it pushed Congress to endorse federal aid for chip makers. The Washington Post reports: Manufacturers' median chip inventory levels have plummeted from about 40 days' supply in 2019 to less than five days, according to a survey of 150 companies worldwide that the Commerce Department conducted in September. "This means a disruption overseas, which might shut down a semiconductor plant for 2-3 weeks, has the potential to disable a manufacturing facility and furlough workers in the United States if that facility only has 3-5 days of inventory," the Commerce Department concluded in a six-page summary of its findings.
The lack of chip inventory leaves auto manufacturers and other chip users with "no room for error," Commerce Secretary Gina Raimondo said Tuesday as she presented the findings. "A covid outbreak, a storm, a natural disaster, political instability, problem with equipment -- really anything that disrupts a [chip-making] facility anywhere in the world, we will feel the ramifications here in the United States of America," she said. "A covid outbreak in Malaysia has the potential to shut down a manufacturing facility in America."
"The reality is Congress must act," Raimondo added, urging lawmakers to pass a proposal for $52 billion in federal subsidies to incentivize construction of chip factories. "Every day we wait, we fall further behind." The Senate passed the measure last year. The legislation has been tied up for months in the House, though House Democrats are expected to introduce their version of the legislation as soon as this week. Industry executives say federal funding is likely to create more long-term supply of chips but not to alleviate the short-term shortages because chip factories take years to build.
The lack of chip inventory leaves auto manufacturers and other chip users with "no room for error," Commerce Secretary Gina Raimondo said Tuesday as she presented the findings. "A covid outbreak, a storm, a natural disaster, political instability, problem with equipment -- really anything that disrupts a [chip-making] facility anywhere in the world, we will feel the ramifications here in the United States of America," she said. "A covid outbreak in Malaysia has the potential to shut down a manufacturing facility in America."
"The reality is Congress must act," Raimondo added, urging lawmakers to pass a proposal for $52 billion in federal subsidies to incentivize construction of chip factories. "Every day we wait, we fall further behind." The Senate passed the measure last year. The legislation has been tied up for months in the House, though House Democrats are expected to introduce their version of the legislation as soon as this week. Industry executives say federal funding is likely to create more long-term supply of chips but not to alleviate the short-term shortages because chip factories take years to build.
It's only one portion of the problem (Score:1)
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it costs so much cause you do not want a chip to wack out and kill a safety system just cause it got a little chilly outside then de-bonded itself when the engine warmed up
Re:It's only one portion of the problem (Score:4, Interesting)
The problem is not just with automobiles. Automobiles are probably a smaller overall problem - they can live without video for kids in the backseat. But manufacturing in general, for a huge range of products, have been facing chip shortages and delays for several years now. Instead of this problem clearing up, it just got tighter and smaller companies kept being pushed to the back of the line. Covid just made this problem much more apparent.
The "modern" chips are also in extremely short supply. Nobody has a large backlog anymore, nor for industrial rated chips and not for consumer grade either. That's not how modern manufacturing works anymore. There's a lot of just-in-time, and buying enough chips to satisfy the next 6 months or so of estimated demand.
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The problem is not just with automobiles. Automobiles are probably a smaller overall problem - they can live without video for kids in the backseat.
Its not just the chips you'd use for an infotainment system. Its also the chips you'd use for simple tasks no one even thinks about, like running the window controls. In other words, the kind of stuff which in normal times would be plentiful and dirt cheap.
But yes, it affects a lot more than just automobiles.
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Cars made by the lowest bidder. Nothing can go wrong.
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Do you go out of your way to pay more than the dealer asks? No? Well, congratulations, you're part of the problem.
Funny that (Score:2)
I posted the exact same thing [slashdot.org] half an hour ago.
Makes one wonder if all these articles about new chips or chip performance are being used to distract from the overwhelming failure of private industry to do their job.
2019? (Score:5, Insightful)
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Re:2019? (Score:5, Insightful)
Three or four decades of entrenched JIT is hard to replace in two years, especially with so much of the world economy shut down.
We're lucky that this cropped up in peacetime - if we'd figured out how screwed we are in the first week of a world war, there really wouldn't be any chance of recovery in any reasonable time.
Re: 2019? (Score:2)
Funny you would say that... I hear something funny is going on in the Ukraine...
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3 or 4 years for some stuff. Before covid we were told that supply shortages on certain parts would hopefully ease up soon. But the lag between order and delivery has not improved and has only gotten worse in some cases.
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Once the stuff is in short supply, it remains so. JIT has been a great way to have glowing quarterly numbers because of no need to have expensive, physical warehouse space, but now that that system collapsed, it has just resulted in constant shortages, or in some cases, "shortages", where companies are using it as an excuse to jack up prices, or limit quantities so their stuff is valued more.
The problem is... FOMO can only last so long until the market just burns out and finds alternatives. For example, b
That's kind of the point (Score:2)
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We also saw shortages before Covid as well. If you weren't a huge manufacturer then you often were put in the back of the line. If you just wanted a few dozen to ge tthe prototypes to work then you could get them. But if you asked for a couple of thousands then there was the shock of being told you had to wait 6 months. And just one delay on a critical chip would delay your entire product. For parts that are more specialized that's painful - there was a fire at a battery plant a few years back and just
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We all JIT. Its why people have to make trips to the grocery store.
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Some groceries is hard to not be JIT. Sure I could get UHT milk but frankly compared to pasteurised milk it tastes awful in my tea or on my cereal. So you can't go much more than 10 days on that. Though I do have UHT in the house so at a pinch I can use it but I would rather not. Same goes for things like a banana or other fresh fruit. Sure I have tinned fruit so in the house so if there is a longer term problem I could go more than a week but it's not there for everyday use.
On the other hand I have pasta a
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I always have at least a weeks worth of food in the house.
Noob. To be even an entry-level prepper you need a six-month cache.
My main stash is flour, oatmeal, pinto beans, peanut butter. These are all foods my family eats regularly, so I FIFO them annually
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And the moment someone tells you JIT won't cut it anymore, you run out buy enough to last for a longer period of time. If everyone else does this too, the whole system collapses and no one can get anything.
It happened with toilet paper in Spring of 2020, and its been happening for the past year or so for the semiconductor market.
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So here is the perfect solution:
Replace the chips with toilet paper - lets face it, cars in the 1970's did not have chips in - so you could replace the light bulbs (etc) with items from 3rd party suppliers.
The main purpose of a lot of these chips is to prevent third party spares. In other words, to shaft the car owner. Like chips in toner carts.
Or, consider electric power steer
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Depends. During the freeze last February, I had enough to coast through without issue or worrying about running out of food or water. I also have a couple freezers, so I can buy in bulk, and do a shopping trip significantly fewer times than if I didn't have the freezer space.
The trick is to have different tiers of items. A local chef does food that can be frozen a good while. However, stuff that is more perishable (bread, etc.) should definitely be more "JIT" oriented.
It isn't just "JIT", it is the abil
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Amazing how the company is always painted as evil and greedy, but they never seem to actually act in a way that fits the paint job except in the most shallow of ways. Its because you are essentially shallow.
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It isn't just JIT- it is the cost of goods sold and the cost of inventory that drives a tax bill. JIT is partially a side effect of minimizing inventory taxes.
Manufacturers generally keep the minimum inventory of finished goods (at least compared to what was held the previous year). Of course, these taxes are there because of rampant abuse. It all varies by jurisdiction. Unsold stuff gets taxed- this is to discourage overproduction to pump up numbers, and then dumping the parts later.
This used to be GREA
I have an idea!!! (Score:2)
I'm sure nobody has ever had this idea before. Everybody else in their normal day to day lives lives paycheck to paycheck and only keeps enough food in the fridge for 1 or 2 days.
Here is the big idea:
HAVE SOME FUCKING STOCK OF THE SHIT YOU NEED IN ORDER TO DO YOUR FUCKING WORK
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it's even funnier than that since most of the chips are for non-essential things. For example, you don't need to buy a new car. Buy a used one, or keep driving the one you have. Sheer genius, my ideas.
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But Model-T's are expensive and only come in black.
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Originally red, dark green (nearly black), grey, dark blue (nearly black). Then 1915 to 1920 only black... yet the black on the body really was a very dark blue while the enamel on the fenders was black. Then black through 1925, and then all sorts of colors 1926 and onward.
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You're being rather silly, since plenty of used cars two or more years old can be had with warranty... besides most peoples' cars being fine to last another year until the chip shortage sorts itself out. There is no problem, just peoples' wasteful consumption getting crimped a little bit. That is the stupidest thing in the world, to think anyone has to buy a new car RIGHT NOW. No, you can wait.
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Those require lots of chips. Guess you'll have to hang onto your ICE or buy a good used ICE or electric with warranty for now.
Stupidest thing in the world, to think anyone "needs" to buy a new car right now, instead of waiting six or eighteen months.
Re:I have an idea!!! (Score:5, Insightful)
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In fairness, the government does tax inventory which is one of the reasons mfgs moved to just in time production and low stocks.
Are you able to elaborate on this further? No other country I know of taxes 'inventory' (I have direct experience with the UK, NZ and Australia), and the only information I can find on the USA levying an 'inventory tax' is some vague statement that this is done by a a few states - so nothing at a federal level.
I suspect what people mean is that inventory is not tax deductible. But it should not be tax deductible because it is not an expense while it is stored in a warehouse. It is just shifting one type of
Re:I have an idea!!! (Score:5, Informative)
Look here. [ware2go.co]
Inventory tax is determined on a state-by-state basis. Currently, there are 11 states that collect some sort of inventory tax, some on a statewide level and some only collect it within particular municipalities. It’s important to look at each state’s property tax policies before deciding to house inventory there on a short-term or long-term basis to understand the full impact it will have on your business. The states that currently tax inventory are:
Arkansas
Alaska
Kentucky
Louisiana
Maryland
Mississippi
Oklahoma
Texas
Vermont
Virginia
West Virginia
Notice how many of those states are the so-called low tax/red states.
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Do you like paying more for things? Having minimal stock is cheaper, which is why everyone does it. Because if you don't, the other guy will, and people will buy his product instead of yours because it's cheaper.
""The reality is Congress must act," (Score:5, Interesting)
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Even if, it still will take time. In the meantime it's pain city.
Re:""The reality is Congress must act," (Score:5, Informative)
Really? You don't understand the request.
"Congress must act!" means "The gov't needs to use taxpayer money to guarantee decades of profits for the industry and they'll move back onshore. For a while, anyway."
Remember kiddies, it is only Socialism if the gov't is giving money to the PEOPLE. Giving it to CORPORATIONS is as American as applie pie, the 4th of July, and motherhood.
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Remember kiddies, it is only Socialism if the gov't is giving money to the PEOPLE. Giving it to CORPORATIONS is as American as applie pie, the 4th of July, and motherhood.
Right you are [marketwatch.com].
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What do you know, it's the same under capitalism. In fact under capitalism, even if you work, you're still considered a leech because your wages are getting in way of investor profits.
There's a much better way for Congress (Score:2)
If the companies want gov't tax money, sure, let 'em have it. In exchange for the same thing they give anyone else who gives them money: stock. And not the cheap stuff either. Real, live voting shares.
No more free lunch. If you want my tax dollars better get ready to give me something for it.
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WHICH computer chips? (Score:1, Troll)
These pedestrian FUD articles on the chip shortage always fail to do one thing: Disclose the actual part numbers of the chips that are in short supply.
Yes, it matters.
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Go to the website of any major electronics component vendor. Go to the product category for microcontrollers. Look at the number of components. Now check the "in stock" option and refresh the filter. Note how dramatically it drops.
If you filter by more "modern'ish" and broadly used parts (e.g. ARM Cortex-M stuff), the difference will be even more stark.
Re:WHICH computer chips? (Score:5, Informative)
WHICH computer chips?
Essentially all of them.
If you're in the business of electronics this is all you deal with today. Everyone is spending effectively all of their time dealing with inadequate component supply. Every kind of device, from MLCCs to DDR, DACs and ADCs, SPLCs, CPLDs, FPGAs and MCUs. Electronics engineers are reworking finished designs around availability of components; dusting off stuff that hasn't changed in years to rework around some now effectively fictional device.
Component manufacturers are reworking entire product lines; obsoleting anything they can get away with obsoleting. Entire product lines are vanishing as manufacturers are focusing the capacity they have on the highest margin devices. Speculators are buying up "last buy" parts en masse and reselling a incredible markups.
There has never been a worse time to buy a finished electronic device. Yes, prices are high, but worse than that is that some of the components you get are from second sources, not qualified to the same degree as what the designers specified. Also, reworks lead to loss of functionality, glitches and failures because the maintenance engineers that do that work lack the knowledge, skill, time and/or equipment to do the job properly.
It's a fucking mess. It's taking a long time to unwind. It was caused by a ridiculously lengthily, overspecialized and fragile supply chain that enabled extreme consolidation. Until more capacity comes on line via incumbents or new competitors the mess will continue.
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Not really....the automobile manufacturers being pushed to update their chip tech and that won't change overnight. The auto manufacturers are a big part of their own problem because they heavily relied on JIT supplies and forfeited their orders. They are now in the back of the line and are being pushed to change.
https://fortune.com/2021/09/17... [fortune.com]
https://www.motortrend.com/new... [motortrend.com]
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Thing is you're citing year old narrative from 12-15 month old articles. The flaw with the "car makers screwed up" narrative is that supply problems have now caught up with everyone, including those didn't cancel contracts. So the narrative so many people have been parroting turns out to be nothing more than pointing and howling at the dead canary in the coal mine; the part of the market that is the most sensitive to disruption. Even Toyota, apparently the only major car maker that held some reserve of c
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The link are not for 12-15 month old articles. They are from September and December. in any case, the media asks the auto industry about the problem they say one thing and when you ask the chip industry they say another. I'm sure the truth lies somewhere in the middle.
JIT works great until it doesn't. Outsourcing to OEMs works great until it doesn't. The auto industry got caught off guard just like the rest of us. We can only hope the auto makers learn from the pandemic and take steps to be less exposed
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Well put. The basic rule of design at the moment is to buy all the parts for at least a year's supply, then start the design work. It's just totally nuts and nobody knows when it might improve.
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I have to wonder, why we couldn't deploy electron beam lithography in the production process.
This take on lithography offers few advantages that, I think, would have helped with the current crisis.
One, the way the machine was designed was modular. If a modern scanner that gives you production speed that is satisfactory for high volume manufacturing costs, let's say 50 million, you could split that in 10 modules and sell one tenth of speed for one tenth of the price. This lowers barrier to entry.
Much more im
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Electron beam lithography sounds amazing. However, lithography is only one dimension of the problem. The next most difficult problem is packaging. The variety of packaging is immense and there is no scalable additive solution for it.
Also, some of the supply constrained components aren't planar semiconductors. Some MLCCs have been tight for years; long before the pandemic. Now they've become a market of aggressive speculators. I just ran headlong into an RF connector shortage; stuff made of brass and
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Almost any mass-market FPGA from Xilinx or Intel, for example. These are expensive single source parts with no substitutes outside their own product family. When they're hoarded by Chinese brokers, your product costs hundreds of dollars more to build. When they're gone, your product doesn't ship at all.
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Auto manufacturers who bought single source parts, or failed to spread their purchasing over the multiple sources deserve to go bust. They are responsible for the whole disaster.
And people buying John Deere
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That's not how it works in the post-VLSI world. Nothing non-trivial can be built without at least a few parts that aren't available from more than one manufacturer.
"Free Market"? (Score:2)
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Which gave us commodity products at sale prices. Guess what made that happen, and I didn't see the consumer complaining, except that it needed to be even cheaper.
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Sorry ass-hole, we know the story and it has nothing to do with consumers.
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No, it is an example of the rather less talked about, but all pervasive "Extremely costly Market Economy".
Hint: Joe Public pays the cost.
More inventory? (Score:2)
Free money will not help (Score:2)
Law of (perhaps...) unintended consequences (Score:5, Insightful)
Detente with Communist China backfired spectacularly destroying US manufacturing by facilitating mass sellout by our oligarchy at the sacrifice of the American middle class.
Americans are vocally patriotic but few worth mentioning go beyond that so destruction of our semiconductor fabrication industry was not considered a problem....until now.
China is an ideological enemy
China is an economic enemy
China's human rights record speaks for itself, not that enough Americans to matter sincerely give a shit.
Not only have we sacrificed self-reliance on the altar of unfettered predatory capitalism, our people sold out to freedom's worst current enemy. American culture renders our society socially incompetent to defend freedom.
Not only can't we make our own semiconductors, our trade COMPLETELY pays for Bejing's entire war budget with billions to spare.
America lost because democracy makes idiocracy inevitable given sufficient time. Every empire has a life cycle and we had a good run but are following the path described superbly by Sir John Bagot-Glubb. In 1914 Great Britain bestrode the world as the US does today. By 1960 that was but a memory. Enjoy it while it lasts.
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Every empire has a life cycle and we had a good run but are following the path described superbly by Sir John Bagot-Glubb. In 1914 Great Britain bestrode the world as the US does today. By 1960 that was but a memory. Enjoy it while it lasts.
When the aircraft carriers can't get electronic components for replacement parts, maybe the federal government will stop fucking around with carrots and start using the stick.
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The Hunter “silence” is because its a bunch of republican lies, but I repeat myself, republicans always lie.
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But you are failing to consider what the alternatives would have looked like. Detente per se was not the problem.
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Are you saying communist China bought America?
That's very capitalist of them. Pretty risky speculative investment too.
JIT and LEAN (Score:3)
5 days inventory on hand is the wet dream of every JIT and LEAN consultant.
Why aren't they dancing in the streets celebrating their their success? Maybe it wasn't such a great idea after all.
Hmm... if only... (Score:3)
In fact, the largest economy for producing 32-90nm semiconductors is China. They can end the chip shortage probably almost overnight... if only SMIC were allowed to produce chips.
This is the problem. We have the production capacity, we've simply decided we can't use it. And we've decided that rather than helping the companies here and now, they would instead force the companies to not be dependent on China... even if this means that simply moving less important chips to China to open up capacity outside of China for the important stuff.
So... cry me a river.
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JIT is great! (Score:2)
Technically true (Score:2)
If you mean year, half a year time to deliver is less than 5 days, then it's true. Or you could just use negative days.
what kind of retarded solution is this? (Score:2)
Going to take poor working class tax money and give it to ultra rich multinational corportations? What kind of liberalism is Biden running? You libs should just rope yourself.
Whew! (Score:2)
Oh, we're getting the federal government on this? Thank God! Now we have nothing to worry about.
Which chips again? (Score:2)
Thereby proving JIT is stupidity (Score:2)
And all the bs that MBA's have been doing since the eighties is, as I've been saying since then, complete disasters.
Welfare for tech? (Score:1)
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Can we get Trump back? Please?
The reality is that the United States in general picked a huge trade fight with China. It didn't start with Trump, but he certainly ramped it up hugely and used every opportunity to be abrasive about it as it was happening. Biden has spoken a lot about toning down Trump's rhetoric, but has actually done little to reverse the trade war policies. In that light, of China doing business with, essentially, a country who is belligerent to them, is it any wonder they aren't doing backflips to meet demands? Per
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I believe the word you were looking for is "bigly"
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The problem is that manufacturing has been outsourced. Any solution that involves giving money to an outsourcer (i.e. Intel, Apple, etc) is a mistake. Either the companies spend their own money, or they manufacture in the U.S.
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Your life was better under Trump, and you know it.
The bleach makers appreciated his help.
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Dear Leader did nothing of the sort. The CDC and NiH were the prime movers behind the vaccines from the Fed. Gov. The vaccine manufacturers were already working on them. All the Fed. Gov. did was supply some extra money which the manufacturers didn't really need. They did clear some regulatory hurtles.
Go back and listen to Dear Leader's fevered pronouncements at the time. He claimed the virus was no big deal in Feb. 2020. He claimed it would magically disappear by Spring. Then he claimed it would magically
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If we take "this shit" to mean the chip shortage, it absolutely was happening last year. Its just that last year we still had enough leftover stock of less commonly used choices in the supply chain, so it was possible for more flexible electronics product designers to somewhat work around the issue. Well now all of those secondary and tertiary options have run out of inventory in the supply chain too.
My God, just stop (Score:5, Informative)
It is partisan. None of this shit happened until Biden took over. Your life was better under Trump and you know it. Everyone knows it. Anyone who votes Democratic at this point is an idiot.
The rhetoric is profoundly unhelpful (and likely originating in some partisan staffer's office somewhere), or, worse, offshore by people who just want to stoke the fire.
It is absolutely not a partisan problem, it is an AMERICAN problem. You could have a video showing a republican senator bashing a hole in a dam, and as long as the hole was small enough that the valley under it didn't flood until after the election where a democrat won, that same republican would blame the incoming democrat for the flood. Unfortunately it happens the other way around too. That's the partisan politics that needs to stop. You have to stop blaming the person in office for things that were set in motion years ago. But yes, you do have to hold him accountable for what he's doing about it now.
So, as I said earlier, the trade tensions admittedly existed long before Trump. But it was unquestionably Trump who went off the rails antagonistic towards China, Trump's trade war during a fucking pandemic caused further trade stresses and antagonism that was aimed straight at having an effect two years later. That's how deep the supply chain is. Trade experts were warning about it then, we've been hearing warning about it for two years, and now that it's critical and Biden happens to be in office, the partisan blame game apparatus goes into full swing.
People need to stop the blame game. Need to recognize that external factors are fanning those flames. Russia is actually planning to invade another country, and you think that this timing is accidental? Open your eyes and see the manipulations of the last few years for what they are.
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But it was unquestionably Trump who went off the rails antagonistic towards China
criticize trump all you like, but we'll do well to recall he was the first to stand on the world stage and unequivocally criticize china. there was even a time where trump was basically the only one criticizing china--think about that for a moment.
if trump was really so off the the mark there, you'd see biden et al roll back trump's policies... instead, we publicly poo-poo'd trump's wild ride, but kept the infrastructure.
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damn, you are on to him. I suppose I can now finally release the memo I received in secret from the Biden Administration:
We will now curtail chip imports to the U.S. to knacker manufacturing. We realize this will cause the economy to tank and hand the Republicans a campaign issue. But frankly, we feel sorry for them since they have no new ideas of their own. So we are handing them this one out of the spirit of bipartisan cooperation in the hopes they'll stop inventing new ways to curtail voting.
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Can we get Trump back? Please?
Trump is a protectionist who believes in huge tariffs on imported goods that drive up costs for American consumers.
How exactly does that help the situation?