Thread by @anjani_trivedi

The chip shortage is deepening. Its now expected to last even longer than it was just a few months. Carmakers across the world are struggling, with Porsche's CEO this week saying its "very serious"; GM & Ford could see their earnings slashed by about a third this year, per Moodys

So how did we get here? Well, for starters, its comes down to misjudged expectations and miscalculated demand. Plans were shelved too early, technology was too hyped up. bloomberg.com/opinion/articl…

Now, systemic supply chain issues are emerging. Across the board, there is asymmetry and supply issues. Automakers have a shortage of chips and chipmakers have a shortage of machines to make them. A chip can take up to 3 months but a machine takes a lot longer to manufacture.

A handful of machine manufacturers, with a grip on 80% of the market, have effectively run a global supply shortage for the better part of the last two decades. bloomberg.com/opinion/articl…

A few have managed better than others. Toyota, the world largest carmaker, broke from its uber-efficient manufacturing motto to build a buffer and stocked up on chips. Its been through enough crises to learn its lessons. bloomberg.com/opinion/articl…

Latest preliminary figures from equipment manufacturers show demand is continuing to surge. In North America, it hit $3 billion for the first time. This shortage isn't going away and its time carmakers and other industries facing the shortage start adjusting to that reality.

The solutions won't be so easy because no one really wants to make the chips carmakers need. Its a half-decade path to profitably making low-margin semiconductor devices that the auto industry needs now.
bloomberg.com/opinion/articl…