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Why shortages of a $1 chip sparked crisis in the global economy

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by Bloomberg from https://auto.economictimes.indiatimes.com

The chip crunch was born out of an understandable miscalculation as the coronavirus pandemic hit last year. When Covid-19 began spreading from China to the rest of the world, many companies anticipated people would cut back as times got tough.

To understand why the $450 billion semiconductor industry has lurched into crisis, a helpful place to start is a one-dollar part called a display driver.

Hundreds of different kinds of chips make up the global silicon industry, with the flashiest ones from Qualcomm Inc. and Intel Corp. going for $100 apiece to more than $1,000. Those run powerful computers or the shiny smartphone in your pocket. A display driver is mundane by contrast: Its sole purpose is to convey basic instructions for illuminating the screen on your phone, monitor or navigation system.

The trouble for the chip industry — and increasingly companies beyond tech, like automakers — is that there aren’t enough display drivers to go around. Firms that make them can’t keep up with surging demand so prices are spiking. That’s contributing to short supplies and increasing costs for liquid crystal display panels, essential components for making televisions and laptops, as well as cars, airplanes and high-end refrigerators.

“It’s not like you can just make do. If you have everything else, but you don’t have a display driver, then you can’t build your product,” says Stacy Rasgon, who covers the semiconductor industry for Sanford C. Bernstein.

Now the crunch in a handful of such seemingly insignificant parts — power management chips are also in short supply, for example — is cascading through the global economy. Automakers like Ford Motor Co., Nissan Motor Co. and Volkswagen AG have already scaled back production, leading to estimates for more than $60 billion in lost revenue for the industry this year.

The situation is likely to get worse before it gets better. A rare winter storm in Texas knocked out swaths of U.S. production. A fire at a key Japan factory will shut the facility for a month. Samsung Electronics Co. warned of a “serious imbalance” in the industry, while Taiwan Semiconductor Manufacturing Co. said it can’t keep up with demand despite running factories at more than 100% of capacity.

“I have never seen anything like this in the past 20 years since our company’s founding,” said Jordan Wu, co-founder and chief executive officer of Himax Technologies Co., a leading supplier of display drivers. “Every application is short of chips.”

2021-semiconductors-chips-shortage-inline
The chip crunch was born out of an understandable miscalculation as the coronavirus pandemic hit last year. When Covid-19 began spreading from China to the rest of the world, many companies anticipated people would cut back as times got tough.

“I slashed all my projections. I was using the financial crisis as the model,” says Rasgon. “But demand was just really resilient.”

People stuck at home started buying technology — and then kept buying. They purchased better computers and bigger displays so they could work remotely. They got their kids new laptops for distance learning. They scooped up 4K televisions, game consoles, milk frothers, air fryers and immersion blenders to make life under quarantine more palatable. The pandemic turned into an extended Black Friday onlinepalooza.

Automakers were blindsided. They shut factories during the lockdown while demand crashed because no one could get to showrooms. They told suppliers to stop shipping components, including the chips that are increasingly essential for cars.

Then late last year, demand began to pick up. People wanted to get out and they didn’t want to use public transportation. Automakers reopened factories and went hat in hand to chipmakers like TSMC and Samsung. Their response? Back of the line. They couldn’t make chips fast enough for their still-loyal customers.

A year of poor planning led to carmakers’ massive chip shortage
Himax’s Jordan Wu is in the middle of the tech industry’s tempest. On a recent March morning, the bespectacled 61-year-old agreed to meet at his Taipei office to discuss the shortages and why they are so challenging to resolve. He was eager enough to talk that interview was scheduled for the same morning Bloomberg News requested it, with two of his staff joining in person and another two dialing in by phone. He wore a mask throughout the interview, speaking carefully and articulately.

Wu founded Himax in 2001 with his brother Biing-seng, now the company’s chairman. They started out making driver ICs (for integrated circuits), as they’re known in the industry, for notebook computers and monitors. They went public in 2006 and grew with the computer industry, expanding into smartphones, tablets and touch screens. Their chips are now used in scores of products, from phones and televisions to automobiles.

Wu explained that he can’t make more display drivers by pushing his workforce harder. Himax designs display drivers and then has them manufactured at a foundry like TSMC or United Microelectronics Corp. His chips are made on what’s artfully called “mature node” technology, equipment at least a couple generations behind the cutting-edge processes. These machines etch lines in silicon at a width of 16 nanometers or more, compared with 5 nanometers for high-end chips.?

The chip’s makers have seen their shares soar with strong demand
The bottleneck is that these mature chip-making lines are running flat out. Wu says the pandemic drove such strong demand that manufacturing partners can’t make enough display drivers for all the panels that go into computers, televisions and game consoles — plus all the new products that companies are putting screens into, like refrigerators, smart thermometers and car-entertainment systems.

There’s been a particular squeeze in driver ICs for automotive systems because they’re usually made on 8-inch silicon wafers, rather than more advanced 12-inch wafers. Sumco Corp., one of the leading wafer manufacturers, reported production capacity for 8-inch equipment lines was about 5,000 wafers a month in 2020 — less than it was in 2017.

No one is building more mature-node manufacturing lines because it doesn’t make economic sense. The existing lines are fully depreciated and fine-tuned for almost perfect yields, meaning basic display drivers can be made for less than a dollar and more advanced versions for not much more. Buying new equipment and starting off at lower yields would mean much higher expenses.

“Building new capacity is too expensive,” Wu says. Peers like Novatek Microelectronics Corp., also based in Taiwan, have the same constraints.

That shortfall is showing up in a spike in LCD prices. A 50-inch LCD panel for televisions doubled in price between January 2020 and this March. Bloomberg Intelligence’s Matthew Kanterman projects that LCD prices will keep rising at least until the third quarter. There is a “a dire shortage” of display driver chips, he said.

LCD Prices Are Surging
Aggravating the situation is a lack of glass. Major glass makers reported accidents at their production sites, including a blackout at a Nippon Electric Glass Co.’s factory in December and an explosion at AGC Fine Techno Korea’s factory in January. Production will likely remain constrained at least through summer this year, display consultancy DSCC Co-founder Yoshio Tamura said.

On April 1, I-O Data Device Inc., a major Japanese computer peripherals maker, raised the price of their 26 LCD monitors by 5,000 yen on average, the biggest increase since they began selling the monitors two decades ago. A spokeswoman said the company can’t make any profit without the increases due to rising costs for components.

All of this has been a boon to Himax’s business. Sales are surging and its stock price has tripled since November.

But the CEO isn’t celebrating. His whole business is built around giving customers what they want, so his inability to meet their requests at such a critical time is frustrating. He doesn’t expect the crunch, especially for automotive components, to end any time soon.

“We have not reached a position where we can see the light at the end of tunnel yet,” Wu said.

The Fools Bikernet News for April 1st, 2021

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This news is completely whacked, so hang on.

The Bikernet Weekly News is sponsored in part by companies who also dig Freedom including: Cycle Source Magazine, the MRF, Las Vegas Bikefest, Iron Trader News, ChopperTown, BorntoRide.com and the Sturgis Motorcycle Museum.

Ride fast and free forever,

–Bandit

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The Doomed Bikernet Weekly News for March 25th, 2021

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There are two premises at play here. Threats of doom and control freaks. Some folks are constantly hunting for more control over you.

At one time bikers made up one of the largest activist groups in the country. We were right up there with the NRA. We fought hard for freedom to choose to wear a helmet or not. We won until a control freak (Joan Claybrook) took over the DOT and came up with the public burden theory, so she could take our freedom again. We faced an uphill battle gallantly and in many states succeeded.

I never understood the media. They supported helmet laws and taking our freedoms. But the media relies on freedom or there would be no media just government propaganda. Hell, you might also read a book I wrote in 1999, Sam Chopper Orwell. It explains what’s happing in biker style. Hang on.

You’ll see this topic pop-up numerous times in the news. It’s not about exhaust smoke and plastic containers. It’s about honesty, freedom and good times. Let’s hit the news.

It just bothers me, because we are actually living in the best of times. Sure, there’s stuff to do and improve. But we are not doomed. Let’s party or as the brothers say, “Support Good Times.”

Ride Fast and Free Forever.

–Bandit

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NCOM Biker Newsbytes for March 2021

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Industry news from National Coalition of Motorcyclists (NCOM)
Compiled & Edited by Bill Bish

THE AIM/NCOM MOTORCYCLE E-NEWS SERVICE is brought to you by Aid to Injured Motorcyclists (A.I.M.) and the National Coalition of Motorcyclists (NCOM), and is sponsored by the Law Offices of Richard M. Lester.

The National Coalition of Motorcyclists (NCOM) is a nationwide motorcyclists rights organization serving over 2,000 NCOM Member Groups throughout the United States, with all services fully-funded through Aid to Injured Motorcyclist (AIM) Attorneys available in each state who donate a portion of their legal fees from motorcycle accidents back into the NCOM Network of Biker Services.

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The Creative Bikernet Weekly News for March 18th, 2021

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Hey,

I’m researching FXDR models and was trying to find out the difference between FXDR and FXDRS. I was told there were slight differences, and then Ron and Bartels’ H-D helped. The only two-year model 2019 and 2020 were all FXDR but when they sent the paperwork it said FXDRS, so the confusion.

The folks next door loaned me a fork lift. I have two motorcycles in my office and one in the living room upstairs. The brothers, Jeremiah and James were concerned, but it worked like a champ and we lowered them to the shop level in no-time.

The Bonne Belle arrived at Departure Bike Works this week. Lee and his crew will install our new 45 flathead engine and get it ready for Bonneville.

The international speed trials are on for August 25 in Bonneville, and we will be there with the Salt Torpedo and the Bonne Belle. Hang on for more reports.

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The Adventurer Bikernet Weekly News for March 11, 2021

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As bikers we are adventurers. Hell, anytime you head out in Los Angeles on a motorcycle, it’s an adventure. The current adventure is moving to Deadwood, South Dakota and out of California. Remember, what doesn’t kill you makes you stronger. I hope that adage is accurate.

I’m researching a new Harley-Davidson model the FXDR and the FXDRS. I’ve heard some stories and Donnie Smith built one. I was told they were built only in 2018 and 2019. Upon further investigation, they may have been built in 2019 and 2020. Let me know, if you know anything about them and or have any experience with them.

Hang on! And ride free forever.

–Bandit

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The Bling Bikernet Weekly News for March 4th, 2021

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All Wild and Chrome

I’m working on a new Sam’s Picks story. He’s a cool dude, who is facing some health issues. I hope he can get a tune-up and be good as gold shortly.

I’m also working on a story about a Masonic based bike club that’s all over the country. It’s called the Widow’s Sons. And I’m packing all the rusting bling in the shop for shipment to South Dakota. I’ll take a picture of the shop. It’s getting crazy. Let’s hit the news.

With news from car haters, the NMA, the MRF, Lowbrow, S&S, Full Throttle Saloon, Flying Pistons, WindVest, Hamsters, OCC Road House, War on Parking, Toyota, the Future of Harley, JIMS Machine, Lane Splitting and we’re just scratching the surface.

Ride Fast and Free Forever,

–Bandit

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Piaggio, KTM, Honda and Yamaha to set up swappable batteries consortium

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from https://auto.economictimes.indiatimes.com

The consortium will define the standardised technical specifications of the swappable battery system for vehicles belonging to the L-category, mopeds, motorcycles, tricycles and quadricycles.

Piaggio Group on Monday said it has signed a letter of intent with KTM AG, Honda Motor and Yamaha Motor to set up a Swappable Batteries Consortium for motorcycles and light electric vehicles.

The consortium will define the standardised technical specifications of the swappable battery system for vehicles belonging to the L-category: mopeds, motorcycles, tricycles and quadricycles.

The companies will be working closely with interested stakeholders and national, European and international standardisation bodies. The founding members of the consortium will be involved in the creation of international technical standards. The Consortium will start its activities in May 2021.

In the context of the Paris Climate Agreement and the transition to electromobility, the founding members of the consortium believe that the availability of a standardised swappable battery system would both promote the widespread use of light electric vehicles and contribute to a more sustainable life-cycle management of batteries used in the transport sector, the companies said in a joint statement.

Also, by extending the range, shortening the charging time and lowering vehicle and infrastructure costs, the manufacturers will try to answer customers’ main concerns regarding the future of electromobility.

Michele Colaninno, Piaggio Group chief of strategy and product, commented, “With the signing of this letter of intent, the signatories show their proactiveness vis-à-vis the major concerns of their customers and the political priorities as regards the electrification of vehicles.”

An international standard for the swappable batteries system will make this technology efficient and at the disposal of the consumers, added Michele Colaninno.

A Miracle Bikernet Weekly News for February 25, 2021

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Life is Nuts and then You Die…

Hey,

Everyday is a miracle. I wake up saying, “Today is going to be amazing.”

Last week I receive a fortune cookie and the message said, “You will receive a surprise very soon.” It didn’t lie. I read something recently about being lucky. Some 40 years ago I walked into a Chinese Restaurant in Calabasas, had lunch and received a fortune cookie. I cracked that puppy and read the message. It said, “You will be Lucky for Life!” I have been.

Luck is not a myth. It’s a mindset. If you feel lucky, you are positive luck will come your way, so you look for it, you foster it, you follow up on it, and you have a blast.

If you feel unlucky, you’re not looking for shit. So, what do you get? You got it. Let’s hit the news. It’s going to be a lucky day.

In the meantime, ride fast and free forever.

–Bandit

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