superswiss

I guess it makes sense to group all the missing options together so one can easily see what's missing. Calling it a package is funny, though. Regarding the chip shortage, I have said this a while ago. Don't expect this to be over any time soon. It's not just the raw materials and staffing shortages, but the chip industry simply doesn't wanna resume production for the old chips that the car industry is still predominantly using. They are pushing the industry to redesign their systems to use more modern SoC chips and newer architectures. This will take time. There are 100s of ECUs in a modern luxury car. Most of them will have to be redesigned. Tesla did that in response to the shortage, but they have far fewer ECUs as they centralized everything to a few ECUs with a common operating system. A typical German car is made up of 100s of ECUs from different suppliers. To get them all to modernize them is gonna be a feat that will take years. Likely only gonna happen with the new electric models that are built all-new from the ground up with more modern tech. Today's cars will be known as the pandemic cars years from now that nobody wants. They've been built during a time with staff and supply shortages. Lucid reportedly is building their cars with parts ordered from Amazon. I had to laugh about that one.

JD15

Beyond that, the semiconductor business is highly cyclical and most companies are prudent when evaluating manufacturing expansion. Some companies are already preparing for the next slowdown, like the one that occurred in 2018 - 2019, and would rather sacrifice some present business to avoid having significant excess capacity in a couple of years.

jim2560

check post #42

https://www.audiworld.com/forums/q5-...3027505/page5/

18A5SB

Amazing!

NoMoreBMWs

While no doubt German luxury cars would benefit from a fresh electronic platform, when I read about the 2023 AMG C43 and C63 https://www.caranddriver.com/news/a3...-c43-revealed/ it seems to me that the current crop of German sports sedans is the last stand for the 6s and 8s which were the apex of the ICE age. Perhaps even more concerning is SUV-like mass. The new C63 will weigh a half a ton more than my classic E46 and E92 M3s did.

Regarding 2021 and 2022 MY it seems to be luck of the draw. My 2022 S5 Sportback is perfect and complete. Even the Audi niggles like window software, camera default and "throttle lag" which spoiled my initial experience with my 2018 S5 are - at least so far - absent. Perhaps it is necessary to foreshorten perspectives in the last years of self-driven automobiles. If there are no drivers there won't be any classic driver's cars. This could delegitimize my view that the current crop of entry level German sports sedans are the last of the classic ICE breed. But I can't help myself: that new C63 is EV junk with a 4 pot in it.

lensch09

As a supply chain/corporate finance professional, I'm absolutely puzzled by the choices this industry is making.

I always thought chips were relatively cost dense with significant margin - If that was the case, the solution should be "build more, sell more."

I guess maybe my assumptions are wrong? Is the general market for chips really that cost competitive? If so, why? Seems to be those relying on chips are buying up everything they can get their hands on as the products that rely on them are profitable (which would drive up price equilibrium on the component level).

I had entertained the idea of taking my services to a chip manufacturer and leaving the medical device space. If the semiconductor market is really that cost competitive (and stubborn), I think I'll stay where I am (and keep my fat bonuses).

-DL

JD15

Margins can be high for companies with in-house manufacturing, assuming they run an efficient operation. However, fixed costs are also high and companies need to structure the business to be profitable during an inevitable downturn. Building and ramping up a new fab takes three to four years, so companies have to forecast sustainable long-term demand rather than simply building a new fab that will not be ready until 2025 to satisfy demand in 2021. Furthermore, even if companies with fabs (this excludes Nvidia, AMD, Qualcomm, Apple, etc) have decided to increase capacity, the effects won't be evident for a couple more years.

lensch09

That whole industry just sounds dumb to me.

Sounds like a clown show with B/C talent (similar to automotive) and even less creativity. My wife got a 30% bump in comp leaving the semiconductor industry and moving to medical. Guess that's why that industry has **** talent (even worse in automotive).

I'll stay where I am.

-DL

JD15

That's a narrow and simplistic way of looking at things. The semiconductor business is mature at this point and the weak companies have already gone out of business or been acquired.

JohnEnglish

It's an incredibly capital intensive industry. They can't have inventory lying around and swapping one chip for another can have a massive domino effect on the final product with redesigns of other components and their recertification. The margins are decent and obviously vary with demand but they average between 10% - 20%. It's certainly not "easy money" as it requires an incredibly complex logistics chain. The big problem right now is that after a huge down turn in orders, there is massive uptick in orders and companies are buying up everything including chips they don't need but they know their competitors need.

With COVID and the Russian invasion of Ukraine, it's not surprising that their supply chain is as messed up as it is. Because of the size and complexity of it, one little hiccup can have a huge effect. I'm not sure what else they could be doing to mitigate the situation. Take for example the neon issue which has been brought up many times. The global supply has been reduced by 50% and it's critical to chip manufacturing. How do we get more neon? Build more steel mills? Sure but that take years to build a single one and if there's no demand for the extra steel, what do you do with it? You could flood the market with cheap steel which would then crash the price and force steel makers out of business which puts you back to square one.

The obvious question is, if there was an easy "make more chips" solution, don't you think all the electronics companies and automotive companies, who are some of the largest in the world, along with the semiconductor industry would have implemented it? Even Apple, who I don't think has ever been accused of having "B/C talent" is only putting their new A16 chip in the Pro models of the iPhone 14 due to manufacturing constraints.