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Car production has ceased due to a shortage of chips.
Dream time
Taiwan Semiconductor Manufacturing, one of the companies best positioned to know the outlook for the chip shortage in the automotive industry, had good news and bad news this week.
During a conference call held Thursday to discuss Taiwan Semi’s quarterly results (ticker: TSM), CEO CC Wei said the deficit has been exacerbated by the snowstorm and freezing temperatures that hit Texas in February and “ Japan’s fab production failure. ” a clear reference to a fire that hit a large chip factory there last month. Chips of many kinds could generally remain in short supply until 2022, he said.
The good news, however, is that Taiwan Semi will largely see the situation for auto chips in particular disappear by itself towards the end of the third quarter. “Along with our productivity gains, we expect the shortage of semiconductor auto parts for TSMC’s customer to be significantly reduced by the next quarter,” said the CEO.
Both
Ford Motor
(F) and General Motors (GM), along with many other automakers, have shut down production in some plants while waiting for parts. Both Ford and GM have already said the chip shortage would be a billion dollar headwind to 2021 profits.
Ending the chip shortage in the third quarter would be better than letting it drag on in 2022, but it could still mean auto companies are changing their financial forecasts, for the worse, when they cut their first quarter earnings in the coming weeks. report. Many investors expected the deficit to disappear on its own in the first half of the year.
And the language Wei used in April was worse than what he said in January, when the company reported fourth-quarter numbers. “We see at the moment that there is a slight shortage of the automotive sector, the mature technology,” Wei said at the time. “And we work with the customer to reduce the impact of the shortage.”
The mature technologies are essentially less advanced semiconductors. The pandemic, the resurgence of auto sales after the pandemic, the difficulty of ramping up the production of new semiconductor technologies across the industry, and the strong demand for things like 5G phones and high-performance computers have all contributed to the current automotive situation.
In the long run, Taiwan Semi plans a major increase in capital expenditure to meet growing demand and ensure that the deficit does not recur.
Auto investors don’t seem to be very concerned. Shares of Ford and GM are down about 2% this week, while the
S&P 500
and Dow Jones Industrial Average both gained just over 1%.
Still, shares of Ford and GM are both up about 40% so far. The shortage of semiconductors currently remains an afterthought for investors.
Write to Al Root at [email protected]