Pandemics, kicking cars out of the stone age
The semiconductor stone age, that is.
By now, you probably know that production of cars has slowed down worldwide, due to a shortage of electronic components, or “chips” for the sake of simplicity. Initially, the carmakers thoughts, or said, that this would only affect production for a few months. but this is not happening. One reason is [relatively] well known, and is the general mess of worldwide supply chains. The other is less known, and more interesting too.
But it’s more complicated, and more interesting than this
When the pandemic hit, manufacturing of home devices took priority over cars, that could not be used as much due to lockdowns.
Butg when the car market wanted to return to normal, chipmakers had already reallocated their capacity.
BUT why is it hard to reallocate it again?
The problem is that the chips carmakers want are, even if they have excellent reasons to demand them, chips that semiconductor companies do not want to make anymore. The chips that should go in cars are technologies that “at best, were state of the art when the first Apple iPhone launched”.
In other words, a major reason why there is a chip shortage for the car industry is that the semiconductor industry took the pandemic as an excellent, long-awaited occasion to get rid of obsolete manufacturing lines. They are telling carmakers to get their semiconductors out of the stone age, loud and clear, with statements like these:
- “We’ll make them as many Intel 16 [nanometer] chips as they want, [but not older chips]”
- “[Resume making the same chips as before] just makes no economic or strategic sense… Rather than spending billions on new “old” fabs, let’s spend millions to help migrate designs to modern ones.” Or, to use a slogan, “Hey, car companies, please wake up and finally join the 2010s!”
Wait! That’s not so easy!
Carmakers want cheap electronics because they need to save as much as possible on every car, even luxury ones, to stay afloat. But that is only the cheap side of the story, and there are much more serious reason to keep demanding “older chips”.
One is that the new chips are not backward-compatible, packaging-wise. Designing a chip today, with exactly the same functions of one conceived 15 years ago, means forcing the designers and suppliers of every board that carries that chip to remake even that board.
Even more crucial is reliability. Quoting again from Fortune:
“Most systems in cars are safety-critical and need to perform in practically every situation regardless of temperature, humidity, vibrations, and even minor road debris. With so much at stake, tried and true is better than new and improved.”
All this, to make cars that, very likely, will never be needed in the same volumes as before the pandemic. It would be very, very interesting, and surely highly profitable too, to know for sure which car companies will be still around in twenty years from now, and even more how many cars they will make. Possibly with electronics at least as reliable as today, of course.