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Chip shortage: Toyota to cut global production by 40%

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Re: Chip shortage: Toyota to cut global production by 40%

#561

Post by jbay808 »

mindslight wrote: post #555
jbay808 wrote: post #497

Earlier quoted context omitted.

> they'll just raise their own prices to compensate. That's how it works in econ 101, but not necessarily in practice. Prices on many goods are less flexible than commodities like oil and lumber, for many reasons. Manufacturers may be locked into fixed-price contracts or distribution agreements, for example. Or a scarce component might be shared across "budget" and "premium" product lines, but the budget line is too…

Sure, but the alternative is for a company to shut down its production line rather than pay extra for parts it needs. None of your examples would seem to include that happening.

I agree they'd probably pay extra for the parts, but that might not just get passed on in their system price. It can manifest in all sorts of other ways (debt, discontinuing a different product line, cutting back on research, etc).

In today's environment debt is cheap, so companies that might otherwise shut off a production line can afford to borrow and bid up the price of parts.

Re: Chip shortage: Toyota to cut global production by 40%

#562

Post by nostrademons »

twobitshifter wrote: post #536
blueblisters wrote: post #513

Earlier quoted context omitted.

Building it is one thing. Making it operational without importing talent and running it profitably is another. Taiwan has some of the best fab engineers who work at US minimum wage salaries. Of course you can pull them away with higher pay like China is doing, but that means profitability will likely go for a toss.

Do you have a source for the best Taiwan engineers working for minimum wage?

Monthly salary for a TSMC fab engineer is about NTD$48,000/month [1]; I saw another source on the web that listed NTD$612K/year, which is consistent. The exchange rate is 1 USD ~= 28 NTD, so that about USD$1700/month or about USD$10.50/hour, which is pretty close to what McDonald's pays these days.

Prices in many foreign countries are wonky though, because of different cultural & economic systems. You can have a good lunch out (the equivalent of fast-casual; most eateries are like that) in Taiwan for about USD$2-4, and because the expectation is that you live with your parents until you get married, housing expenses are minimal. There's also a big oversupply of 20-30something labor, because the older engineers who built the company (and get paid significantly more) aren't retiring and so those skilled jobs aren't opening up. That's behind both the low prices for food (many young Taiwanese open small restaurants) and for entry-level fab engineer jobs.

[1] https://www.glassdoor.com/Monthly-Pay/TSMC-Process-Engineer-...

Re: Chip shortage: Toyota to cut global production by 40%

#563

Post by subpixel »

Veliladon wrote: post #7

Toyota was one of the few (only?) companies to keep a large stockpile of chips on hand to continue production in case of a supply interruption. They kept something like two years worth on hand. I guess 18 months of doing the extremely heavy lifting for the whole industry has taken its toll and now they're in the same boat.

I just bought a Toyota at MSRP last week. I was considering waiting a little longer, glad I did not.

Re: Chip shortage: Toyota to cut global production by 40%

#564

Post by starfallg »

ak217 wrote: post #554
onepointsixC wrote: post #542

Earlier quoted context omitted.

That's why the Chinese are so keen on taking over Taiwan as it will give them that access. The core theory that the PLA repeats is that they could overwhelm US assets in the region and quickly crush Taiwan in hopes of forcing the US to agree to a cease fire and peace deal.

How does Taiwan block mainland blue water access - any more so than Okinawa?

China has a plausible pretense to invade Taiwan. Okinawa? Not so much.

Re: Chip shortage: Toyota to cut global production by 40%

#565

Post by wonderwonder »

wyager wrote: post #387
smeyer wrote: post #325

Earlier quoted context omitted.

I don't think it's fair to attribute "most" of this to inflation. Car prices have been rising much faster than many other components of CPI, so even in real rather than nominal dollars cars are getting more expensive.

The stuff people actually care about has been rising faster than CPI. Cars, housing, meat, metals, lumber, etc. are all going through the roof. Inflation is a vector, and any reduction to a scalar involves taking the dot product of that vector with a weight vector. Under my personal weight vector, and I suspect most people’s weight vector, inflation is a lot higher than CPI.

Food prices are insane right now. I used to leave the grocery store with a spend of ~$90 now I average ~$120. Its anecdotal but it adds up.

Re: Chip shortage: Toyota to cut global production by 40%

#566

Post by zsmi »

twobitshifter wrote: post #536
blueblisters wrote: post #513

Earlier quoted context omitted.

Building it is one thing. Making it operational without importing talent and running it profitably is another. Taiwan has some of the best fab engineers who work at US minimum wage salaries. Of course you can pull them away with higher pay like China is doing, but that means profitability will likely go for a toss.

Do you have a source for the best Taiwan engineers working for minimum wage?

Not minimum wage certainly, but less. Not sure how significant an expense salary is for the TSMC though as a fab is very capital intensive.

https://focustaiwan.tw/business/202106300017

"The median employee salary at Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, reached NT$1.81 million (US$64,874) in 2020, up from NT$1.63 million a year earlier."

https://www.glassdoor.com/Salary/TSMC-Salaries-E4130.htm

Process engineer is like $73K/yr

So these, very skilled, employees probably get like ~15% less in Taiwan. No idea what Taiwan's employer tax situation looks like.

Re: Chip shortage: Toyota to cut global production by 40%

#567

Post by jhgb »

silon42 wrote: post #304
andruby wrote: post #132

Earlier quoted context omitted.

I don't think it's possible. At least not road-legal in Europe. There must be hundreds of chips in a modern car: Engine, ABS, wireless key, cruise control, radio, audio, electric windows, gps, battery management, airbags, seat-belt check, sensors, climate control, ...

you could drop: wireless key, cruise control, gps easily possibly climate control (not needed for short rides, a fan will do), maybe even radio (can always add later) and electric windows I'd buy that car if it was cheaper... I'd need AWD though, trailer hitch...

I'm not even sure you need to drop all of these. Lots of functionality could be centralized. The Apollo Lunar Module did everything with just one embedded computer. We've probably just traded more chips for shorter wires in many such cases.

Re: Chip shortage: Toyota to cut global production by 40%

#568

Post by baybal2 »

starfallg wrote: post #464
mywittyname wrote: post #418

Earlier quoted context omitted.

Yes. One scary fact that I learned is that, in war games between China and the USA, China almost always wins due to superior production capacity. Those $100B American battle carriers and $40MM advanced fighter jets can be taken out by $50,000 rockets/missiles produced at a rate of hundreds or thousands per day.

The issue is that China needs energy and other natural resources to sustain production which the US and allies can effectively blockade. It always puzzles me why China is so antagonistic with its neighbours. Indochina is very difficult to invade, and the whole South China Seas situation means that China has no blue ocean access into the Pacific. In a global war, the only reliable lifeline into China is through Russia…

> It always puzzles me why China is so antagonistic with its neighbours.

> The issue is that China needs energy and other natural resources to sustain production which the US and allies can effectively blockade.

You just answered your own question.

They are so hostile, and aggressive exactly because of that immense insecurity, and fear.

It's the mental model you pickup growing in any red country: you never acknowledge your weaknesses, lest you want them being instantaneously exploited.

On other hand, you feign a polar opposite. It's everywhere in China:

— Far from rich people in small towns buying fake Ferraris

— Dumb companies hiring fake "big name foreign executives" to mumbo jumbo their plans to investors

— "Advance to retreat" tactic

— Chinese businessmen hiring a service of "fake thugs" and tatooing themselves to appear "tough mafia men" to scare off actual mafias

Re: Chip shortage: Toyota to cut global production by 40%

#569

Post by throwawaygh »

s1artibartfast wrote: post #506
throwawaygh wrote: post #374

Earlier quoted context omitted.

1. Your comment doesn't even provide a prime facie argument against some forms of government intervention. E.g., we could let the market determine prices but mandate that fab equipment suppliers go to the front of the line. 2. Price is probably a red herring anyways. I'm willing to bet that fab equipment suppliers are losing out not on price negotiations, but on volume negotiations. I.e., they might even be willing t…

>It was suggesting that we very temporarily give special treatment to a very small consumer of chips that has an outsized impact on production rate, in the midst of a global chip shortage. Why would we do that if the fabs themselves don't think it is worth paying their equipment manufacturers enough to afford their own chips? Giving "special treatment" is a price control. It is forcing a transaction that otherwise wo…

> Why would we do that if the fabs themselves don't think it is worth paying their equipment manufacturers enough to afford their own chips?

Because there is a global chip shortage that is making life substantially worse for the vast majority of Americans. And because markets are tools used by man, not the other way around.

Re: Chip shortage: Toyota to cut global production by 40%

#570

Post by eldaisfish »

kwhitefoot wrote: post #486
eldaisfish wrote: post #253

Earlier quoted context omitted.

this is survivorship bias, nothing more.

No it isn't. Survivorship bias would have been me claiming that because my cars lasted more than 50 k miles that therefore all cars did. I merely added a small counter argument to the idea that cars of the period were necessarily short lived.

But most were short lived. The lifespan of cars has been getting longer and pointing to the exception that bucked the trend is literally survivorship bias.
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