STM
Well-known member
- First Name
- SM
- Joined
- Feb 20, 2022
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- 3
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- 277
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- Location
- Austin, Texas
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- 2010 F 150 XLT
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- Home Builder
It's not as simple as people in charge getting a fire lit up on their backside... The thing is.. This shortage in the automotive, appliance etc industries is a temporary one created more by Covid than a permanent increase in demand.. If you look at it, the demand for cars hasn't gone up significantly.. The supply has been constrained..Makes sense, and I figured that was probably the reason to an extent. You’d think that people in charge would have a fire lit under their asses in order or leverage change to ease the issue, but I guess not. The computer industry has done much better in terms of managing the constraints.
Under these circumstances, if they invest in new capacity, then in a couple of years, there will be a surplus capacity.. Which will lead to price reductions and decreased profitability for years to come.. So the manufacturers are reluctant to make the investments..
As the covid related constraints ease up, things in the automotive industry should get back to normal with about the existing capacity..
Again, while it appears like the computer industry / chip fabs for computers have done better.. The thing to consider there is.. The life cycle of computer equipment.. At 3 to 5 years is a lot shorter than the 10 plus years in the automotive industry... So it makes sense to keep investing more in the fabs that supply the computer industry... Because, the demand in the computer industry grows much faster than the demand in the automotive industry plus.. The quantities there are far higher!
So there are smart people running both sides of the chip manufacturing businesses.. Just that it is a lot more profitable to invest in the computer side than the automotive side..
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