[HN Gopher] Chip shortage: Toyota to cut global production by 40% ___________________________________________________________________ Chip shortage: Toyota to cut global production by 40% Author : midnightcity Score : 492 points Date : 2021-08-19 11:15 UTC (11 hours ago) (HTM) web link (www.bbc.com) (TXT) w3m dump (www.bbc.com) | ceva wrote: | That is good news for planet earth! | folli wrote: | Why? Because older, less efficient cars are being kept on the | road for longer? | thrwyoilarticle wrote: | The question of whether to keep an old car or buy a new, | cleaner car is difficult, with many important unspecified | variables such as who 'owns' the emissions due to the | manufacture of a car (the manufacturer? the first owner? all | owners?). | | This isn't true for mileage though. If you move closer to | work, your commute will emit less. | RutZap wrote: | I believe that driving an old car for longer has a smaller | environmental impact than consistently driving newer cars as | the bulk of emissions is during the manufacturing process. I | have no data to support my statement, it's just my hunch. I'd | be very keen if someone with the right knowledge can approve | or disprove my statement. | Tade0 wrote: | The opposite is true - the manufacturing process is | responsible for an average of 7-10 tonnes of CO2, while the | same vehicle over its lifetime will emit more than 50 | tonnes from the exhaust. | | Moreover manufacturers have been reducing their carbon | footprint lately. As an example VW reports that 70% of the | energy the use in plants is provided by renewable sources. | | That being said while emissions rules have been getting | more stringent over the years, they're increasingly being | followed through introducing EVs, not improvements in | engine efficiency. | lostapathy wrote: | > As an example VW reports that 70% of the energy the use | in plants is provided by renewable sources. | | This is a great start, but not where most of the carbon | embodied in a new vehicle comes from. The energy used by | the VW plants keeps the lights on, air conditioned, and | powers tools for assembly. Most of the carbon embodied in | a car comes from the energy it takes to mine raw | materials and process them into useful metals. | burntwater wrote: | This seems to be the crucial bit that is always missing | from these discussions. I don't doubt that the CO2 | emitted in the assembly of the car is less than in the | driving. But I'm curious about all the other | environmental impacts (of which CO2 is just one small | bit). The destruction of wildlife habitat, the poisoning | of ground water, etc, that's involved in the retrieval | and processing of the raw materials, on up through the | chain. | Tade0 wrote: | > Most of the carbon embodied in a car comes from the | energy it takes to mine raw materials and process them | into useful metals. | | Yes, and that is included in this estimate. | | Producing a tonne of steel emits 1.85t of CO2. The | estimate for mining and processing is "just" 270kg/t: | | https://www.researchgate.net/publication/324486263_Analys | is_... | | This pales in comparison to the 20 tonnes of fuel a | typical car is going to work itself through throughout | its lifetime. And all this fuel has to be first extracted | and refined. | zelos wrote: | Not true at all, ~80% of emissions from an ICE car are from | using and servicing it. | | https://www.iea.org/data-and- | statistics/charts/comparative-l... | | Looking at that chart I think you could build a brand new | ICE car, throw it away, build an EV and drive that instead | and still come out ahead? | lotsofpulp wrote: | > Vehicle assumptions: 200 000 km lifetime mileage | | I was under the impression decent quality ICE vehicles | are proven to last at least 320k km these days, and can | easily last 15+ years. | | Have electric vehicles even been in use long enough to | have sufficient data to compare? | caf wrote: | If we take as given that _" decent quality ICE vehicles | are proven to last at least 320k km"_, then after | accounting for both vehicles that are less than decent | quality, and vehicles destroyed due to accident, | malicious damage or poor maintenance long before they | reach that figure, then a fleet average of 200,000 km | doesn't seem out of the question. | lotsofpulp wrote: | The same factors would seem to apply to EVs (except | perhaps poor maintenance, but I am not knowledgeable | enough about EVs to be sure), so for the purposes of | comparison, I figured apples to apples would be comparing | expected lifetimes of both assuming they are not abused | or neglected. | caf wrote: | It seems to me that they are using an expected lifetime | (in the "expected value" sense) of 200,000 km for both | types of vehicles. | | If those factors apply equally and dominate the reasons | vehicles reach EOL, then the expected lifetime not | varying significantly between the vehicle types looks | like a reasonable assumption. | | Using the real expected lifetime taking into account the | circumstances that tend to render a vehicle permanently | unserviceable in the real world looks like the correct | approach to determine how manufacturing costs are | amortised over the vehicle lifetime. | ghaff wrote: | "Easily" | | At least for a snowy area, those numbers are probably on | the high side for reliable transportation but not 2x on | the high side. | | Presumably, an EV would at least need a battery | replacement well before that point. | lotsofpulp wrote: | I presume an EV would rust the same as an ICE due to road | salt/ice melt. | istjohn wrote: | Electric vehicles are far simpler mechanically, so I | expect they will last much longer. | metalliqaz wrote: | only if they have been built to do so. | | the same busted (and hard to repair) body parts will | occur in both. Think AC, window motors, lamps and | switches, etc. | | plus, none of the manufacturers seem to be investing in | easily replaceable batteries. They'd rather you buy a new | car. May as well right? the batt replacement is 60% of | the cost! | bottled_poe wrote: | Still better for the environment by decades. | chrisseaton wrote: | We're trying to switch everyone to electric. That's not going | to happen if we can't build new cars. | lotsofpulp wrote: | A far better way to reduce energy consumption is to not move | mass in the first place. | | Not building new cars certainly helps with that goal (since | older working ICE cars do not junked anyway, they just go to | someone else). | riskable wrote: | Well Toyota, specifically made bets that the world would | _not_ be moving to electric cars and thus, aren 't producing | them. | | So yeah, Toyota (again, specifically) reducing production | actually _is_ better for the environment. | phkahler wrote: | And here I was picturing a 4-axis machine... | belter wrote: | "Porsche will provide cars with 'fake chips' to reduce delivery | times" | | https://news.ycombinator.com/item?id=28042518 | laydn wrote: | That makes no sense. I wonder what they mean by "fake" chips? | Are they simply not placing the chip on the board, or are they | using a footprint compatible different chip (unlikely), or are | they completely redesigning the board with another chip which | has much better availability? (most likely) | jtbayly wrote: | Or leaving out the infotainment system. | detaro wrote: | Presumably they are building cars but leave entire modules | out, and then fit them later as supply arrives. Has some | benefits over stopping production, if you can afford to have | a stockpile of cars around. | nickthemagicman wrote: | I looked for a simple non-electronic car recently to buy, and | found out that the government has mandated numerous safety | systems requiring electronics like backup cameras, no seatbelt | alarms, blind spot monitoring, lane assist etc, and in the | upcoming infrastructure bill there is a rider to add | breathalyzers to every new car made in America. (ref below) | | Is there an officially designated cost/reduced risk ratio that | policy makers can go by to determine if a regulation is worth | while? | | Is a regulation that costs 1 billion dollars to save 10 lives at | 100 million a life considered worthwhile? | | Is a regulation that costs 1 billion dollars to save 1 million | lives at a cost of 1000 a life worthwhile? | | Is there even an officially designated cost per life saved for | new safety regulations? | | If not it seems like a slippery slope, and the government can | never overreach as long as it can justify the regulation by | saying it saves a single life. | | Reference: https://time.com/6086981/bipartisan-infrastructure- | bill-brea... | frankchn wrote: | The DOT and the NHTSA considers that value to be $6.3 million | per "statistical life" in 2009 dollars [1] | | [1]: | https://www.nhtsa.gov/staticfiles/administration/pdf/Value_o... | selimthegrim wrote: | You might want to look up the marginal cost of a backup camera | what with CCDs these days | nickthemagicman wrote: | The manufacturers add a significant markup I imagine. | | My original point is what's the cost benefit ratio boundary | of enforced safety laws? | throwaway894345 wrote: | What are these chips and what is preventing us from scaling up | capacity? I'm not challenging that it's difficult, but the | reporting seems shoddy. Maybe I'm the only one who wants to | understand this stuff, but these kinds of questions always seem | obvious to me (same with COVID vaccine manufacturing). | acdha wrote: | Here's a good rundown: it ultimately all comes back to chip | fabs being huge operations with massive upfront costs which | makes them sensitive to both the pandemic's direct effects and | secondary problems like the way the auto manufacturers slashed | orders in 2020, forcing the chip manufacturers to sign other | contracts to avoid idling that much capacity[1], and unrelated | problems happening at the same time like cryptocurrency pulling | capacity away from useful applications. | | https://www.eetimes.com/the-chips-are-down-with-no-relief-in... | | 1. I'm not sure how much of this has been independently | verified but this commenter blames the auto manufacturers | heavily: https://news.ycombinator.com/item?id=26931498 | throwaway894345 wrote: | That's a really good HN comment, thanks for sharing! | aazaa wrote: | > Taiwan Semiconductor Manufacturing plans to build new factories | in the US and Japan | | I can't help but think that this massive shortage is setting up | and equal an opposite reaction 2-3 years down the road: a glut as | all this new capacity comes online. Especially given that because | companies are now scrambling for chips, they're likely to over- | order to ensure future supply. | melfrey wrote: | Will the car price starts to increase due to the chip shortage? | avelis wrote: | Price increases already happened in the US for used cars. This | will only continue the premium for used cars. | stevewodil wrote: | Why is it not affecting new car pricing as dramatically? And | why would that continue? Used car prices cannot surpass new | car prices surely, so at some point new car prices will be | raised because of the low supply and high demand, or new car | orders won't be fulfilled for months later | bluGill wrote: | Used cars have surpassed new car prices in the past. | Generally because new cars can't actually be bought at any | price. A car today is sometimes worth more than a better | car that doesn't exit. | baxuz wrote: | Ordered a Yaris Hybrid in June. | | Still no info on the order, except that the factory in France is | on shutdown in August till the 23rd. Except: | | > Until now, Toyota had managed to avoid doing the same, with the | exception of extending summer shutdowns by a week in France | | Which means it reopens in September... | | > Toyota is to slash worldwide vehicle production by 40% in | September because of the global microchip shortage. | | Oh boy. Hopefully my order is in one of the first in the queue. | varispeed wrote: | There is a lot of scalping going on. I keep an eye on certain | parts and as soon the stock comes up, it disappears within | minutes. Then you can buy all those chips on AliBaba at 10 times | the price. I think government should look into that as this is a | huge problem for many businesses. | rcMgD2BwE72F wrote: | On one hand, Toyota buys so many chips that their supplier will | probably prioritize their orders. | | On the other hand, Tesla is tiny compared to Toyota but is | probably more flexible and can adapt faster, e.g by using alt | chips with new firmware and by using fewer chips per vehicles (to | be proven, but we know Model Y has half the number of ECUs of | Mach E / ID.4 for instance). | | Also, without dealers, Tesla could better manage their build-to- | order system and pricing (to push customers towards high margin | vehicles and forgo volume growth while the shortage continues) | itsoktocry wrote: | > _to push customers towards high margin vehicles_ | | Wait, isn't this what people tell us is wrong with dealerships, | and why the Tesla method is superior? | rcMgD2BwE72F wrote: | Not a sales method, just raising price on the cheapest | models. I meant pull not push. | JKCalhoun wrote: | So the new car thief will yank the computer(s) out of newer cars, | sell them on the black market. | bluGill wrote: | No, because the computer is tied to the VIN, and you need a | dealer to change that. Dealers will check to see if the VIN is | stolen. | | Not all cars have that, manufactures have been using the above | to stop theft for years. | 1-6 wrote: | My Toyota Prius is still sitting around without a catalytic | converter on it. Procrastinating because I'm not being called | back to the office yet. | waterside81 wrote: | Can someone explain to me why this wasn't the case before covid? | Are the companies who are ahead of the automakers "in line" | ordering more than before covid? | Saturdays wrote: | Simplest answer: Demand has gone up overall for technology like | tvs, computers, game consoles, etc... Meanwhile, during covid | the ability to scale (production and supply chain) to meet that | demand has been difficult. | bluGill wrote: | Cars are not a large market compared to cell phones and other | users of ships. Cars are louder than the rest, but not bigger. | | They typical car lasts 10-15 years. Cell phones about 2. More | people have a cell phone than a car. Sure the car has more | chips, but not by enough to make them bigger than phones. | (Phones and cars mostly don't use the same process) | neals wrote: | Come on, we all know this problem and we all know the solution. | It's probably red-circuits that we are talking about here. We've | all been there: you have your yellow belts full of green- | circuits, but the red ones are just so much more complex. You | need to set up the entire oil production chain for that, which is | tedious and you probably rushed it just 'get a few red circuits | so I can get my electric furnace'... | | I say, take a step back, take some time and really automate | plastic-bar production (yes, even the oil wells and refineries, | and don't just put rocks in a container, belt them over there | like a grown-up) | | Only after producting enough for a full red belt, should you | continue expanding into other branches, like robots and faster | belts. | | Don't they teach this stuff anymore? | spsesk117 wrote: | I love playing Factorio, but it's moments like above when it | starts to stop feeling like a game and it starts to feel like | refactoring code at work. | blunte wrote: | Factorio is a nice and simplistic (and fun, for a while) way | to demonstrated many aspects of software and product | development. | | You go through basic product planning and design, first quick | MVP, then some feedback loops where you recognize some needed | design changes, etc. Then once you have it figured out, you | want more. | | So you start scaling up. That scaling often necessitates | refactoring, because it necessitates space and time | management (no sense having a bottleneck in your system which | limits your growth potential). | | Then you have the aliens which represent unexpected problems | and failures. | | A while back someone posted about playing Factorio with job | candidates as a way to see how they thing and solve problems. | This is probably much better than most tech interviews. If | you can be decent at Factorio, you can probably be pretty | decent as a software developer. | TeMPOraL wrote: | I'd laugh but then I saw this comment: | https://news.ycombinator.com/item?id=28233436. | | Yup, Factorio is a nice way to learn about supply chains. | | Unfortunately, like almost all videogames, it assumes the whole | system is run by a benevolent dictator (i.e. the player). In | real life, most of the complexity and most of the waste comes | from the system being built incrementally and operated by great | many parties in a mix of cooperative and competitive | relationships. | neals wrote: | I think you're still allowed to laugh | swiley wrote: | Ah yes, the blackstart situation. So terrible once you switch | to nuclear. | jameshart wrote: | Think of biters as a metaphor for competitors, taxes, and | regulatory compliance. | wonderwonder wrote: | So new cars are going to be come more expensive due to supply | limitations and in turn used cars will continue to become more | expensive as they can rise to a certain % of the new car price. | At the same time housing prices continue to sky rocket. Seems | like not a great time for someone just stepping into adulthood | and financial responsibility. | oldsklgdfth wrote: | > stepping into adulthood and financial responsibility | | The timing of my life events is one of the things I am most | grateful of. | | I graduated in 2014 and within a couple years I bought a house. | Strong job market for an employee and low interest rate. | | I know people that were getting PhDs, because they started | undergrad in the aftermath of the housing bubble and couldn't | find jobs when finished. I also know people that decided to buy | a house before the bubble and are still stuck underwater, | preventing them to pursue opportunities not in their area. I | also know people that went into medicine as tuition became | ridiculous and have no way of servicing their student loans. | | I guess what I'm getting at is count your blessings. Others may | not be as fortunate as you. | ren_engineer wrote: | but stop and think for a second about all those short term | profits Wall Street made by outsourcing all of our crucial | manufacturing! Those congressional bribes don't pay themselves | either! /s | | the worst part is our government is rewarding them for bad | behavior, the article mentions the billion dollar chip subsidy | program. So these companies made money outsourcing and will now | make more by bringing it back. Instead they should put a | massive tariff on any chip not made in the US. Companies that | invested here would be rewarded for loyalty | dcolkitt wrote: | What short term profits? The car industry has among the | lowest margins in the entire economy. | | Moreover the chips were never outsourced. Toyota never made | its own chips, nor is it feasible to. You seem to have some | sort of idealized view where a company internally | manufactures everything it needs starting from raw materials. | That's not how it works, and that's never how it worked. | ren_engineer wrote: | "silicon valley" is the name because of all the chips that | used to be made here, US used to lead the world in chip | manufacturing | | Toyota is just a symptom, every other car manufacturer and | other industries are facing shortages as well. The US | economy is now strangled because our supply chain got | outsourced for "efficiency" that didn't account for | potential disruptions | lotsofpulp wrote: | > Instead they should put a massive tariff on any chip | not made in the US. Companies that invested here would be | rewarded for loyalty | | Voters would have rewarded politicians who supported | these tariffs by voting them out of office for making all | their toys more expensive. Everyone likes cheaper stuff | and more stuff in the short term. | ren_engineer wrote: | voters have complained about stuff being made in China | for years and if it was framed from a nation security | perspective you'd get wide bipartisan support. The | current chip subsidy program literally just got wide | bipartisan support, it's extremely popular | lotsofpulp wrote: | Now that the effects have been felt, yes. But not a few | decades ago when the majority were enjoying cheaper | goods. Even now, I do not see broad support for tariffs | in order to bring production back to the country. | misja111 wrote: | It's a bit too easy to blame this only on Wall Street. First | of all companies have outsourced their production facilities | to lower production costs. The parties benefiting from this | were: | | - shareholders (more profit) | | - consumers (lower prices) | | Second, you could say shareholders == Wall Street, but you | could just as well say that shareholders are pension holders, | banks, insurances and small private investors. All of these | simply want to have return on their investment that is as | high as possible. If that's good or bad is an interesting | question, but the bottom line is that very few people are | without blame here. | ren_engineer wrote: | you'll notice I also blamed congress for effectively being | bribed to allow this to happen. The government's job should | be to prevent stupidity like this from happening, | Department of Defense at the very least should have been | sounding the horn of how our supply chain issues are | national security issues | | plenty of people have been warning for decades how the | reliance on manufacturing from other countries could have | major consequences. The fact that a small island like | Taiwan is probably the most important geo-political issue | in the world could have been prevented with a little bit of | long term planning | xyzelement wrote: | > just stepping into adulthood and financial responsibility. | | I am older than that (40 and my wife is 35) and while we have | been independent professionals for a while, we now have a 1 | year old so this summer for the first time in our lives we | bought a house and a car. | | It was definitely harder to find a house (mainly less | availability driving competitive bidding) and it took a little | longer to find a car and we ended up having to pay MSRP. | | However the thing I can say is - the incremental cost/hassle of | having to do these things during the pandemic supply crunch is | almost irrelevant compared to having to do this stuff at all. | We paid say 3% more for the car and ok maybe 10/20% for the | house than we would have otherwise, obviously that's painful | but if I was "just stepping into adulthood and financial | responsibility" I'd look to avoid this stuff altogether. | | EG: do you need to own a house? If you're a single person, | "throwing away" money on a relatively inexpensive rental might | be much wiser than "investing" in a house in a seller's market. | Likewise, if you're young and single then you should relatively | easily (depending on where you live of course) arrange your | life to not need a car. It was very easy for us in NYC, of | course may be different for you. | | The point is that in my mind, "adulthood and financial | responsibility" don't have to translate "got my own house and | car" but simply "making wise financial decisions given my | situation" so if there's room to be flexible, be flexible. | BossingAround wrote: | The fact that you can weather the extra costs doesn't mean | it's "no big deal," which is how your posts comes across to | me. | xyzelement wrote: | The point of my post was to give the OP some pragmatic | advice, on the bigger-deal lever he has in his life. | Obviously there's a marginal drop-off of who can afford X | if X goes up even a little. | gnopgnip wrote: | CPI is showing a 45% increase in used car prices over the | last year. | fartcannon wrote: | When I was in my early 20s, someone gave me this exact | advice. I didn't have much money and they said that real | estate was too expensive and I should just invest/rent. Fast | forward to today, I paid 8x more for my small sad house than | I would have then and my investments on my small amount of | money didn't make up the difference. | | The market is so screwed up that even a crash that halved the | price would still be 4 times price back then. | xyzelement wrote: | Finance guy here, two things. You are looking at it in | retrospect. "I should have bought a house" is no different | than "I should have bought X stock" when you're looking at | the price history backwards. At the time, it could have | gone up or down. EG we just bought a house, I have many | reasons to expect that it could drop in value over the next | bunch of years. | | Second, you may not be doing proper calculations. I would | not have - before I bought a house. Do you count property | taxes, upkeep, larger water and electricity bills, possibly | longer commute times/needing a car, relative lack of | mobility, air conditioner/heating/roofing/siding/repair, | lawn maintenance, etc. | | Yes sure, if I bought _this_ house 10 years ago, it would | have been great. But I wouldn 't know 10 years ago that I'd | want this house, and for example dealing with all the above | shit as a single man would have been stupid. There were | also points in my life where I was very open to relocation | for the right job, something home ownership would have put | friction on. | | it's very common to think of only a pro or a con of a | decision (if I bought earlier, it would have only cost X) | but you're not factoring the risk that existed at the time, | nor the commitment you're creating on yourself, not the | carrying costs I described above. | | May not be relevant to you but I feel fine about "losing | out" on 20 years of house appreciation (if I bought at 20 | not 40) because I avoided all that stuff for 20 years, too. | fartcannon wrote: | Whatever helps you sleep at night :D | | My parents bought a detatched home at 20 with minimum | wage jobs. I bought a townhouse at 40 with a high paying | career. My kid is going to be 60 by the time he can | afford a home. | | It's fucked. Buy now. | lastofthemojito wrote: | Reminds me of what I've heard Porsche aficionados say: | "You can't pay too much for a classic Porsche. You can | only buy it too soon". | | They're not making any more of them, and demand and | prices only go up (until maybe one day they don't, I | don't know). | xyzelement wrote: | >They're not making any more of them, and demand and | prices only go up (until maybe one day they don't, I | don't know). | | You can say that about anything - limited run beanie | babies, bitcoin, whatever. It's all true until it's not. | | In the case of classic Porsches, next time you hear | someone say that, ask them (a) what's gonna happen once | boomers die out. Do genX/Z/millenials give a shit about a | classic Porsche the way a boomer would? (b) what happens | if/when we replace ICEs with electric and the gas station | infrastructure goes away (not saying it will happen but | it's one likely future path.) In the world where you | can't get gasoline, is a classic car still valuable? | | I don't know the answers to these questions but unless | the person who is giving you advice has modeled this out, | their advice is of no value. | xyzelement wrote: | > It's fucked. Buy now. | | Ok you certainly should go for it, but I'll give you one | analysis that I have. We bought in a NYC suburb (for a | bunch of reasons) and here's what I think constitutes | price risk for me. | | At the end of the day, a house is worth what someone can | and is willing to pay for it. Right now, there's reasons | the demand is high for near-NYC housing because (a) | people aren't sure they need to be near NYC long-run and | don't want to risk it (b) it's an easiest move to make to | leave the city and not go far (c) supply is low because | with covid, fewer people are willing to have an open | house (d) now everyone is in a rush to upsize so space is | at a premium. | | All of these are demand factors that can change. EG: (a) | it may become clear in 1-2 years that permanent remote is | an option for many people, relieving demand pressure on | NYC and the area. (b) once people are comfortable with | leaving the city they may be comfortable moving further | afield. (c) the pent-up supply of folks who didn't sell | in 2020/2021 may come to market, especially if a and b | occur, causing people to want to sell before it's "too | late" (d) everyone who needed up upsize may have done it, | relieving that pressure. | | Also, for New York state specifically, with the number of | wealthy people leaving the states, it feels inevitable | that state and property taxes will rise, making all of | this even less attractive. | | And finally, interest rates are ridiculously low right | now, rising rates will be a damper on prices when that | happens. | | Obviously there plenty of reasons it could also go up, | but if your model is so simple "it's fucked so it's | always goes up" you may get fucked too. | zsmi wrote: | > All of these are demand factors that can change. | | Don't forget: Cities actually allowing housing stock to | increase. Very unlikely but hopefully not impossible... | fartcannon wrote: | Agreed. Same with stocks. It's all gambling. | devoutsalsa wrote: | Rents are going through the roof, too. | nosianu wrote: | And when you try getting that hole in the roof fixed, you | might run into even more problems: | | "Roofing Industry Faces Unprecedented Supply Disruption" | (April 27, 2021) | | https://www.roofingcontractor.com/articles/95590-roofing- | ind... | wonderwonder wrote: | Wonder how much of that is driven by people actually | being home to answer the door when roofers knocked during | Covid. Completely anecdotal but I got a new roof during | the covid lock down and so did 3 of my neighbors and its | mainly due to being home to answer the door and the | roofer being able to get insurance to cover the cost. | Scoundreller wrote: | I get it if insurance covers it (without jacking your | rates for perpetuity to pay for it), but alas, how do you | work from home while being re-roofed? | ghaff wrote: | NYC (esp. Manhattan and parts of Brooklyn) is pretty | exceptional in the US with respect to there being no | expectation of car ownership. You _can_ get by in other | cities out of school (especially given app-enabled rides, | Zipcar, etc.) but the general expectation is car ownership. | | As for housing, it's perfectly normal to rent for a while | until you know you want to settle down in a location for an | extended period of time. | ipqk wrote: | The difference being that lots of people want to keep those | inflated housing prices high (nimbyism), whereas nearly | everyone wants car prices to go back to normal. | yalogin wrote: | Car prices won't go back to normal again though. They will | come up clever financing schemes to make people pay but the | prices will never be reduced. | wyager wrote: | This is mostly just a reflection of the fact that the value | of the dollar has declined precipitously over the last 18 | months. Dollar prices are sticky, so it can take a bit of a | shock for inflation to "kick in", but we've had plenty of | shocks to go around. | jondwillis wrote: | I'll add a bit of a pedantic point: the dollar hasn't | really lost any value _against other currencies_ (DXY) | over the past year. In fact, it is a little higher. | | It has lost value against lots of commodities and "real" | goods. | smeyer wrote: | 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. | wyager wrote: | 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. | wonderwonder wrote: | 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. | JackPoach wrote: | There's huge inflation in many things related to making | cars (chips, steel, shipping costs as many cars are still | being shipped across the ocean, labor costs, etc.). We are | likely to be in the very beginning of significant inflation | cycle, with probably double digit inflation which will | eventually drop to 4-4.5%. I wouldn't expect to prices to | drop any time soon, nor have 2% inflation. My bet is that | fewer and fewer new cars will be sold in the next few years | (3-5) with prices rising 4-10% each year. | ptero wrote: | It's not just cars, the prices are rising across the | board (not evenly), so we have pretty high inflation if | you add in the items official estimates excluded. | tms2x2 wrote: | When do we get 30 year loans to buy a car? | beached_whale wrote: | I would say it is more self perpetuating. With housing prices | growing as they are, people are saving less for retirement | and putting that money into their house with a plan to cash | out, move to the country, and retirement. | dalbasal wrote: | Nimbyism exists, as do more concrete constraints in urban | locations but... | | The way house prices work, often, is more or less banks | determining prices via mortgage eligibility. Banks agree that | a house is worth X. They lend X. That becomes the price. | Buyers tend to be available. | | People are so quick to see that credit expansion fuels price | inflation in other areas, even the economy at large, but | somehow diminish or ignore this with housing. | | Obviously, supply constraints avoidable or otherwise, affect | supply. In any given year though, the supply of housing does | not change a ton. Where they do, you don't tend to have wild | inflation... though you do often see bigger houses. | | It's impossible to decouple housing from monetary policy. | Housing is one of the few ways that buying power gets from A | to B, where B is not a financial institution or direct | spending. | sandworm101 wrote: | >> whereas nearly everyone wants car prices to go back to | normal. | | There is a significant voice that would like to price cars | out of private ownership. Traffic, pollution, safety, urban | sprawl ... pick your evil and someone wants to eliminate | private cars for that reason. | | I regularly read about how the next wave of cars will all be | somehow "shared", that we will whistle and they will appear | at our doorsteps ready to carry us off to our 9-to-5 jobs in | shiny glass office towers. I just don't see that happening | anytime soon. Total conversion to electric cars in 10 years, | maybe. Conversion to total ride-sharing and/or mass transit, | doubtful in 30. | nsizx wrote: | That's like 0.1% of people | razius wrote: | The 0.1% that matter. | ThePadawan wrote: | I live in a country with a working public transport system. | | I'd prefer it if ICE cars were as expensive as possible in | order for the planet not to burst into flames. | wonderwonder wrote: | I don't think it's necessarily NIMBY or at least my | understanding of it that makes people want to keep housing | prices elevated. If I buy a house at an inflated price, I | want the house value to continue to rise as a large degree of | my financial security is tied up in that house. My ability to | refinance, take cash out and eventually even sell that house | are tied to it continuing to escalate in value. In the US | this is particularly true as so much of out net worth is | essentially our home value. As inflation increases and | peoples ability to save is even further reduced this will | become even more of an issue. | BurningFrog wrote: | NIMBY-ism doesn't make people want housing prices to rise. | | The wish to inflate housing prices causes NIMBY-ism! | teorema wrote: | Not really a great time for anyone really, at least from the | vantage point you're referring to. | dahfizz wrote: | If you're an established adult who owns a house and two cars, | your assets have skyrocketted. You're having a great time. | codesnik wrote: | how? can you capitalize on that upside somehow? sell them, | live in a tent until prices are down? | mlac wrote: | Yeah they are not liquid assets... my concern is if one | of my cars dies... | dahfizz wrote: | Trade it in. You'll still pay MSRP on the new car, but | you will get way more for your trade in than it is worth. | dcolkitt wrote: | You can pull out home equity in a cash out refinance. | Borrow at 2.5%, then roll that into index funds averaging | 8%, and turbo-charge your retirement goals. | i_haz_rabies wrote: | "put it all on black!" | bluGill wrote: | yeah. That might work out, but my investments are | diversified more. I have real estate in the form of my | house. I have stocks and bonds in my 401k. I have | government in my social security. They are completely | separate, so if any one fails I'm still okay. (well if | the government fails I'm probably in trouble no matter | what, but social security is limited at best) | malfist wrote: | I capitalized on it by buying a new car and selling my | old one. I sold a 3 year old camaro for $1000 less than I | paid for it. I didn't get very much off MSRP of the new | car, but I got way more value from a three year old | camaro than I ever expected to get. | heliodor wrote: | So... you got more for your used car and paid more for | your new one. | | Which is exactly the point being made by the parent | comment that you can't capitalize on the upside. You'd | have to sell and step out for a while. | malfist wrote: | What do you mean I can't capitalize on the upside? | | Sure, my purchase costs went up some, but no where close | to the additional value I got over normal for my sale. | Put it this way, I paid a few hundred dollars, maybe a | thousand dollars more for the car than I would normally, | but I sold my old car for thousands more than I normally | would have been able too. | | That's capitalizing on the upside for sure. | dahfizz wrote: | Used cars used to be worth x% of a new car. | | Today, they are worth x+y% of a new car. | | If you trade up now, you will pay less for the new car | than if you traded up two years ago. | | Similar situation for houses. Even if we assume all | houses have inflated by the same rate, you can still | downsize and cash out. Your existing $600K house is | inflated 25% and you can sell for $750k. You downsize to | a $400k house which is inflated to $500k. You oversold | for $150k, but only overpaid by $100k and you pocket the | difference. | mikeyouse wrote: | Obviously most people can't do this but a family member | was recently approached by the dealer who sold him his | most recent work truck. He's driven like 30k miles on it | in the past 2 years and it was a $75k Chevy diesel. | Dealer offered him $90k to buy it back from him (to sell | to someone else) and my family member said "Sure". So he | made $15k on an asset that should have lost 1/2 its value | by now. Obviously rare and hard to take advantage of but | some people are absolutely capitalizing on the weirdness. | alistairSH wrote: | But what does he drive now? If the truck was just a toy | that didn't need replaced, then good for him. But that's | not the case for the majority of people. | bluGill wrote: | There are lot of construction workers driving around 20 | year old trucks. Those who own a company and don't use | the truck as a limo to show off to customers value the | extra money in their pocket. The more the truck is | abused, the older it will be (concrete and rocks are | abusive to the body of trucks so those industries get the | oldest ones) | wonderwonder wrote: | I assume that in most situations like this the original | person with the truck would have to replace that truck. | In this case he now has to pay 90k for the truck he | originally paid 75k for. | dahfizz wrote: | Or hobble along with a "free" $15k clunker until prices | go back down. | mikeyouse wrote: | Perhaps, but it's not uncommon for these places buying | new-off-the-lot high end trucks (my family members' | included) to have a dozen+ vehicles at their disposal. | He's planning on using his 5-year old similar HD truck | until the market thaws a bit, but it's also overkill for | most everything he does. One of the many work vans his | business owns can likely do 95% of the work. They're | mostly just buying the big ones for clout and due to | generous tax writeoffs. | frockington1 wrote: | I bought another house and am renting the old one out. | The new house has an interest rate at 2.3% while | inflation is over 5% with conservative estimates. | dahfizz wrote: | HELOC's are very common. You can cash out on all that new | home equity and install solar panels, build an extension, | put in a pool.... | alistairSH wrote: | That's assuming you have the cash-flow to float the new | loan. If you bought the home 5+ years ago, that might be | true, but for anybody who bought recently, that's | probably not an option. | burntwater wrote: | The chasm between the lower class and even the middle class | is widening by literally the week. | gonzo41 wrote: | Spend 5K on a really nice commuter electric bicycle. You'll be | doing a solid for the Environment and you'll have an EV that | makes you fitter. | lordgroff wrote: | I live 50km from work now (thankfully looks like mostly | remote forever, the COVID silver lining), but I used to bike | to work before I had kids. | | I don't know that I'd do it again. The number of avoided- | death-by-split-second close calls that I racked up in about | five years is just too high... Now that I'm a bit older and | have children, seems irresponsible. | | This is in a city with relatively developed bike | infrastructure, including separated lanes in some places. | (Some) drivers just don't give a damn, and while I wish it | was different, I don't see it changing any time soon either. | rcMgD2BwE72F wrote: | This is so sad. We did not build cities for humans but for | machines that, we thought, would serve humans well. We got | it so wrong. | wonderwonder wrote: | This is great in theory but not so great when you are food | shopping for a family or you need take the kids to get new | shoes. | yourusername wrote: | High end bike parts are also in short supply. Popular | electric bikes also have months long waiting lists. | alistairSH wrote: | FWIW, my local bike shop has a pile of electric-assist | commuter/townie bikes ready for riders. Supply chain for | bikes is definitely broken right now, but they're out there | - you just have to look and wait and look some more. | bongoman37 wrote: | If you have a kid that's not a workable solution, moreover, | safety is a huge issue on 2 wheelers. | acdha wrote: | I've taken my son on an e-bike daily since he was 11 months | old - he loves it compared to being in the car. There are a | range of products on the market handling up to 4 kids and | with creature comforts like rain shields. | | I use one of these: | https://yubabikes.com/cargobikestore/electric-boda-boda/ | | A relative uses one of these in the Boston area, year | round: | | https://www.ternbicycles.com/us/bikes/472/gsd | | A friend loves this for their family: | | https://www.r-m.de/en-us/bikes/packster-70/ | | Not cheap, but an order of magnitude less than a car | ($10k/year by AAA's numbers) over the lifetime of the bike. | steve_adams_86 wrote: | For anyone with a small commute I'd recommend this too. | Our Yuba (spicy curry) has around 3000km on it over 2.5 | years, is going strong, and I'll still be commuting ~30km | per week over the next year with it taking my 4 year old | to daycare then going to work. I'll likely continue | commuting with him on it to kindergarten and perhaps | early grade school. | | It wasn't cheap initially ($7000 CAD), but the cost per | km drops enormously every year while the bike still rides | as well as ever. The kids have all loved it, too. My | youngest is disappointed when we drive places - he wants | to walk or ride all year. | | We do have a temperate climate which helps. Our cold days | in winter are typically around 5 degrees outside of cold | snaps, but even then we rarely dip below 0. | | It's a major quality of life improvement for us. They're | amazing grocery getters, you don't get all sweaty on | them, kids tend to love it, and they're quite a bit | easier to buy, maintain, and park than a car. | | We went with the spicy curry because of its insane cargo | capacity (we've used it for its full capacity many times, | especially while bike camping), but you can spend far | less if you don't need to carry that weight. | fires10 wrote: | My problem with 5K on an electric bike is the 50 mile commute | one way to work in inclement weather. | neon_electro wrote: | Fair enough - doesn't sound like you were ever the target | audience for a commuter bike to begin with. | dijit wrote: | The three most cycle heavy cities in Europe all get more | rainfall than London. | | (Amsterdam, Copenhagen, Malmo) | | Something else is the problem. Maybe infrastructure or | terrain. | dshoemaker wrote: | I think the 50 mile one-way commute may be more of the | problem here. I can't imagine traveling that far for work | daily. | [deleted] | carlmr wrote: | My problem with dropping 5K on a bike is that they get stolen | [deleted] | dont__panic wrote: | In the US city that I live in, cars get stolen an awful lot | too. And not just puffers (cars left with the keys in the | ignition to warm up on a cold day) -- I've heard of plenty | of locked recent-year cars stolen from private locked | garages with no keys at all. I believe car theft is up at | least 500% from pre-covid. | | And that's to say nothing of the opportunistic catalytic | converter thefts if you park your car on the street | overnight. | paunchy wrote: | Most of these thefts utilize "relay attacks" that | simulate the key being in close proximity to the car, | using directional antennas to interrogate the key that's | sitting in the house and then relay it back to the car. | The solution is to disable the proximity feature, but | that's inconvenient. | carlmr wrote: | Where I live I'd guess the rate is 100 bikes stolen for | every car. | | With a bike you don't expect it to be there after locking | it in the street for more than 15 minutes. I don't know | anybody personally whose car was stolen. | rcMgD2BwE72F wrote: | In France, all bikes must now be marked to prevent theft | https://www.bike-eu.com/laws- | regulations/nieuws/2021/01/fran... | | Is there similar plans in the US or at least some states? | blunte wrote: | It's been "not a good time" since 1975. Prior to that, at least | in first world countries, you could start with less | intelligence and have a much better chance at class improvement | and even financially secure retirement than now. | | On the other hand, if you're in politics, finance, or executive | business management, it's been a really, really great last 40+ | years. | candyman wrote: | I wonder if there will be a long term shift in supply chains | toward less "asset light" and more vertically integrated | operations with sourcing moved closer to end market demand. | GordonS wrote: | Is there a credible estimate of when the chip shortage is likely | to be over? | baybal2 wrote: | Digitimes tell of q3-4 2022 | flyinglizard wrote: | Does anyone know the particulars of the shortage? Talking more | about the commodity chips. Very hard to get anything from TI, ST | or Microchip. Which fabs and nodes are specifically overloaded? | baybal2 wrote: | Not nodes, wafer sizes. Most severe shortages are on 200mm. | | 200mm had 12 month lead times before COVID, now we talk about | years. | adamcharnock wrote: | I'm not sure if this will answer your specific questions, but I | found this HN comment from a few months ago to be some very | interesting background: | | https://news.ycombinator.com/item?id=26931498 | btbuildem wrote: | I don't see this raised anywhere -- but what's so bad about | producing fewer cars (the poor neglected shareholders and exec | bonuses aside)? | | It's almost as if we would need to lean into this, reducing | growth and producing fewer cars would be in line with efforts to | mitigate the drivers of climate change. | | What if car manufacturers pivoted their KPIs and focused on | making long-lasting, serviceable vehicles? Toyota is already the | worldwide leader in these, as evidenced anywhere that's not | smoothly paved suburbia-land. | dmix wrote: | Used car prices was up something like 90% and even renting cars | is way more expensive already. This is just going to further | constrain supply. | | I tried renting a car and despite being sold out in the vast | majority of places well ahead of time it was 2x the normal base | price. | eldaisfish wrote: | Consider for a moment the people outside the developed world | whose lives are greatly improved by cars. | | Scarcity drives prices up putting things out of their reach. | tlocke wrote: | Cars tend to diminish quality of life. Local, walkable and | cyclable neighbourhoods on the other hand enable people to | flourish. When people have to travel by vehicle, trains and | trams are superior to cars. | bluGill wrote: | Cars are only diminish quality of life when there are too | many in a given area. For every person along the way though | a car is a greater improvement than no car. Sure each one | harms the overall quality of life, but the individual is | better off. | eldaisfish wrote: | how do you propose people in rural Africa transport their | goods to markets? Cycle and trams? Perhaps electric buses? | 5e92cb50239222b wrote: | Have you even been to the developing world? We mostly drive | old junkers that were discarded by Americans and Europeans | after 15 years of use for breaking and polluting too much. | eldaisfish wrote: | this comment is a textbook example of how out of touch many | here are. | | The developing world also makes cars. India - to name just | one - is among the largest exporters of vehicles to several | countries in Africa. | | No, people in the developing world do not drive hand-me- | downs from the West. | jcranberry wrote: | Need to keep that supply of junkers coming though! | crazypyro wrote: | >(the poor neglected shareholders and exec bonuses aside) | | Well, to provide a different perspective, there are car plants | around the US that have been shutdown for months and the people | formerly employed there haven't been able to work. | | Not necessarily arguing that more cars are better, just its not | only shareholders and executives who are hurt by the chip | shortage. | itsoktocry wrote: | > _It 's almost as if we would need to lean into this, reducing | growth and producing fewer cars would be in line with efforts | to mitigate the drivers of climate change._ | | Newer cars pollute far less than old cars. | | > _What if car manufacturers pivoted their KPIs and focused on | making long-lasting, serviceable vehicles?_ | | They do make long-lasting, serviceable vehicles. Where have you | been? | gberger wrote: | > Newer cars pollute far less than old cars. | | More cars pollute more than fewer cars. | itsoktocry wrote: | > _More cars pollute more than fewer cars._ | | It must be nice to live in a sunny place where you can walk | or bike to work. | | Unfortunately, the rest of the world, including that which | services fancy "green" neighbourhoods, require vehicles. | mnadkvlb wrote: | Can someone explain, why this is not reported as in what | inflation looks like ? | | when Supply cant meet demand we get higher prices, what am i | missing here ? | itsoktocry wrote: | > _Can someone explain, why this is not reported as in what | inflation looks like ?_ | | What do you mean "this is not reported"? Are you actually | looking at the BLS inflation reports? | | The fact is, semi-conductor price increases make up a tiny | proportion of the average person's cost of living. | thaumasiotes wrote: | That's not really the usual concept of "inflation". Every | commodity fluctuates in price. Inflation is when the price of a | unit of money falls. Conceptually, it's very easy to | distinguish "cars cost more dollars because cars are more | expensive" from "cars cost more dollars because dollars are | cheaper". In practice, it's difficult to measure the value of a | dollar. But in general, inflation looks more like the price of | everything going up, and less like the price of cars going up. | | (Currently, a lot of different prices _are_ going up, and | current inflation is high. But you can 't just point to Toyota | raising prices and say "See? This is what inflation looks | like!" That is what inflation looks like, but it's also what | not-inflation looks like.) | vvarren wrote: | This so-called "transitory inflation" is really starting to seem | like it will parlay into full blown inflation. | riggins wrote: | https://www.nytimes.com/interactive/2021/08/18/opinion/infla... | | "In July, some of these sectors (used cars in particular) | experienced a big deceleration in inflation, bolstering the | argument" | | https://news.yahoo.com/us-used-car-bubble-burst-141009925.ht... | | "The price index for used vehicles rose 0.2% in July, after | having risen at least 7.3% in each of the previous three | months. The category was one of the few, along with hotel rooms | and airfares, that drove recent inflation, the economist Paul | Krugman pointed out on Twitter. "Combined, these three sectors | account for...more than 1/2 [half] of inflation over the past | three months," Krugman wrote. In May, in fact, a full third of | the overall price rise was due to the surge in used car | prices." | CrazyPyroLinux wrote: | Regardless of prior _academic_ work, Krugman 's Twitter and | NYT opinions are blatantly partisan rather than scientific. | Whatever he says, do the opposite. https://contrakrugman.com/ | (edit: slightly more specific and less ad-hominem) | jtbayly wrote: | Used cars have a natural price cap, and my understanding is | that it has been reached. They are too close to the price of | a new car to go any higher. | cableshaft wrote: | Yeah, I normally buy used, and this time I just bought new | (technically I leased new, but it's the first time I'm | leasing a car in my entire life), because it just didn't | make any sense to me to buy a used car for almost the same | price as a new car. | lucasmullens wrote: | Maybe, but with new cars being sold for above MSRP, that | natural price cap is rising. | the-dude wrote: | If you can get a new car. In theory, a used, available car | could be worth more than an unobtainium. | nszceta wrote: | The price of a new car is whatever the dealer is willing to | let it go for. MSRP is a starting point, not the final | price, which can be literally anything. | el-salvador wrote: | Not everywhere though. I recall Venezuela had unusual car | prices about a decade ago. | | Car dealership inventory was very low due to currency | controls and wait times at car dealerships increased to | months. | | A slightly used car, inmediately available for sale, was | more expensive one than a new one with months wait. | JimTheMan wrote: | A shortage is not inflation | hirako2000 wrote: | Supply and demand change is what increases or decreases | costs. If demand don't adapt, there will be inflation to | force it to adapt :) | JimTheMan wrote: | 'Inflation' is not the price increase of a single thing to | demand/supply. | | Inflation is the systemic increase in all costs of what a | household would buy as money itself become less valuable. | | Prices 'inflating' on a single product because there's a | shortage of... base materials or whatever is not inflation | as an economic term. | hindsightbias wrote: | I bought 2x4s for $3.60 last weekend. | | Just a month ago, HN was rife with lumber apocalypse. | throw0101a wrote: | > _This so-called "transitory inflation" is really starting to | seem like it will parlay into full blown inflation._ | | A lot of the people screaming about inflation were doing so | using the argument that there's too much spending and the | "excess" money supply will cause the US to turn into Zimbabwe ( | _Fed printers go brrrrrr_ ): demand-pull inflation. | | The price fluctuations caused pandemic-related supply issues | (cost-push inflation) don't have much to do with money supply | and stimulus packages. | | * https://en.wikipedia.org/wiki/Inflation#Keynesian_view | | If things get too hot, it's easy enough for interest rates to | be pulled up, but given un/employment isn't at pre-pandemic | levels, policy makers may let things ride for a while. | vvarren wrote: | My argument doesn't hinge on the excess spending. Rather, the | increase of costs due to a labor shortage, chip shortage, | construction materials shortage, etc. is having a compounding | effect across the whole economy. | frockington1 wrote: | The Fed doesn't seem to care about inflation adding even more | burden to the poor. But hey, at least all the asset rich | political donors are happy | sprafa wrote: | How is this related to the chip shortage and Toyota? | 3pt14159 wrote: | When the supply of goods goes down, it pushes prices up. | wiz21c wrote: | Only if you let greediness exist. | compscistd wrote: | But inflation has to do with the supply of money, not the | supply of goods, right? Genuine question | throwawaygh wrote: | No, inflation has to do with the price of goods and | services. Inflation is defined as "a general increase in | prices and fall in the purchasing value of money". | | Inflation can be caused by many things: reduced supply, | increased demand, expectation of future price increases, | degradation in the quality/desirability of alternative | products (eg bond yields), and, yes, an increase in the | amount of dollars chasing an asset class/product/service. | | Re: your original question, to be a bit pedantic, the | supply of money _on its own_ cannot cause inflation in | consumer goods except via extremely odd channels (e.g., | inflation expectations). A trillion dollars sitting in a | bank account has approximately no effect on prices. Like | a bullet in a chamber, money at rest has no effect on | consumers ' experience of inflation until it's propelled | forward. | | But it's important not to conflate causes with | definitions. Also, attributing causes of inflation to | particular instances of inflation is often _extremely_ | and _inherently_ political. The inflation we 've seen in | consumer goods is a complex phenomenon with many | disparate causes. Beware of anyone selling you a "just- | so" story for the cause of inflation in a few dozen | disconnected goods and services. | | Especially if that story aligns perfectly with their | ideology/product/investment/political campaign. | | And even more especially if they start the story by | conflating _one possible cause_ of inflation with the | very definition of the thing. | ajmurmann wrote: | There is really three types of inflation: 1. Demand | driving higher prices 2. Increased cost driving higher | prices 3. Expectation of inflation driving higher prices | and this inflation itself | ModernMech wrote: | Inflation has to do with purchasing power of a dollar | decreasing. I would argue that inflation is something | measured at the scale of the entire economy, and you | can't say much about inflation looking at a single | commodity, or even a single sector. | devttyeu wrote: | Kind of both? If I were to come up with a formula, I'd | say 'prices = GDP / SupplyOfGoods', where GDP is just | 'MoneySupply * MoneyVelocity'. | | If supply goes down, prices go up. If money supply grows, | prices go up. If money velocity (number of times money | changes hands in a given period) goes down, prices go | down, etc. | | (It's worth noting that in 2020 when money supply | exploded, money velocity fell by a lot, which is why GDP | fell, and why there wasn't that much inflation) | | edit: s/inflation/prices/ | ItsMonkk wrote: | People think of inflation like they think of the oceans. | If the ice caps melt and water melts in, the shore lines | from New York to Tokyo rise slightly. If you track this | rise, that's inflation. That's not how it works, and it's | not what the CPI tracks. Inflation is much more analogous | to inland water, you know, lakes and rivers. | | If you give the bottom 80% of the income distribution | more money, they will spend it right away like a river. | If you give the 81-90%, portion of it will be saved in | their lake(say, a 401k) and they will spend some of it. | And if you give the top 10% more money, they save all of | it in their reservoir. | | The way that we have been introducing new money into the | system is not by melting ice in the middle of the ocean. | We also haven't been raining all over. The key way that | new money has been introduced over the past 50 years is | by lowering the interest rate. When you lower the | interest rate, what happens is that people refinance, and | suddenly they can pay less, but quickly realize, oh, I | can also borrow more, so they do. | | I'll show you a few numbers, which I got by going to the | zillow housing affordability page with default settings. | I only modified the interest rate, all other values stay | the same. | | Year | Average Interest Rate 30 Year Fixed | Home you can | Afford | | 1981 | 18.39 | $124,797 | | 1991 | 9.00 | $200,862 | | 2010 | 6.26 | $244,531 | | 2020 | 2.67 | $328,569 | | And so what we see people and REITs and companies doing | is taking out larger and larger loans, and putting those | dollars into assets. Companies take out a bond and buy | back their own stock. And why wouldn't they, it's | profitable because the environment makes it so. And that | money flows throughout the system. We can track the | inflow of all of this money by looking at say.. the M2. | This seems to be the crux of your point, if the amount of | money in the M2 has gone up by 40x since 1971, why is | inflation not out of control? | | The CPI is a measure for inflation that does not track | the oceans water level. The M2 tracks that, and as you | can see the M2 is out of control. The CPI doesn't track | stock purchases. If the CPI were to track stocks weighted | at 1971 levels, inflation WOULD be out of control. The | CPI tracks, specifically, an average of tangible items | that the bottom 80% spends their money on. Therefore the | inflation number is based on the height of certain | rivers. Now that's an important figure to keep in mind, | after all if you get inflation in that bracket and income | isn't rising, you quickly run into a revolution. And so | that's what the FED has found, if you track the CPI you | get the perfect amount of heating to boil the frog | without them noticing. | | But when you introduce money into the system by lowering | interest rates, you are in effect giving the money in | proportion to the assets already owned. Someone bought | that home in 1981, and someone with the same exact income | would bid 328k for it today. You basically tripled(and it | was a leveraged sale, so 15x!) that home owners asset, | without any need to compare anything else, like actual | income rises, or for instance SF has moved upmarket which | would also effect prices. And so if you don't have much | assets, it's a desert. If you do, it's a rain forest. And | because the wealthy already have all that they want, | demand for those items that the bottom 80% spend their | money on doesn't change. So the supply and demand of | those items don't change. So the CPI value stays the | same. But money was introduced. If you take a look at the | velocity of the M2, the M2V, you can see this take place. | The wealthy get the gains of the new M2 dollars, and | store it away. The more dollars created, the lower the | velocity. | | The lower the velocity, the lower inflation. But that | rain is being stored in the reservoirs. If inflation | causes stored wealth to lose value it's like a dam bursts | and the wealthy start to spend and not save their money, | it starts as a trickle and ends in a tsunami. | lordnacho wrote: | The problem is when those things affect each other. | Otherwise we wouldn't care. | macksd wrote: | It's is often talked about that way: Wikipedia at least | defines it as a general price increase. And that still | gives you many of the same effects as a money-supplu- | triggered inflation. Many annuities are worth less. The | dollars in a savings account are worth less. The minimum | wage becames worth less... | mguerville wrote: | Inflation is just when prices go up, for whatever reason. | Increased supply of money can cause it (and does more | often than not), but decreased supply can also do that as | it moves the price equilibrium. Unfortunately we have a | bit of both at the moment, money supply shot up and lots | of supply chains slowed down. | fab1an wrote: | If there are fewer goods, prices usually increase, as | there is relatively more money chasing fewer goods. | selykg wrote: | Inflation is the rise in costs for goods. | | If the supply of these chips causes a loss in supply of | in demand items, like cars, then it will cause an | increase in the price of cars. | | The thoughts are that this is temporary, until the | components that are in low supply can catch up and meet | the demand. | | But if the lack of supply lasts for too long then people | become used to the increase price and manufacturers can | just keep the price there at the inflated price. Now it's | permanent inflation. Or that can happen if the supply | doesn't keep up with the demand. | [deleted] | mkj wrote: | This central bank says it's prices going up. https://www. | rba.gov.au/education/resources/explainers/inflat... | rz2k wrote: | While possible, look at lumber prices now[1] in the context of | articles from April saying that the high prices would persist. | | Economists who study these phenomena tend to be a better guide | than reporting that is in the middle of reacting to dramatic | signals like shortages and fast price changes. | | [1] https://tradingeconomics.com/commodity/lumber | mensetmanusman wrote: | This is a huge deal, imagine that the production of one Apple | AirTag means one less vehicle produced. | aembleton wrote: | I'm sure a car has many more chips than an AirTag. | icegreentea2 wrote: | The article (and others about this topic) indicate that the chip | shortage isn't just a static. They all claim that chip and other | supply chains (all based on South East Asian) are all under new | pressure from delta strain spread. | | In fact, I wonder how much of this really is chip supply vs | general supply. Most articles on this open with headlines about | chip supply, but then contains quotes from Toyota about "supply" | and "parts" in general. | wallaBBB wrote: | Much of the ECUs OEM are purchasing from Tier 1 suppliers | (Denso for example - a Toyota spinoff) who are directly hit by | IC shortage, so that's why they are talking about overall | supply. Also Japanese OEMs and suppliers tend to favor ICs from | Renesas, and Renesas has been hit particularly hard this year | [1]. | | [1] https://www.renesas.com/us/en/about/press-room/notice- | regard... | creeble wrote: | Highly anecdotal, but I spoke to Bilstein about some seemingly | unobtainium shocks yesterday. Pre-pandemic these part numbers | were common as dirt. | | They said their sales were up 50-60% over the last 18 mos, and | that raw materials supply is down by a similar margin. | | These are _shock absorbers_ , not chips or toilet paper. | | It seems like we're seeing the delayed effect on supply chains | over the pandemic. There is surely no value in hoarding shock | absorbers, and if distributors were the hoarders, they seem to | just be sitting on them, not raising prices. | ruuda wrote: | Yeah, this also makes no sense to me: | | > The Covid pandemic boosted demand for appliances that use | chips, such as phones, TVs and games consoles. | | SOCs in phones and game consoles are produced on very different | processes than chips used in cars, no? Cars don't need the | smallest dies or most energy-efficient chips. These industries | are not competing for the same capacity. Or am I missing | something? | petre wrote: | > SOCs in phones and game consoles are produced on very | different processes than chips used in cars, no? | | Yes, some of them are different. Consumer chips are not | industrial norm, they have narrower environmental operating | ranges. | | The foundries producing automotive chips shifted production | to consumer chips during the lockdowns, as the auto | production lines were on hold. This caused supply chain | disruptions. Add to that US > China IP export bans and you | have a black swan event. | [deleted] | kube-system wrote: | Not everything is a purpose built CPU, GPU or SoC on cutting | edge nodes. There are many general purpose ICs that are | boring and ubiquitous: Display drivers, power conversion, | amplifiers, microcontrollers, etc. | fouric wrote: | Hypothesis: there's a correlation between shortage of chips | made with cutting-edge processes and chips that are not, | because a lot of them are made by the same companies (and the | supply-chain issues are impacting _companies_ not just | _product lines_ ). For instance, in addition to having the | bleeding-edge 5nm node, TSMC has a _lot_ of larger nodes and | specialty non-digital-CPU nodes, too[1]. | | [1] https://techtaiwan.com/20210816/tsmc-speciality- | technology/ | gameswithgo wrote: | modern car entertainment systems often use some of the same | parts as tvs/game systems/pcs etc | | perhaps the engine ECU is not the chip that is in low supply | detaro wrote: | They certainly overlap. SoCs aren't the only chips in game | consoles or other devices, different kinds of chip production | have shared supply chains that themselves are struggling, | SoCs used in cars aren't necessarily that different from the | ones in other appliances (e.g. NVidia Tegra X1 is used both | in the Nintendo Switch and some cars, and probably a pile of | other things) ... | technothrasher wrote: | I can't speak for Toyota, but for my own electronics | manufacturing business its definitely a chip specific shortage. | We don't really have huge problems getting most stuff, but | digital ICs are more and more just simply unobtainium, with | vague lead times of 1-2 years. | whiteboardr wrote: | @kliment had a pretty good summary on this: | | https://news.ycombinator.com/item?id=26931498 | kristofferR wrote: | Good! Toyota has been sabotaging clean cars because they can't | compete [1][2]. | | Most well known car brands have great electric cars now, but | Toyota and their oil lobby buddies are trying to halt the | progress. The decline of Toyota sales is good news for the world. | | [1] https://www.nytimes.com/2021/07/25/climate/toyota- | electric-h... | | [2] https://insideevs.com/features/524481/toyota-hybrid- | pioneer-... | heresie-dabord wrote: | Large-battery EVs (LBEVs) are an unscalable luxury, both for | cost and recharging infrastructure. Even if Toyota has chosen | to advance its interests more aggressively, the criticism of | the EV market is valid. | | The electrical infrastructures of the US and the EU are not | able to support a total adoption of EVs, especially not LBEVs. | Consumers appear to be choosing LBEVs, not small-battery EVs. | They want range even though most people need only a range of | less than 100km. [1] | | Toyota's (or anyone else's) hybrid vehicles are a better choice | for combination short-range/long-range drivers, where short | trips are clean, and long trips use the energy density of | petrol. | | IMHO what Toyota should be doing is adding a larger battery to | its hybrids, e.g. 17 kWh instead of 8.8 kWh. I believe the | Honda Clarity has a 17 kWh battery. | | From your articles: | | "Toyota's view is also that countries are jumping in with the | idea of the electric-vehicle endgame without a real plan, and | it's more political showmanship than sound planning," Mr. Liker | said. | | Toyota will inevitably be marketing EVs, though. | | "For one, China, an important market for Toyota, has moved | aggressively to require automakers there to make electric | vehicles. That has spurred Toyota to start producing electric | cars under a joint venture." | | [1] https://www.greencarreports.com/news/1128626_why-you- | really-... | da_big_ghey wrote: | Toyota is not "sabotaging clean cars", only trying to delay | regulations. | Ma8ee wrote: | So not sabotaging, only obstructing. I'm so pissed at all the | auto-makers (with the exception of Tesla). The writing has | been on the wall for at least a decade in large neon letters, | but they all seem taken by surprise that they suddenly have | to produce electric cars. | CountDrewku wrote: | Psst you can avoid all of those issues by not buying | Toyota. Stop trying to regulate everyone else into what you | want. If these EV's are so good it shouldn't be an issue at | all. | space_rock wrote: | Stop polluting the cities and atmosphere and then it'll | be none of our business | CountDrewku wrote: | I bike religiously so sorry you're not going to one up me | on the "polluting" less scale. Are you going to come take | my ICE vehicle from me? Didn't think so. | | Drop the authoritarianism it's unbecoming. There's a | great country I can suggest you to move to if you want | government control over everyone, feel free to PM me for | details. | da_big_ghey wrote: | Position in many of cases I have heard has been that | electric vehicle is just as good. Are you taking a | position that they are representing some quality of life | decrease and that the state must force us to accept this? | space_rock wrote: | Do whatever you want but if you pollute the atmosphere | you'll pay for it. Communism doesn't work. User pays | da_big_ghey wrote: | This still is not "obstructing". Only it is trying to slow | down coercive mandate alone, no obstacle to consumer buying | an electric car on own initiative! | hownottowrite wrote: | Please write back when Tesla learns how to correctly apply | paint to a car or fit body panels, or well, pretty much | everything else that makes an actual car a car instead of a | disposable gadget. | kristofferR wrote: | Tesla does not equal electric cars. Most well known brands | have great electric cars now, not to mention all the new | brands like Nio and Polestar. | greenonions wrote: | Ah yes, the most important function of a car, the paint... | skhr0680 wrote: | If you want a car to last more than five minutes, then yes, | paint is very important | altcognito wrote: | Rust is a thing. | jve wrote: | Don't know if any Tesla car is aluminum, but Tesla Model | P surely is. | | Edit: Alright, maybe declining trend: | https://electrek.co/2017/08/22/tesla-model-3-body-alloy- | mix/ | rightbyte wrote: | I wonder if old alu cars will suffer from metal fatigue. | orwin wrote: | The tone of GP is poor, but yes, the paint is really | important if you want your car to last more than 5 years, | especially if you live near the sea. And if you only take | your car out on weekend and summers and can not put your | car in a garage, a poor paint job will cost you even more. | colordrops wrote: | The concerns you express aren't noticable or bothersome | except to a small percentage of enthusiasts. Teslas are | mechanically far more reliable and require less maintenance | that other cars. | altcognito wrote: | Most people would consider the ability to put together the | stuff you do see as a pretty good indicator of your ability | to put together the stuff you can't see. | lotsofpulp wrote: | They have not even been out long enough to make that claim. | Especially when comparing to Toyota. | throwaway0a5e wrote: | >Especially when comparing to Toyota. | | Toyota been saying "don't worry guys, we fixed the rust | issues, the new ones won't be rusting out" every year | since 1985 and running a more or less rolling recall | since the 00s. | | Or was that not the implication of your comparison? | | Teslas will last a long time because the most important | indicator of vehicle reliability is one that they share | more or less 1:1 with Toyota, customers who who put very | easy miles on vehicles and dutifully maintain them. | | That said, I fully agree that we have nowhere near the | length of data set we need to know how Teslas will fare | in terms of reliability and longevity (not the same | thing) after adjusting for how they are used. | itsoktocry wrote: | > _share more or less 1:1 with Toyota, customers who who | put very easy miles on vehicles_ | | Like all the Toyota trucks used in military operations | around the world? Those kind of "easy miles"? Comparing | these two companies, with _vastly_ different scales of | operation, is kind of silly. | throwaway0a5e wrote: | <rolls eyes> | | The edge between manufacturers in any given measurable | attribute of vehicle performance is far, far smaller than | a bunch of screeching fanboys on the internet would have | you believe. If it weren't you'd see far less diversity | of vehicles on the road. | | The humvee is also used by militaries all around the | world. It's not known for particularly great reliability. | Militaries have a much difference set of objectives when | it comes to labor vs supply chain complexity vs cost than | civilian entities and individuals do. | | Poor countries in Africa and the middle east use Toyotas | a lot for the same reason they still use 7.62 | intermediate cartridges a lot. It's what they have, it's | what their supply chains are tuned for. It does the job | they need, not necessarily with maximal efficiency but | well enough they can't justify the cost of switching. | | Meanwhile in the civilian market Toyotas cost more, don't | do good incentives/rebates and financing is more limited. | This drives people on a budget to other brands. This | means Toyotas wind up in the hands of people who treat | them proportionally nicer. A Tacoma rolls off the lot and | into an upscale garage. A Colorado rolls off the dealer | lot and into a commercial fleet where it will be driven | by a bunch of people who aren't paid enough to care. A | Camry will have one ass in one seat for the first 100k | and it will go from home to work and home to work. An | Altima will spend its first 100k dragging a family of | four all of the places they need to go. A Sienna's first | owner will go to home Depot, buy 3000lb of pavers and | rent the truck to drive it home. A Town and Country's | first owner will put that in the van without thinking | twice. | | See what I'm getting at here? Being expensive up front | means that only people who can afford to be nice to | things get their hands on them, at least initially, that | means the vehicles rack up more miles and years before | they see hard use. Any vehicle not fundamentally flawed | to begin with can look reliable in the hands of these | people. I can present other examples of this if Toyota is | too emotional of a topic for people to discuss. | | Also it should go without saying that we're talking in | broad generalizations here. | | I do agree with you that the scale difference between | Tesla and Toyota is massive and comparison between them | is silly. | lotsofpulp wrote: | While there might be a slight effect of Toyotas being | used less intensively because disproportionally higher | income people buy them, I doubt it is a material effect. | The people that are not going to put pavers in their car | because they can afford not to and want to keep it nice | are buying Denali Yukons or other more expensive, luxury | vehicles. | | Toyota did not start expensive, and even now it is not | the most expensive ($/mile). They earned that reputation | over many years, and while they may have raised prices, | the resale market does not show any evidence of the | quality slipping. | lotsofpulp wrote: | > Or was that not the implication of your comparison? | | The implication of my post is Toyota operates on a | different scale than Tesla, and due to insufficient time | having passed since the advent of Tesla, a claim cannot | yet be made. I referenced Toyota because of its | objectively highly ranked reliability based on resale | price and famously low maintenance costs. | space_rock wrote: | You're talking to the parent comment that is making early | claims about quality? Oh ok it's only allowed to making | negative claims about Tesla | lotsofpulp wrote: | > Oh ok it's only allowed to making negative claims about | Tesla | | I do not understand what this means. But I am simply | stating that the data for ICE vehicles is far longer and | the dataset larger, especially for Toyota and other | reputable brands, to make a conclusive claim that Tesla's | reliability (and even maintenance) is less over the whole | life of the vehicle. | | Although I do not doubt that it is possible for electric | vehicles to achieve this claim, and maybe Tesla already | has. | papercrane wrote: | The data doesn't bear that out. Tesla's have consistently | ranked near the bottom in reliability surveys and indexes. | They're amazing cars, but they've got a long way to go on | the build quality and reliability measures. | Veliladon wrote: | 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. | Unklejoe wrote: | I just wonder how deep this goes down the line of third party | suppliers. Like, I know a lot of auto manufacturers use Bosch | or Siemens for their ECUs, so I would think it's really out of | their hands. Then again, maybe they have terms in the contract | to force Bosch to maintain a certain inventory? | dd36 wrote: | I thought Toyota invented not doing that. | varispeed wrote: | Power 101: Preach one thing, do the opposite | | It is smart to project to the world that just in time | manufacturing is effective and then stockpile parts. This | will get you ahead of competition if there is a problem like | we experience now. | zeke wrote: | One big advantage of low inventories is you do not have to | fix or trash lots of parts if they were made out of spec. In | the case of chips the odds are they are all good. It is just | the cost of ownership but not the cost of refitting. | throwaway0a5e wrote: | >One big advantage of low inventories is you do not have to | fix or trash lots of parts if they were made out of spec | | Instead you either stop/slow production or shove them in | your products and hope for the best. | hef19898 wrote: | You know a function called Supply Chain Management | exists, right? | throwaway0a5e wrote: | It _should_ go without saying that there are nuances in | implementation. What I 'm describing here is a | fundamental tradeoff of JIT systems. If you get the wrong | thing delivered it throws a bigger wrench into things | because you don't have the buffer. Can you make this rare | enough that the amortized cost is low enough to make JIT | overall cheaper? Of course, that's why everyone does JIT. | Jtsummers wrote: | > If you get the wrong thing delivered it throws a bigger | wrench into things because you don't have the buffer. | | JIT, in Lean, does _not_ mean no buffer, it means as | little of a buffer as you can get away with. If you have | issues with delivery like this on a regular basis, then | you 'd increase the buffer size (at least temporarily) | and also take your suppliers to task for sending the | wrong thing over and over. | | The buffer size should be increased if any upstream | supply issues exist that regularly cause a shortage. | Ideally, you should address those issues themselves, but | if you have and they can't (or won't) be fixed then you | increase your buffer to accommodate reality. However, the | shortage is itself a signal. Too high an inventory | permits supply issues to persist without being addressed | for a long time _because_ you never get the signal about | the issues with them (the downstream production | slowdowns). | hencq wrote: | > JIT, in Lean, does not mean no buffer, it means as | little of a buffer as you can get away with. | | Yeah, spot on. One of my college professors used to | compare it to a river with rocks in it. If you want to | safely sail on the river, you can either a) keep the | water level high enough or b) remove the rocks. In a | production system inventories/buffers are the water level | and variance is the rocks. The philosophy of JIT is to | remove as much variance from your system as possible so | you can lower your buffers. If you have identified areas | of high variance you're forced to keep buffers until | you've removed enough variance to lower your buffers. | cptskippy wrote: | > JIT, in Lean, does not mean no buffer, it means as | little of a buffer as you can get away with. | | Eh... I would argue that JIT means making that buffer | someone else's problem. | | I was doing EDI at a logistics firm that contracted with | Seagate who provided HDDs to Hitachi for their SANs | around 2006. Hitachi was doing JIT for their | manufacturing, Seagate however was just speculating | Hitachi's demand and literally stockpiled HDDs in this | firms warehouses geolocated next to Hitachi's factories. | | We would pickup stock from Seagate and ship it to these | warehouses where they would remain Seagate's property | until Hitachi requested it, then we would simply transfer | ownership to Hitachi. | | Interestingly, we used rail shipping as a buffer to | reduce warehouse size by sending freight on | slow/cheap/indirect routes. | Jtsummers wrote: | In this case you have two buffers. Seagate/you have a | buffer for the outflow based on expected consumption | rate. Hitachi almost certainly has some buffer of their | own. This is not unusual with physical goods where you | have the transportation time and cost to consider (which | you/your employer took advantage of). | | If Hitachi couldn't consume your delivered HDDs as fast | as they were delivered and anticipated any kind of | delay/disruption could ever happen, they'd have some | buffer of their own. | cptskippy wrote: | In this case Hitachi didn't have a buffered supply. The | warehouses were located literally across the street. The | products were palletized at Seagate's factory in | quantities matching Hitachi's product lines then | delivered to the warehouse in a cadence closely matching | Hitachi's consumption rate. So when Hitachi placed an | order, a pallet was pulled and the ownership of the | serial numbers on that pallet were transferred to Hitachi | as it was delivered. | | The logistics firm was the buffer allowing Seagate's | product rate and Hitachi's consumption to be asymmetric | in nature. | hef19898 wrote: | The last bit works, as long as the slow transportation is | closely controlled. I tried it once, in the end warehouse | space was cheaper. | | EDIT: What you describe sounds more like VMI, vendor | managed inventory, than JIT. Both require half way | reliable forecasts and collaborative planning so to worl | properly. Have to agree so that both solutions tend to | push inventory risk to suppliers. Done correctly, overall | inventory does decrease so. | cptskippy wrote: | JIT and VMI go hand-in-hand, they aren't mutually | exclusive. Implementing JIT is to impose VMI on your | suppliers. | | The interesting thing was that Seagate avoided managing | inventory by outsourcing to the logistics firm. The stock | was technically Seagate's until it was ordered by Hitachi | but the logistics company took immediate possession as | pallets rolled out of the factory. | | > The last bit works, as long as the slow transportation | is closely controlled. | | It didn't need to be controlled, just scheduled. You knew | you need x units by d. The factory output n per week, so | you could stagger shipments by way of different lines. | | All of the inventory was tracked by serial numbers and it | was interesting to watch it move because supply was often | delivered to the warehouse out of order or shipments | weeks apart arrived simultaneously. | hef19898 wrote: | The way I used was VMI to avoid the limited flexibility | of JIT, bit yes both concepts tackle the same problem. | What you describe sounds like a lot of fun to run on a | daily basis, would have loved to do that! | a9h74j wrote: | I wonder if Toyota was a little slower at starting to | expedite, for having had a large buffer stock already in | hand. | akg_67 wrote: | They changed after 2011 earthquake when several factories | couldn't continue production because parts were not coming | from factories impacted by earthquake. | dgellow wrote: | That changed after 2011 earthquake | danparsonson wrote: | I don't think that's exactly true and actually may be a | common misconception - see | https://www.youtube.com/watch?v=b1JlYZQG3lI for a much better | explanation than I could provide. | Ekaros wrote: | And then they invented that maybe they should keep poorly | sourceable parts at hand. And chips are those. Unlike nuts, | bolts, metal and plastics. Which you can easily find | replacements for. | The-Bus wrote: | Plastics have actually experienced a pretty significant | shortage this year, with resins and other components being | hard to source[1]. Polaris, for example, would build their | entire vehicle except the seats, then build and attach them | once the plastic resin for the foam became available[2]. | | 1) https://www.ntotank.com/blog/resin-material-market- | shortages... 2) https://www.wsj.com/articles/supply-chain- | bottlenecks-drive-... | jnorthrop wrote: | Yes, they more or less invented the concept of just in time | delivery, but they also suffered supply chain issues after | the Fukushima earth quake. After the latter incident they | made the risk calculation that inventory of some parts was | worth the expense. | [deleted] | Spooky23 wrote: | Wall St in general and Jack Welch in particular embraced the | "avoid owning anything" at any cost model to juice the books. | [deleted] | hef19898 wrote: | JIT is probably the most mis-understood supply chain concept. | Kiro wrote: | How? | hef19898 wrote: | Because people equal JIT with close to zero buffer | inventory. JIT is basically a concept of defining the | _correct_ and _minimal_ buffer. If that 's close zero, | cool. If it's more than zero, cool as well. It also puts | a lot of emphasis on lot sizes and lead-times. No one in | the right mind would implement JIT for stuff involving | sea freight without buffer stock close to production. | wheelinsupial wrote: | There are pre-conditions for products to be set up as | JIT. As you mention, short lead times, but also things | like high quality, high availability, and others as well. | | Toyota and a lot of the concepts that come out of Toyota | are ideals to strive for. It doesn't mean everything is | like that, which is hard to understand from just reading | the lean literature. | gameswithgo wrote: | Chips are small, don't age fast. Make sense as an exception | to the rule. | bluGill wrote: | Chips also go out of production suddenly (with only a | couple years warning - which isn't anywhere near enough | time to replace them all). thus any major manufacture has | stockpiles of chips that are no longer in production that | need to last until production of the widget switches to new | chips and have enough left over as spare parts for existing | widgets. | davidrm wrote: | > Chips also go out of production suddenly (with only a | couple years warning...) | | No they don't, automotive semiconductors suppliers have | an "obligation" to manufacture the component for at least | 15 years, which makes managing the production output | planning, spare parts etc. much easier. It's not like | walking into your supermarket and finding out that your | favorite brand of chocolate is no longer available. There | are minor exceptions, and sudden changes in the demand | might affect the immediate availability, but at the very | least the part is almost guaranteed to be produced for 15 | years with defined notice policies. Microcontrollers | don't have a pin-compatible drop in replacement when they | get discounted, but many different ICs do, like power | supplies, transistors etc., so discounting them is not a | big deal. | | e.g.: https://www.nxp.com/products/product- | information/nxp-product... | | > Participating products are available for a minimum of | 10 years from product launch (15 years from product | launch for many products developed for the automotive, | telecom and medical segments), and are supported by | standard end-of-life notification policies. | bluGill wrote: | Some of them get that, and car manufactures have learned | the hard way how important that is and so demanding it | more. However there are still a lot of parts where they | can't get the 15 year supply in anything that meets the | other requirements. | lmilcin wrote: | It is different to keep large inventory of everything because | you are inefficient and can't function without it and | different to decide to stockpile specific parts because of | perceived potential risks while being efficient with | everything else. | minikites wrote: | This is a misunderstanding of lean manufacturing. Lean is not | about eliminating every stockpile, it's about thinking | through your supply needs and only stockpiling what is | necessary. | nszceta wrote: | Were manufacturers stockpiling what was unnecessary before | lean manufacturing? It's an absurd notion that anybody | would stockpile things without consideration of inventory | costs. | Jtsummers wrote: | Yes, they were. | | Think of each stage of the system, not just the | components you bring in but also the partially assembled | components you produce along the way as well as the | finished product. US auto manufactures (in particular) | had an operating method where they kept inventories high | at all stages. This wasn't entirely deliberate. They | weren't saying, "We need 5000 car doors just sitting | here." They were, instead, saying, "We can't stop making | doors just because everything else down the line is | stopped due to <event> so keep churning them out and pile | them up." The tail end inventory of "complete" vehicles | were sitting there due, often, to quality issues | (misaligned assemblies, missing parts, whatever the | reason may be). | | So inventory piles up everywhere along the chain, which | also worked because there was a large turnaround period | when retooling and equipment downtime (not always | planned). Because _Nobody Ever Gets Credit for Problems | that Never Happened_ [0] there was an underinvestment in | maintenance and improvement efforts. High inventory | across the line papers over this issue. Lean discourages | high inventory in order to make these issues apparent so | that they can get the attention that they deserve. Also, | rework is viewed as waste so quality issues should be | addressed when they 're discovered, not by assembling | hundreds or thousands of vehicles incorrectly and then | fixing them, fix the assembly line issues causing that | misassembly. | | [0] https://web.mit.edu/nelsonr/www/Repenning=Sterman_CMR | _su01_.... | hef19898 wrote: | They did stockpile everything due to not having a plan or | consider costs. That also had the strange side effect of | constantly running out of parts. In some way, stuff | worked by accidentally having the right stuff on hand at | the right time in sufficient quantities. TPS is all about | having a plan for this stuff. | sct202 wrote: | Sort of, it would come down to suppliers would | historically only sell in large quantities to maximize | their production efficiency, so the per unit production | cost would be minimized by running a long production run. | But this would potentially cause scrap if the final | product did not sell well to expectations or if there was | a design error, and then also increased working capital | as the inventory levels would spike really high with | infrequent supply from the vendor instead of being more | constant with more frequent replenishment. | | And then multiply across everyone in a supply chain for a | single product having to deal with waiting to receive | giant parts orders from their vendors before they could | start their own giant order to supply their customers. | doikor wrote: | After the 2011 earthquake they came to the conclusion that | for some hard to source parts you have to keep a big | stockpile. | | Basically if a part can only be produced by one or two | parties there is too much risk of that source going away and | disrupt everything else. This also applies all the way down | the chain so if you got part A that can be made by 20 | contractors but if all of those contractors depend on the | same source then that part is also on the list of "stockpile | this part enough to get over most disruptions" | a9h74j wrote: | Should this be called the left-pad moment of just-in-time? | KaoruAoiShiho wrote: | Not really, Toyota handled the shortage the best and was | the last to cut production. The supply disruptions simply | lasted too long to be possible to compensate for. | brobdingnagians wrote: | Maybe this is a dumb question, but does anyone still produce | cars without chips? It's possible, and in the current | environment it seems like it would be a major competitive | advantage-- and might be more reliable in general. | andruby wrote: | 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, ... | silon42 wrote: | 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... | jhgb wrote: | 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. | detaro wrote: | "Without chips" is not really possible if you want to sell in | first-world markets, way to many requirements (engine | efficiency, safety features, ...) you would be hard-pressed | to meet otherwise. | raisedbyninjas wrote: | Backup cameras are required now. | kube-system wrote: | Stability control has been mandatory in the US since | 2012. I doubt there's any remotely reasonable mechanical | way to accomplish that. | fulafel wrote: | EVs in lighter classes that don't have ESC requirements | would probably work. A bit of battery design work for the | analog BMC would be needed to use lithium chemistry but | shouldn't be that hard. | josephd79 wrote: | probably not, regulation and crack down on pollution from | vehicles. Have you ever rode in an older car that uses a | carburetor instead of fuel injection? Nothing like the crisp | smell of gasoline in the morning... or anytime you drive it. | cuu508 wrote: | Of course, you need _some_ electronics. Let 's rephrase: | which cars from western mainstream manufacturers are | currently the "lowest tech"? No infotainment, no digital | dash, no touch-sensitive anything, as few sensors as is | viable to still be road legal? | | And a related question: modern cars are full of tech | because that's what market demands. Can we expect the trend | to reverse at some point? | bluGill wrote: | > modern cars are full of tech because that's what market | demands. Can we expect the trend to reverse at some | point? | | No, they are nice to haves. anyone who is looking to save | money on a car will buy a used car with those features | because they get the cheaper price and the features. | throwaway0a5e wrote: | >No infotainment, no digital dash, no touch-sensitive | anything, as few sensors as is viable to still be road | legal? | | For compact/subcompact sedans/hatches and midsize sedans | the OEMs typically make a super stripped down variant so | they can advertise an insanely low "starting at" MSRP. | Dealers don't typically buy a lot of them so they're very | hard to find and you'll likely have little room to haggle | on price. | | Nowadays there's a pretty long list of mandatory | electronics and everything has at least one bus network | in it but if you want to minimize the number of | extraneous modules on that network then a stripped down | economy car is your best bet. | akiselev wrote: | _> no digital dash_ | | Rear view cameras are mandatory since ~2014 so I don't | think this is possible. | jaywalk wrote: | He probably means no digital instrument cluster, which | isn't necessary for a rear view camera. Most lower-end | vehicles put a dedicated screen in the mirror for the | rear view camera. | lallysingh wrote: | https://ineosgrenadier.com/ may hit the spirit of what | you want best. There's still a screen, but mostly for | Android Auto/Carplay. | aembleton wrote: | Probably the Dacia Sandero | https://www.dacia.co.uk/vehicles/sandero.html | | Go for the Access version and you don't even get a radio. | cuu508 wrote: | James May on Dacia Sandero: "This car really does say | that you have more sense than money. And if you happen to | be astonishingly rich, think how _sensible_ it makes you. | It 's anti-fashion, anti-consumerism, anti-obsolescence." | | https://youtube.com/watch?v=ELX7NJxnUX0 | jccooper wrote: | No; it would be illegal in every major market, which if | nothing else all require some sort of on-board diagnostics | system. OBD has been required in California since 1988. India | just recently required OBD on everything. | jrwoodruff wrote: | I don't even know if you can buy new off-road toys that don't | have chips - four wheelers, side-by-sides, snowmobiles and | the like. Pretty sure they all use electronic fuel injection | these days, and that requires at least one chip. | bri3d wrote: | Even before EFI, almost all dirt bikes and snowmobiles | built since probably the 1980s have had electronic | ignition. You have to go pretty far back in time to find a | vehicle of any sort with a points ignition that has no | silicon/transistorized electronics in it. | gameswithgo wrote: | It is probably possible but would require complex mechanical | solutions to meet modern efficiency and emissions | requirements that would likely be far less reliable. | ghaff wrote: | >and might be more reliable in general | | Cars in, say, the 1960s were not "more reliable in general." | It's not all semiconductor-related of course--they also | rusted out quickly in areas that got snow--but 5 years/50K | miles is about what you were looking at for vehicle lifetime. | Also much lower fuel efficiency, to say nothing of lack of | what we'd consider routine safety features today. | ohples wrote: | I seem to recall most cars built before the mid-80s just | had 5 digit odometers. | didgeoridoo wrote: | The many Cubans driving cars from pre-1959 would be | surprised to hear this. | [deleted] | ghaff wrote: | The fact that clunkers can be kept running at some level | for an extended period of time (especially if they're not | somewhere that the frame will simply rust out from road | salt) doesn't change the fact that what people in | developed countries would consider reliable day-to-day | transportation has a significantly longer life cycle than | it used to. | hef19898 wrote: | Ever since working on Integrated-Logistcs-Support I take | issue when terms like reliability are thrown around. | Because in the end it's a result of looking at Reliability | (stuff not breaking down often), Availability (stuff being | functional when planned to be), Maintainability (how easily | stuff can be kept functioning and repaired when broken), | Supportability (how easy spares can be get) and Testability | (how easy it is to find defects). | | On that, Availability is the result of all the rest. With | the important part of _planned_ Availability, because that | excludes stuff like planned maintenance. Arguably modern | cars beat old ones in that category. | ghaff wrote: | I think that's true. What most of us care about in cars | is that they work when we want to drive them someplace | _right now_ , won't leave us stuck on the side of the | road, and don't have prohibitive (time or money) planned | maintenance. | | What's probably true is that older cars that aren't | rusted out can probably be kept running by people with | the appropriate mechanical skills even in the absence of | proper factory/3rd party parts for longer than modern | vehicles can. Given intact supply chains, modern vehicles | are more available overall. But, to the point of the | article, modern vehicles are more susceptible to lack of | parts. | hef19898 wrote: | True, as an owner of a car from 1982 I agree. Requires a | lot more preventive maintenance, e.g. oil changes every | six months or 5-6k km, but runs perfectly fine when | properly maintained. Also, I cam probably fix most issues | with tools carried on board on the side of road. Enough | to get to a proper workshop at least, I converted it to | 2WD after killing a diff and drove for 200 km that way. | If you cannot do that yourself, you're screwed so. | | That being said, if I'd go on a 2k + mile trip I would | put in some work to get the car fit for this. Looking at | my dads VW camper, I'll just fill up drinking water, | maybe gas and fuel. Without a serious amount of | preventive maintenance those cars do have a tendency to | break down so. I guess we are just not used to this kind | cars or machinery anymore. | OldHand2018 wrote: | Depending on the brand/model, the odds are pretty | overwhelming that your car from 1982 has 5 or more chips | in it. | | The chip-ification of cars has been going on for a | really, really long time. | hef19898 wrote: | Mine has a total of three 35 amp glass fuses. And dual | carbs. I can confidently say there are no chips in there, | excluding the radio and the rests of the snack variant on | the back seat. Sometimes I'd love EFI, 17 l / 100 km just | hurts... | ghaff wrote: | I also remember when it was a good idea to carry spare | fuses with you. I certainly don't in my current 10 year | old vehicle and have absolutely no idea where the fuse | box is (well I know the general vicinity where it | probably is) without looking in the manual. | hef19898 wrote: | Oh, I have probably half a dozen or so in the glove box! | The auxiliary circuit has a tendency to blow the fuse | out... Still unable to figure out why... | clipradiowallet wrote: | > Also, I cam probably fix most issues with tools carried | on board on the side of road. | | I think that is the largest appeal to me of older cars. | There are only so many parts that can fail, and they are | all repairable with some time and hand tools(and maybe a | Haynes manual!). | | (for people unfamiliar, a Haynes manual is a 3rd party | manual customized for most makes/models of automobiles. | It describes with pictures how to perform [almost] any | repair.) | hef19898 wrote: | Yeah, the Haynes Books of Lies! Kidding, they are great. | Also I found that original workshop manual are sometimes | better. Fun fact, Haynes has an owners manual for the WW2 | Panther tank. | everdrive wrote: | In addition, breakdowns were a much more regular | occurrence. It wasn't unheard of for brakes to fail without | warning. I hate computer-laden cars quite a bit, but as you | say, cars have become much more reliable than they ever | were in the past. (Written while parked in a 17 year old | Toyota.) | kwhitefoot wrote: | My 1965 Volvo Amazon did 300 k miles before I scrapped it, | in 1984, in favour of a 1976 Volvo 245. I only scrapped it | because it wasn't worth anything, it was in perfect working | order. The floor of 245 finally succumbed to Norwegian road | salt in 1996 after 250 k miles but was otherwise in perfect | order. | | I don't remember how far my 1965 Austin Mini van had done | by the time I scrapped it in 1978 but I'm quite sure it was | much more than 50 k miles. | ghaff wrote: | That was certainly not the norm however. I can clearly | remember when 100K miles was considered exceptional and, | as someone else noted, probably beyond what the odometer | was designed for. | eldaisfish wrote: | this is survivorship bias, nothing more. | kwhitefoot wrote: | 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. | eldaisfish wrote: | 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. | hef19898 wrote: | The bias is more that we go through cars faster, | generally, then they die. And once a car isn't used | anymore, it just rots away. Or it gets exported to some | developing country to happily life for another couple of | decades. How that would work with modern electronics, I | don't know. Probably as long as electronics don't brick | the car it should fine I guess. | WillPostForFood wrote: | _The bias is more that we go through cars faster_ | | Is that true though? Average length of car ownership is | at an all-time high of over 8 years. It was under 5 years | just 20 years ago. Maybe length of ownership doesn't | correlate to length of car life, but seems like a strong | signal that car quality and lifespan is going up. | CryptoPunk wrote: | Capitalism really promotes planned durability. | ghaff wrote: | Cars are 1.) expensive enough and 2.) required by many | people to work in order to get through the day that, | while plenty of people also want the latest and greatest, | most value reliability and long lifetime a lot. (To the | point where these are tracked pretty carefully by | organizations like CR.) | UseStrict wrote: | Vehicles made a massive leap forward with the introduction | of electronic components - fuel injection, oxygen sensors, | throttle control. Not to mention essential safety | components like traction control computers and anti-lock | braking. There's no way a vehicle without these features | would pass any sort of environmental or safety regulation | today. | w-m wrote: | All new cars in the EU need to have an automatic emergency | call system since 2018: https://en.wikipedia.org/wiki/ECall | | That would be hard to pull off without chips. Although I | guess you could keep it completely isolated from the rest of | the car. | Cloudef wrote: | It is possible, but the cars will be taxed into oblivion, | because of push to electric cars. This is nothing new in | finland because nobody there buys new car anyways, and | continues to recycle existing old cars. Though that will also | soon become impossible due to rising taxes to get rid of the | old cars. I'm not sure which here is supposed to be more eco- | friendly in the long run, but I suppose if you make people | impossible to own anything that'll eventually win? | throwaway9870 wrote: | You cannot build a modern car engine without chips, let alone | a car. Also, no way to hit safety requirements without chips | (air bag deployment for example). | gameswithgo wrote: | I mean yes, if you take that tautologically, since a modern | car engine has a chip. But probably you could build an | engine that meets modern requirements without. People | forget how clever analog solutions can be. It would be a | huge pain in the ass though, and take years. | hef19898 wrote: | No, not since the late 80s when electronic fuel injection | became necessary to meet emission standards. The | alternative, carbs, just isn't good enough anymore. | teorema wrote: | Ugh... in one of the these threads on HN someone said a | manufacturer was doing that, or at least openly speculating | about it, offering a low tech model. I think it was in France | but my memory is fuzzy. | pyb wrote: | Dacia Logan ? | NickNameNick wrote: | Probably thinking of 'voitures sans permis', really small | cars that can be driven in France by people without drivers | licenses. | | (Including by people who've been disqualified...) | gilbetron wrote: | When I started driving in the 80s, there was always a real | chance that the car wouldn't start, or have a problem | starting. Even new cars. Now? Except for a dead battery, I | haven't had that problem in years, and we don't buy/lease new | vehicles very often (our two current vehicles are 4 and 17 | years old). ICs are far more reliable than old school | electronics/mechanics! | atonse wrote: | I can't think of any system in a car today that doesn't use | some chip somewhere. | | Wouldn't even power steering use it? Headlights? | | Engines would have engine control units running some kind of | real-time OS, anti lock brakes, anti traction systems, | airbags, power locks with wireless keys. Climate control vs | just "AC fan on" | | Even some ignition systems have chips that do some kind of | key exchange to start the car. (Yes you can bypass it but now | you're making a car that's easier to steal) | refurb wrote: | No. US cars got chips starting in the mid-80's, so almost 40 | years ago. | | And they were actually much more reliable and efficient. Fuel | injection was light years ahead of carburetors. | | And I'd argue it would be impossible to meet emissions | without computer control of the engine. | subpixel wrote: | I just bought a Toyota at MSRP last week. I was considering | waiting a little longer, glad I did not. | phkahler wrote: | Most auto companies don't take delivery of chips except for | managing production of a few key modules like engine | controllers. Most of the chips in your car are in components | made by suppliers with circuit boards often made by a second | tier supplier. Combine that with many chips having no alternate | and I don't see how Toyota could really stay exempt from this | problem. OTOH not every chip maker is having trouble keeping | up. | lostapathy wrote: | Toyota doesn't have to physically hold the chips/modules to | accomplish they. They have contracts with suppliers that lock | in how much inventory the supplier has to have on hand, and | how much supply they need locked in from their own upstream | suppliers. | | One criticism of Toyota's production system is that they | aren't so much "just in time" as it sounds on the surface, | rather they just force their suppliers to run the warehouse | instead of them. Which still makes sense - Toyota wants to be | in the car business, not the warehouse and logistics | businesses. | bluGill wrote: | Toyota is in the logistics business more than the car | business. Sure cars make the money, but the logistics are | the hard part of a large car factory. | lostapathy wrote: | In that way - one could argue they "manage the logistics | business" - but that they don't actually want to do the | logistics (or own the inventory/warehouses). | mrfusion wrote: | Has anyone considered redesigning the car to not need these | particular chips? | | Do a massive push to target a different chip or even a FPGA. | There must be something out there to run the software. | 11thEarlOfMar wrote: | If you have a taste for irony, my company makes critical | components for semiconductor equipment. If we can't ship, | equipment companies can't ship new equipment. If they can't ship, | semiconductor fabs can't increase capacity to meet the demand and | solve the shortage. | | We went line down last week due to shortage of a chip for our | component. | | In reality, the shortage is somewhat self-inflicted, like toilet | paper a year ago, but for whatever combination of real demand + | hoarding, we can't get chips. | throwawaygh wrote: | A negative feedback loop in semiconductor supply seems like a | situation where a government should just step in manage the | market a bit. | 1e-9 wrote: | It is a _positive_ feedback loop, not a _negative_ feedback | loop. See https://en.wikipedia.org/wiki/Positive_feedback. | robotresearcher wrote: | It's negative WRT the chip production rate. | dev_tty01 wrote: | No, there is a shortage, leading to a shortage, leading | to a shortage, ... | | If it was negative feedback, the "error" (shortage in | production) would lead to an error cancelling signal, and | therefore an increase in production. Positive feedback | has error leading to larger error, shortage leading to | more shortage. | a9h74j wrote: | It does have negative external effects, as you observe, | in the sense of a viscious circle. But even a viscious | circle, mathematically, has positive feedback, resulting | initially in a positive exponent growing against time, | not a negative exponent damping out in time. | robotresearcher wrote: | Doesn't positive feedback require a positive loop gain? | Right now, not enough chips are available to make new | chips. So the loop gain is less than zero, damping the | output recursively. | throwawaygh wrote: | I'm also confused by the confusion here... probably naive | pattern matching? Reminds me of TAing undergrad courses | where you could get more than half the class to confuse | "positive feedback" and "negative feedback" on a midterm | by just giving examples where stability = bad :) | [deleted] | robotresearcher wrote: | Grandparent gives the choices of 'positive exponent | growing against time' or 'negative exponent damping out | against time'. Here we have a positive exponent damping | (reducing) the output over time, because it's value is | less than one, resulting in a negative loop gain. The | Wikipedia article linked up thread defines positive | feedback as having positive loop gain, and negative | feedback negative loop gain. | a9h74j wrote: | IIRC, generally a positive loop gain greater than one | will lead to diverging behavior aka instability, whereas | even a positive-sign to feedback, if loop gain is "less | than one" will not. I might be brain-farting here, but I | cannot be precise anyway, which IIRC gets into plotting | poles in a complex plane. (Cue joke my applied math | professor would tell, about why all the Polish people | were asked to sit in the right-hand aisle of an | aircraft.) | [deleted] | robotresearcher wrote: | Self-reply, too late to edit. Looks like I remembered the | definition of loop gain incorrectly. This should say a | loop gain less than 1, not negative | zsmi wrote: | The problem is, if the feedback signal is too slow in | getting back to the thing which measure error (i.e. too | much phase lag), then negative feedback can turn into | positive feedback and this leads to an instability. | | One of the most complex pieces of the semiconductor fab | is the building itself. Even with plans and permits in | hand, it takes years to make one that can output at | reason throughput and yield. | | This report is from 1999 and it hasn't gotten easier. | | https://www.imia.com/wp- | content/uploads/2013/05/Construction... | | "Typically the product life of a semiconductor chip (nine | to 12 months) is less than the time required to construct | the facility and install the equipment for manufacturing | (24 to 36 months). As such, the | construction/commissioning process is a rapid, constantly | overlapping and complex set of events. In addition, | construction of semiconductor facilities is very complex | and costly (about USD 1.2 to 1.5 billion) due to the | extraordinarily sophisticated processes and equipment | required to manufacture semiconductor chips." | a9h74j wrote: | Yes, and same situation in every mining-related commodity | market. Multiple time delays of order several years. | Large up-front investments. Large uncertainties in | payoff. Look at the multi-year price behaviors in those | markets and see too if there is much stability. | CamperBob2 wrote: | _" Typically the product life of a semiconductor chip | (nine to 12 months) is less than the time required to | construct the facility and install the equipment for | manufacturing (24 to 36 months)._ | | That's an absurd underestimate of market lifetime. I'd | bet that fully 80% of the chips available in 1999 when | that report was written are still in production today (or | would be, if not for the crunch.) | freemint wrote: | Negative Vs positive is about the eigenvalue of the feed | back loop not about the weighting how it affects external | signals | tbihl wrote: | No, still positive. Negative feedback is self-righting, | while positive feedback is amplification (to speak in | very broad terms.) | throwawaygh wrote: | No! It's negative WRT chip production rate! I have a phd | in controls and meant what I said; I assume | roboticsresearcher also knows some freshman-level control | theory ;-). | | Stability ==== good in undergrad engineering, but not | here. We _DON 'T_ want production rate to be stable when | we have a global supply shortage! Here, a negative | feedback loop is stabilizing the system in an undesirable | equilibrium. | | I.e., the function that's being controlled in "supply of | chips", the stable state is "saturated supply", and the | negative feedback loop that maintains that equilibrium is | "starving chip fab suppliers". | | (meta: people down-voting comments on control theory | terminology by two different experts in this field at | least makes me feel a bit better about the signal:noise | ratio on the vote counts on my other comments in this | thread ;)) | alisonkisk wrote: | It's not stabilizing if the economy is in a death spiral | of failing interdependent companies who can't produce | machines for each other. | robotresearcher wrote: | In control terms it is. There's a stable asymptote of 'we | made no machines today' every day, until some external | process breaks the dependency cycle. | saltcured wrote: | Only partially facetious here: you have mistakenly | decided that it it clamps at zero. If we consider the | hoarding aspects, the feedback continues into net | negative chip availability. Before long, there will be | roving gangs of looters taking back the chips you thought | you already had! ;-) | throwawaygh wrote: | Yes, it's fair, I do assume that chip supply/demand isn't | subject to the forces of roving gangs of looters :) | [deleted] | eplanit wrote: | What experiences with which government would lead you to | believe that bureaucrats -- most of whom have never run a | company nor made a product -- would be capable of "managing | the market"? | dfxm12 wrote: | I'm not sure experience running a company is necessarily a | good thing here, or at the very least, not pertinent. Wall | St.'s and the American people's interests are not | necessarily in line. The US' previous president ran some | companies and did not really do a good job in this regard, | either, wrt his trade wars. | eplanit wrote: | You're simply wrong. The US's economy was doing _great_ | under the previous administration, and even top Democrats | agreed that it was right to put strong pressure on China | re: trade. | | https://thehill.com/policy/international/392636-schumer- | on-c... | dfxm12 wrote: | Great for whom? Wall St. or the common American? Like I | said, their interests don't necessarily align. Sure, | maybe stocks were up (usually, not when Trump was | threatening to shut down the government if he didn't get | his wall, though), but that didn't trickle down to | everyone and is _far_ from a total picture of the | economy. Also, your article doesn 't support your claim. | Schumer was praising Trump for being tough on China for | the sake of being tough on China, not for managing supply | chains well. | mediaman wrote: | Seriously? You're using Donald Trump, who specialized in | brand licensing and being a television character, as an | equivalency to all the manufacturing engineers and supply | chain specialists working to resolve the problems created | by a global pandemic that's killed millions of people? | | The amount of disrespect to highly skilled professionals | in this thread working like crazy to respond to a massive | exogenous shock, and then following it up with the idea | that "well, the government should fix it" with no | specific idea of how exactly, the government would fix | it, is mind-bending. | dimitrios1 wrote: | The solution to a market inefficiency isn't to involve a more | inefficient entity. | blululu wrote: | This is a pretty axiomatic view that governments can never | be as responsive or as efficient as markets. The more | commonly accepted economic wisdom is that they are usually | less efficient and responsive than free market forces | operating under ideal conditions. There is a lot of room | for market failures, inefficiencies and temporal dynamics | to change the balance. The are plenty of examples of | government regulatory bodies that have a nice anchoring | effect on the relevant markets. The Federal Reserve Bank, | for example, responds quickly to changing market | conditions, looks at the data and intervenes at a speed | that keeps pace with the rapidly fluctuating market it | regulates. | throwaway0a5e wrote: | It's unrealistic to expect people to hedge online | comments about complex topics (like the one in question | here) to the extent required to preclude "yes but" and | "well akshually" type comments that complain about the | lack of nuance. Yet despite these expectations being | unrealistic everyone expects comments they disagree with | to meet them. | febeling wrote: | I want to print and frame this comment. | nyokodo wrote: | > The Federal Reserve Bank, for example, responds quickly | to changing market conditions | | The Fed was established by Congress and the Chair is | appointed by the President, however the Fed is still a | private institution. That independence makes it a very | different organization than what most people mean by | government. | abfan1127 wrote: | The Federal Reserve hardly responds to market conditions. | Their free and open printing of money is arguably the | greatest risk to our economy. Milton Friedman has great | resources on this, including a video series from the | 1970s (based on clothing alone) called Free to Choose. | Its on Youtube, amongst other places. | kube-system wrote: | Natural boom-and-bust cycles are a huge risk to economies | as well, despite the fact that they're natural and don't | have anyone for which we can point a finger at. | nickff wrote: | The Federal Reserve was originally devised to put an end | to the boom-bust cycle... Well before the Great | Depression. | | If you're going to point a finger, the Federal Reserve is | a very good institution to point at. | imtringued wrote: | I don't know what you mean by "natural boom and bust | cycles" but credit cycles and other financial cycles are | just a property of the money system. Alternative money | systems do not have this property. | | The cycles only make sense because people like and want | them. I.e. they love the scarcity of money. For example, | in a depression the return on money is greater than the | return on labor, people logically flock to money rather | than labor even though real wealth is eroding as people | stop working. | imtringued wrote: | I was looking for a comment like this: | | http://rootbug.com/how-could-it-be-solved/taxing-money- | throu... | | Let me put it in my own words: | | If republicans think that unemployment benefits compete | with private businesses on labor, then I get to think | that 0% interest money competes with labor for capital. | | The fundamental problem is that the 0% lower bound | combined with a deposit guarantee represents not only a | minimum wage for capital. It also presents a job | guarantee. A minimum wage doesn't guarantee you a job. | | So yes, the Federal Reserve is not responding to market | conditions at all. It's artificially holding up interest | rates at zero or above. This is causing massive | distortions in the economy that can only be fixed by a | swiss-army knife of policies. Among one of the needed | responses is "free and open printing of money". The world | economy is already flirting with disinflation (a | reduction in inflation). If you don't have negative | interest rates you will need a whole load of "money | printing" to keep the system standing in place. | | The assumption that a scarce money system (i.e. | guaranteed non negative interest) has a fixed velocity of | money is absurd. Put interest at -5% and just watch | everyone withdraw cash from their bank account. The | velocity of cash would be basically be zero and the | velocity of money on bank accounts would be extremely | high. As the government is doing deficit spending all the | money just piles up somewhere and ends up doing nothing. | QE is even worse because you cannot spend centralbank | reserves to buy groceries. | | https://youtu.be/j5l_Oeg6kMo | | Ok, let's do the negative interest thing. It sounds like | a big hassle right? Just think about the benefits: The | first step after negative interest ratess would be to | adjust the inflation target to 0% meaning perfect price | stability. Actually, you wouldn't target inflation at all | because the negative interest rate completely replaces | the need for inflation. You would target the CPI itself | meaning your goal as the government would be to maintain | a CPI of 100 for all eternity. Any deviation would become | inexcusable. Meanwhile today inflation is a hack to make | a broken money system work. | | Don't blame the fed. Blame the money. | ramesh31 wrote: | Ah yes, the Herbert Hoover approach. | MagicWishMonkey wrote: | I wonder how many of these people rant about how bad the | government is while using GPS to navigate their way to | work on government funded roadways. | evilduck wrote: | On the DARPA derived internet, no less. | nradov wrote: | DARPA funded the basic research. Then the actual Internet | was largely built by for-profit private sector companies. | That hybrid model seems to usually be the most effective | for major new innovations. | JohnWhigham wrote: | DARPA funded most of the grant money used by research | entities to create the various parts of the IP stack. | That's not "basic research". Simply put, were it not for | DARPA, we wouldn't have the Internet of today. We'd | probably have something like it, but something a lot more | closed off and walled garden-esque. | abfan1127 wrote: | As if those things wouldn't innovate in the market? Or | because 1 thing came from the government, then all things | the government touches are gold? | ramesh31 wrote: | The free market can do a lot when it has the basic | requirements to operate, but the point is that government | spending is the only solution when we end up with a | chicken/egg problem as the OP pointed out. | bumby wrote: | This take might have some hindsight bias. | | While a lot of industry seem obvious and worth the | investment today, when they were nascent that wasn't the | case. Would GPS exist if private companies had to fund | the rocket and satellite research just to tell you where | you are on the map? Or would the aircraft industry exist? | | Most of those types of high-risk, nebulous reward (at | least on short-to-near-term timescales) industries are | predicated on government investment. SpaceX, as great as | they are, probably wouldn't exist if they didn't have | NASA as a customer. | abfan1127 wrote: | it certainly does have hindsight bias, on both sides. The | Satellite TV and Radio industries spend the money to | launch. | | Back in the 90s (during the age of early GPS), Motorola | (iirc) tried to launch a satellite phone company too. | | NASA isn't that big of a customer. DirecTV was a huge | consumer of rockets. As it turns out, SpaceX doesn't sell | to them because they own their own rocket company. | bumby wrote: | > _The Satellite TV and Radio industries spend the money | to launch._ | | Correct, but this is an after-the-fact understanding. | They spend money to launch _now_ because the industries | are no longer nascent and being launched on platforms | designed around government investment. The key to my | point is that the government spends money when the | industries are young and risky to develop platforms. If | those platforms work out that helps the private sector | have a less risky path down the road. This is why | telecoms weren 't rushing to develop rockets in the | 1960s. | | > _NASA isn 't that big of a customer._ | | This is very much the same thing. Early on, NASA was | really the only SpaceX customer and NASA helped keep them | from going bankrupt [1]. In addition, NASA made early | launches more palatable because the government is self- | insured. Government contracts help usher along young, | risky companies until they could have a less risky | business model that the private sector feels more | comfortable with. It's very similar to aerospace | development over 100 years ago with the Wright brothers | and Curtis vying for Army contracts. Without those | contracts, they are as much hobbyists as entrepreneurs. | | [1] https://www.ndtv.com/offbeat/elon-musk-says- | nasas-1-5-billio... | adventured wrote: | They can't even manage a trivial task like maintaining | roads and bridges properly. | | You could have hardly picked a worse example than the | government roads system (including our thousands of | dilapidated bridges), which is in absolutely horrific | condition and is a humiliating example for the | government. It's the opposite of a good example. | | That's all due to lack of funding, one might suggest? | They're not lacking for funds. They spent our money on | blowing up other countries and then (occasionally) | attempting to rebuild them. Vietnam, Iraq, Syria, Libya, | Afghanistan, Korea and 497 other cases of meddling and | foreign adventurism. There rests $10 trillion in | infrastructure money. No, they have had plenty of our | money to spend, and they chose to squander it. | | What ever would we do if we didn't have those hyper | incompetent clowns to manage our roads. | | GPS is trivial. If Russia can do it, various US private | corporations could easily do it just the same. | anotherman554 wrote: | US private corporations maintaining roads implies a | society like the one depictive in the Robocop movies. | It's fun to see you prosing that unironically. | only_as_i_fall wrote: | Then what's the solution? Seems like the government is the | only entity that can intervene if market forces are counter | to supply chain resilience. This is partially the | justification for agricultural subsidies in the US, so | clearly there is precedent. | PaywallBuster wrote: | Apple approach, invest in your supply chain | | Extra points by diversifying from China/Taiwan | | In direct opposition, Auto makers approach of minimizing | inventory and producing "just-in-time" caused them to be | vulnerable to supply chain or big market shifts | baybal2 wrote: | > Extra points by diversifying from China/Taiwan | | Take a look on the linkedin jobs in Shenzhen. | | The trend IS NOT towards diversification. In the last 5 | years since Trump's election, US multinationals were | increasing their presence in China, not decreasing. | | Google for example said to open "a small representative | office" in Shenzhen 2 years ago, now it's a full giant | RnD centre in the Ping An Tower where they shipped all of | Pixel's development. | | Apple had RnD offices in China for more than a decade, | but they barely acknowledged their existence. Their | people in the Kerry Plaza were prohibited by their | contract to even show their employment for Apple in their | LinkedIn profiles. Their Shenzhen RnD centre is where | AirPods were developed, along with many other iPad, and | iPhone sub-assemblies. Apple's VR goggles project had its | start in Shenzhen as well. | | Amazon had no presence whatsoever in China besides a | failed Chinese Amazon.com launch. They left China, and | then returned to move the whole of their Kindle, and Echo | device development to Shenzhen. Now they are working on | something rather cryptic there. Some suggest VR goggles | of their own design. | | Facebook... absolutely bizarrely opened their RnD centre | in Shenzhen amid the COVID, just a floor below Google I | heard. | | Dell, Microsoft, Nvidia, Qualcomm, Intel -- all | conventional hardware makers were here since nineties, | but I think they really doubled down on China recently as | well too, to one up the dotcom upstarts in hardware. | PaywallBuster wrote: | We're talking about supply chain here | | e.g. Foxconn investing in capacity outside of China | (India) and Apple being part of it (as customer) | baybal2 wrote: | Having your essential RnD office shut down, if something | happens to/in China, would not be any much less ugly, and | disruptive than having your access to microchips shut | down. | | In other words, the Silicon Valley is still going all in | on China, despite 4 years of Trump, public scorn, trade | war, rising costs etc. | | In other words, they really gave up on any vision where | they don't critically depend on China, and can run with | critical assets in US only. | ceejayoz wrote: | The article notes that Toyota avoided "just-in-time" | supply for chips, and has benefited for a while from | this. Their stockpile just ran out. | | > New cars often include dozens of microchips but Toyota | benefited from having built a larger stockpile of chips - | also called semiconductors - as part of a revamp to its | business continuity plan, developed in the wake of the | Fukushima earthquake and tsunami a decade ago. | Causality1 wrote: | The nightmarish results of agricultural subsidies in the | US is an excellent reason to _not_ involve the government | in the chip shortage. | bumby wrote: | Can you elaborate on your point? | | While I agree there are definitively some downsides to ag | subsidies, I think the real question is if the | interventionist downsides are worse than the non- | subsidized downsides. As bad as they are, I'm not sure | that incentivizing unhealthy food is actual worse than | famine. | Causality1 wrote: | Cratering agricultural prices so margins are so thin | small farmers are driven out of business in favor of huge | conglomerates, mind-boggling levels of food wastage on | the order of billions of pounds sitting in warehouses | until they rot. | | https://reason.com/2019/03/02/thanks-to-decades-of- | governmen... | bumby wrote: | I agree, those are all blowback of subsidies. But they | are also side effects of food abundance. The downsides of | food shortage seems much worse. | | Maybe there's an argument that we've moved passed the era | of food scarcity when those policies were enacted and | they should be modified. But I think a blanket claim that | food subsidies are an inherent bad policy misses their | point. | Causality1 wrote: | That blanket claim was never made. The made claim was | that the ineptitude and mishandling of agricultural | subsidies is reason to reconsider calling for government | involvement in the chip shortage. | bumby wrote: | This is a bit of a confusing take if you're using ag | subsidies as evidence to keep the govt out of chip | manufacturing but now denying that the subsidies aren't | bad. | | > _The nightmarish results of agricultural subsidies in | the US is an excellent reason to not involve the | government_ | | This sure sounds like you think it's a claim of subsidies | being bad policy. | | > _The made claim was that the ineptitude and mishandling | of agricultural subsidies is reason to reconsider_ | | How do you combine the view that "ag subsidies aren't | bad" with "the government shouldn't be in the business of | managing subsidies" when the definition of subsidy | involves the government? At first take, this comes across | as back-peddling to avoid dogmatic cognitive dissonance. | | But I'll be generous and assume you did not mean that ag | subsidies are bad in and of themselves, but the way they | are handled is poor. So what do think is a more proper | way to handle them? Should the focus be on different | products? If so, which ones? | | The point has already been made that ag subsidies are | operating as intended and the downsides you refer to are | downsides of abundance. I have a feeling that most people | who have actually lived with food scarcity would find | them preferable to the actual "nightmarish results" of | too little food. | rrrrrrrrrrrryan wrote: | But agricultural studies are working as intended? | | The U.S. government has decided that it's in our national | security interest to remain a net exporter of crops. | | If World War III broke out and all the borders shut down, | America would still be able to feed herself. The U.K. | wouldn't. There would be mass starvation in much of the | first world, and people would say "the government | should've done something." | | All the diabetes is a pretty rough unintended | consequence, I'll give you that, but shifting some chip | fabs to our shores as a matter of national security | doesn't sound like too bad of an idea. | only_as_i_fall wrote: | Sure, but pontificating on government inefficiencies | doesn't actually improve supply chain weakness either. | wuliwong wrote: | The comment was a response to a suggestion that the | solution to the chip shortage was government | intervention. I don't consider giving a evidence to the | contrary of an argument as pontificating. | only_as_i_fall wrote: | Ok but point to the part of that comment which was | evidence? | | Claiming that the results of ag subsidies have been | "nightmarish" with no further elaboration or citation | does nothing to advance the conversation, it's simply a | strongly worded opinion. | guerrilla wrote: | That's one way to look at it. Another is that those are | side effects of having stable and affordable food prices. | The solution being talked about in this thread of simply | raising prices would literally starve people to death if | applied to that case. | adventured wrote: | > Then what's the solution? | | Time and capital investment. It's like this generation of | people have never heard of production and supply | disruptions, and were oblivious to such things being | possible. Frankly, this doesn't matter very much, it's | not a critical situation. | | The auto market malfunctioning short-term due to a | pandemic doesn't present a strong argument for government | intervention. Tesla can't make batteries fast enough, | there isn't enough supply, its restraining their auto | production, the government must step in and fix the | problem! It's nonsense. The government should not step in | every time there is a short-term problem in a market. | | Toyota won't sell as many vehicles. So what. | | I know, I know, but what if people have to make due with | a three year old vehicle. What if they have to suffer and | endure those vehicles being made to last for five or six | years. Ten years! The horror. | | Toyota won't die. Time will pass, during which necessary | investments and adjustments will be made. Supply will be | increased. The problem will be fixed. It's as simple as | some time and capital investment. The companies that | maneuver the best will come out ahead, gaining an | advantage on their competitors. And the world keeps on | spinning. | | Toyota has generated something like $90-$100 billion in | operating income the past five years. They have the | resources - and then some - to fix the problem. If they | choose not to or can't that's their own incompetence, | their competitors will eat their lunch. Never feel bad | for a corporation earning $20 billion a year. If they | can't get their production corrected, someone else will | figure it out and reap the benefits. | | It does not matter as much as is being portrayed. This is | not an important problem and does not warrant the | government burning its time and resources to step in and | fix (assuming they can help at all). Governments have a | lot of other far more important things to be focused on. | only_as_i_fall wrote: | Good thing we don't use semiconductors in anything more | important then. | JKCalhoun wrote: | > Toyota won't sell as many vehicles. So what. | | Thousands of employees lose their livelihoods as | factories shut down? | freewilly1040 wrote: | Permanent layoffs are an unlikely response to a temporary | supply disruption, and unemployment aid covers any short | term furlough | [deleted] | ortusdux wrote: | Toyota pioneered the "Toyota Way", which is now known as | Lean or JIT manufacturing. JIT is famously susceptible to | disruption from natural disasters. Over the short term, | between disruptions, JIT tends to be more profitable than | the alternatives. Over the long term, the market rewards | companies that can handle disruptions. Basically, to | answer your question, the market is punishing JIT MFG and | rewarding resilience. Companies are watching it happen | and learning from it. One indication of this is the | current increase in inflation. Companies are switching | from 1 month of inventory to 6-12, which is making | suppliers scramble and driving up prices. | | I am by no means against government intervention. | Companies have short memories, and market forces will | force eventually pressure a return to JIT. But now is the | exact wrong time to intervene. | jimbokun wrote: | This assumes an efficient global market, without | interference from other state actors. | | If other countries are implementing protectionist policies, | like keeping semiconductors for themselves or supplying | other nations first to curry favors or improved | relationships, for example, it might be in another nations | interest to increase fab capacity with its borders to avoid | being vulnerable to those political and diplomatic factors. | MagicWishMonkey wrote: | We're in this mess due to our never ending quest for more | "efficiency" | | The government needs to recognize the fact that | semiconductors are essential to national security and | ensure we have the capability to produce our own. | bumby wrote: | I think you're right, but it's partly because we weren't | couching the quest for efficiency in the context of risk. | | I might be more time efficient by speeding everywhere, | but that efficiency gain needs to be understood in terms | of how much additional risk it incurs. | hypertele-Xii wrote: | Moving fast and breaking things isn't national security. | (I agree with you) | [deleted] | Slartie wrote: | That sounds nice, but a singular entity within a | government, entrusted with the necessary power to regulate | the relevant parts of the market without too much | coordination overhead with other government entities, is | actually much more efficient at resolving market | inefficiencies than the free market. Case in point: | production of vaccines. | | That's also obvious: the inefficiency in governments | originates largely from coordination overhead between many | competing entities with overlapping responsibilities. Self- | regulating systems like markets do not eliminate that | overhead, they just use other means of coordination that | trade some of the complexity overhead for a time overhead - | instead of having to coordinate a complex set of rules, you | now have to give the system enough time to "find" its | stable state. But when time is of the essence, an | intelligent, singular entity without the need for | coordination with anyone besides the entities to be | regulated can always outcompete the self-regulating system | when it comes to short-term stabilization (though not | necessarily with regard to long-term stabilization, but | that's not the issue here). | freewilly1040 wrote: | The government did very little in managing vaccine | production other than act as purchaser, how is this an | example of them managing a market? | lostdog wrote: | The US government subsidized the vaccines, effectively | pre-purchasing enough so that manufacturing could be | ramped up faster than normal. | | https://en.wikipedia.org/wiki/Operation_Warp_Speed | Slartie wrote: | The US government regulated critical parts of the supply | chain of raw materials and preproducts in order to ensure | that US manufacturers have no sourcing problems. It then | compelled the manufacturers into exclusively servicing | the US purchase contracts first before fulfilling | competing contracts from other global buyers with any of | the finished product produced on US territory. | | I'd call that quite a lot of "market management". But as | everyone could see it resulted in the fastest vaccination | ramp-up worldwide (excluding Israel, which was a bit | faster, but is also much smaller than the US and which | had its own way to get "preferred" access to vaccine | produced in the EU). | will4274 wrote: | Why? Is the government better at inventory and/or supply | chain management than the current players in the market? My | experience with COVID tests says no. | bumby wrote: | No, but the government can shoulder a larger risk than what | the private sector may tolerate. | | There's all kinds of examples, but aerospace is a classic | one. There would be no airline industry or commercial space | industry if the government wasn't willing to bear a | disproportionate amount of the risk when these industries | were nascent. There just wasn't enough market demand to | incentivize the private sector to do so on their own. So | the govt sets up an incentive structure that brings the | risk to a level where the private sector is willing to | partake. The government is also generally more tolerant of | longer-term scenarios than the private sector. | jbay808 wrote: | I think that your experience with COVID tests would depend | strongly on which country are you in, and which government | you are talking about. | MagicWishMonkey wrote: | No one is saying the government should start producing | chips, but they can offer financial incentives to encourage | chip manufacturers to build fabs here instead of overseas. | baybal2 wrote: | > A negative feedback loop in semiconductor supply seems like | a situation where a government should just step in manage the | market a bit. | | Unfortunately, no Western government can do it even if its | life depends on it. | | German trade officials for example went and completely | prostrated themselves in front of Taiwanese govt, and TSMC, | offering anything short of switching the recognition of China | to Taiwan. | | It bounced off without any effect. | | It was only a blank cheque from USA that made them to even | scratch, and that is still pending that cheque being | honoured, and cashed out. | option wrote: | absolutely no. government interventions rarely (if ever) are | helpful in managing supply and demand. | mathattack wrote: | Just the opposite. Need to let people raise prices to | encourage slack in the system. Let's prices settle where chip | makers can produce new chips. | | There are market failures where the government needs to step | in, but this isn't one. Even with climate change (where they | should step in) the government can't get to the point of | saying it's ok for gas prices to be high. | | We don't want the government to pick winners and losers when | it doesn't need to. | jollybean wrote: | "Just the opposite. Need to let people raise prices to | encourage slack in the system." | | "We don't want the government to pick winners and losers | when it doesn't need to. " | | Markets are not even remotely close to as efficient as | you're implying. | | In a clinch, people are making all sorts of crazy guesses | at what the future will bring, making everything very | inefficient. Remember that efficient markets depend on | rational acting based on good information. We often don't | have very good information at the unit level, and, we often | act irrationally. | | Some company flush with cash, decides to buy things at | crazy high prices thereby denying the 'critical sources' | (those that support production) access. | | Right now there is a lot of parts hoarding - speculators | buying up parts to sell them at higher prices. They're | adding no net value to the system and causing all sorts of | other problems. | | The clearing of those prices may happen over time, but not | without terrible damage being done. | | Supply chains are not like stock markets with clear prices | and instant transactions. | | You may not need the government stepping in, but you | definitely want non-market actions. For example, chip | makers may want to work with their supply chains to ensure | a kind of absolutism or preferential customer tranches. | | FYI this already happens, all the time. Price is not King | for parts, like it is on the stock market. Vendors of | 'everything' are aware of the long term growth of their | business, and will generally want to work with consistent | buyers. | | So in this FUBAR panic, supply chains have to think not | about one thing, about many. | | I believe that root causes was already a fait-accompli at | the start of the pandemic when a bunch of parts of the | supply chain shut down - we're still paying the price of | trying to get things going. | throwawaygh wrote: | 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 to pay more -- even much more -- | than other users, but can 't buy in massive quantities so | don't go to the front of the line. | | 3. Is there any (legal) mechanism at the moment that | prevents chip makers from increasing prices? | | 4. Fab equipment producers are small consumers of chips but | have such a disproportionately high impact on the rate of | future supply. In the midst of a global shortage, we could | straight up socialize 0.00...01% of chips produced every | year and hand them out for free to fab equipment | manufacturers _without even effecting the short-term price | dynamics_. I 'm not actually advocating this, but the | assertion that earmarking a small number of chips for a | particular high-value use fundamentally skew the market in | the short-term is probably false. | | 5. Even if markets can eventually work in this case -- and | for the record I'm convinced that this is a perfect example | of contract negotiators being extremely myopic -- market | dynamics have non-O(1) time complexity and the chip | shortage is wrecking havoc on the real economy. | | My comment wasn't suggesting price controls or socializing | chip fabrication. 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. | s1artibartfast wrote: | >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 wouldn't settle at | that price. | throwawaygh wrote: | _> 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. | s1artibartfast wrote: | >Because there is a global chip shortage that is making | life substantially worse for the vast majority of | Americans. | | Is it really? I don't know anyone who has had substantial | impacts. Some prices have gone up, but I don't see the | urgency. | mindslight wrote: | > _Need to let people raise prices to encourage slack in | the system_ | | You're assuming that increased profit margins will | automatically increase supply chain buffers. But rather, | the same incentive to hire too many financialists that | "save the company money" will exist, and the extra profit | margin will just go to increased dividends. | | And increasing the supply chain buffers won't help much | right now either, it has to be done during good times. In | fact I'd say most of the shortage is from companies | deciding to increase their buffers, in the same way as what | happened to toilet paper. "Hoarders" and "speculators" are | easy illustrations to point to, but the real demand comes | from regular consumers silently buying twice as much as | they usually do. | verdverm wrote: | > You're assuming that increased profit margins will | automatically increase supply chain buffers. | | I read GP's comment as increase prices to decrease | hoarding, which in theory could provide the slack in the | system. Problem might be that certain products may not be | viable if prices get too high. Only those with sufficient | margins prior. | mindslight wrote: | I don't see that raising prices would make consuming | companies want to stock up less. A company that requires | an input to manufacturing is going to have a pretty steep | price-demand curve for every individual component. Even | if prices for one of their scarce inputs doubles, they're | still going to buy as much as they can rather than risk | shutting down their entire production if they run out. | Since their competitors are feeling the same pressure, | they'll just raise their own prices to compensate. | | It's like foodstuffs during the early pandemic - when you | finally found something that they had been out of, you | didn't particularly care about the price, and you | generally bought extra so you wouldn't run out if it went | missing again. | jbay808 wrote: | > 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 price sensitive | to change so the premium product goes up 10x instead. Or | the company just borrows money and eats the loss... | mindslight wrote: | 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. | jbay808 wrote: | 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. | s1artibartfast wrote: | The entire point of a floating price is that it increases | until possible consumers drop off and some products are | no longer viable. | | It kicks low value products out of the market and | prioritizes the high value products. | duncanawoods wrote: | It's a puzzle to me why companies like nvidia didn't just | raise prices and instead left both customers and profit to | the dirty world of scalpers. | | I guess it's "brand damage" but I feel there would be | something more fair and honest if in times of tight supply | they ran their own ebay-like store and auctioned them off. | It wouldn't feel like a price hike and prices could | automatically settle as supply/demand reaches parity. | zsmi wrote: | > It's a puzzle to me why companies like nvidia didn't | just raise prices | | They did. There have been at least three major prices | increases which rocked entire industries. | | There have been reports of people paying 30x the usual | price. | | https://www.scmp.com/tech/tech- | trends/article/3133901/europe... | duncanawoods wrote: | Understandable but it didn't seem to happen like this in | commercial GPU sales. | freemint wrote: | Because there is no run for commercial grade GPUs from | miners or gamers stuck indoor. | cinntaile wrote: | They probably did, the only cards they produce under the | Nvidia brand are the Founders Edition cards and those are | sold for MSRP. Everything else is made by their partners | and those cards increased in price. | duncanawoods wrote: | Yes, soon after posting I realised I was referring to | Asus/MSI/Palit etc. rather than Nvidia. It means either | two levels of auction or the Nvidia chip sale is a % of | the end unit sale. | cptskippy wrote: | > Palit | | I've never heard of this brand, are they big in regions | outside North America? Or do they function as an ODM for | other brands? | duncanawoods wrote: | It's a Taiwanese company around since the 90s. They may | be more Europe focused with a German office. I've never | heard a US reviewer mention them but in the UK, they | offer cards cheaper than the other brands. Beyond that, I | don't know much about them. I've bought a couple of their | cards and never had an issue so they get a thumbs up from | me for N=2. | cronix wrote: | Some, like this MSI subsidary, were actually selling on | ebay at scalper prices. | | > MSI has admitted that one of its subsidiaries has been | selling RTX 3080 graphics cards on eBay at almost double | the MSRP. | | > The controversy first appeared on Reddit, where users | accused MSI of scalping its own RTX 3080 graphics cards | on eBay under the name Starlit Partner. Since, it's been | confirmed in a Justia Trademarks listing that Starlit | Partner operates under MSI Computer Corp and was first | set up in 2016. | | https://www.techradar.com/uk/news/msi-subsidiary-gets- | caught... | duncanawoods wrote: | That feels a like a partner dipping into the scalper | world whereas you want the top level companies to set out | something more transparent. | [deleted] | solatic wrote: | To over simplify, let's say that you have 100 people in | the market: 90 people who can afford $100 per card and 10 | people who can afford $200 per card. In typical times, | you charge $100 per card and sell 100 cards, earning | $10,000 in revenue. | | Now you have a chip shortage, and you can only produce 50 | cards. If you charge $200/card, you only sell 10 cards, | earning $2,000 in revenue. If you charge $100/card, | you'll sell all 50 cards, and earn $5,000 in revenue. So | it can still make sense to keep the price lower if it | makes you more revenue overall. | varispeed wrote: | > Need to let people raise prices to encourage slack in the | system. | | The scalpers can absorb the rising prices until the | desperate companies no longer can afford the increase. That | will cause the market crash, which is not good for anyone. | I think government should regulate that space so that | businesses engaged in scalping could no longer purchase nor | sell the chips. | freewilly1040 wrote: | A "crash" in chip prices would be good for those buying | chips | s1artibartfast wrote: | >The scalpers can absorb the rising prices until the | desperate companies no longer can afford the increase | | The whole point is for manufacturers to raise the price | until desperate companies/consumers can no longer afford | it and don't buy them. Im not sure where scalpers come | in. If prices are set high enough, scalpers can't make a | profit. | nicoburns wrote: | What makes you think the most critical uses have the most | money to pay for chips? I'd imagine there's a lot of crappy | (or in any case not critical) consumer products that have | much higher margins. | HPsquared wrote: | Critical uses have the potential to support much higher | prices. | s1artibartfast wrote: | IF the use is critical, then the user should be willing | to pay more. If they can't, I would want to look into why | and question how critical they are. | imtringued wrote: | There is more money in consumer markets because there are | more customers, not because each customer can pay more. | It's usually businesses that spend big on individual | purchases. | vmception wrote: | Exactly, its so weird that price sensitive recluses never | just considered that GPUs were undervalued? | | "Omg these [new market entrants] are messing up my ability | to take screenshots of my framerate and never enjoy myself" | | Well now its back to business use cases! | 2OEH8eoCRo0 wrote: | What are the barriers here? As sophisticated as automobiles have | become I don't see them needing bleeding edge 5nm fabs. | | My bigger question is: Why is there not a thriving "small | business" chip fab industry? | pjc50 wrote: | The minimum cost of entry is in the hundreds of millions to | billions, it's not especially environmentally friendly, and | you're competing against what would normally be fully-paid-off | old production lines from the incumbents. | | There's a thriving small business _design_ industry, but the | manufacturing is a classical capital-intensive manufacturing | business that also requires very specialist staff. | snarf21 wrote: | My guess it that it is like a refinery, building the factory | takes too long with a large capital outlay. For instance, it | may take a year or two to build and cost (let's guess) $500M. | Now in that time, let's say all the existing players ramp back | up (or expand!!) and there is no shortage. You now are | producing chips that are cheaper elsewhere and it is hard to | recoup your investment. Also, you may be limited on where you | can find people with expertise in this area. | bob33212 wrote: | In theory you could wire up an old pentium or 386 and program | it to do the same thing some of these chips do but you have the | same problem there. No on has a 5M supply of 386s just sitting | around in good condition. | dhbradshaw wrote: | As a chip supplier, I'd be feeling a lot of pressure right now. | In the short term you can squeeze and the tail can wag the dog | for a bit. But longer term this opens the door wide open for new | competitors in the market and / or vertical integration. | selykg wrote: | I don't think chip suppliers are playing games here, are they? | | I think in general all chip manufacturers are at capacity and | it comes down to getting in line. And I'm sure many chip | manufacturers are trying to expand their capacity. I can't | imagine they're sitting there thinking this will last forever. | dhbradshaw wrote: | I'm not sure the reasons for the shortage matter. If you have | a dependency that's causing you major problems, you try to | become less dependent on it. | arglebarglegar wrote: | they'll play it to benefit themselves any way they can, why | wouldn't they | twarge wrote: | I've noticed that the shortage of chips is also strongly driven | by speculators simply buying up everything in sight and trying | to resell at multiples of the cost. | Nasrudith wrote: | That is a whole different level - consumer retail as added | middlemen. Manufacturers who include multiple in one project | don't buy just retail which is oriented at one-at-a-time. | swarnie_ wrote: | You think people are buying up Chips designed to go in to | Toyota cars? | | Surely they're beyond worthless to anyone but the | manufacturer and Toyota themselves? | detaro wrote: | Parent was speaking of the chip shortage in general, which | goes way past cars. Car manufacturers will do what they can | to isolate themselves from the open market (and buy the | numbers and have the political backing to do so), but | demand for non-car parts affects allocation of production | capacity to their demands too. | | > _designed to go in to Toyota cars?_ | | Chips rarely are designed for a specific car, and a car | will also contain quite a few that are not strictly | specific to automotive. | pjc50 wrote: | I'm sure someone's trying to spin up a fab right now, but | that's inherently not a quick process. | baybal2 wrote: | There are tons of n-th tier fabs who seen the shortage coming | 4-5 years ago, and trying to move the ladder in the legacy | processes. | | Rushing to compete with them when they had a 4-5 years | headstart is not a wise decision. | willis936 wrote: | Or cheap. Trying to game a short-term downtick in supply by | spending 100 Bn USD only to come out the other side as not | competitive when you're up-to-speed and your competitors have | an abundance of supply and can undercut you by 20%. | | It's not a winning strategy. | bottled_poe wrote: | Maybe? It seems to me the overheads of establishing a fab | process anywhere near the incumbents are astronomical. I would | guess that even this bottleneck in supply would represent a | minuscule fraction of that overhead. What are the actual | numbers? | phkahler wrote: | >> Maybe? It seems to me the overheads of establishing a fab | process anywhere near the incumbents are astronomical. | | It depends which parts are in short supply. A lot of | automotive parts are still on 20+ year old nodes. 90nm to 130 | or even 180nm. I would guess those are not the parts | experiencing shortages though. So that leaves the fancy | stuff. Bummer if a car can't be built because the | infotainment SoC can't be obtained because it's competing for | production with crypto mining GPUs. | riskable wrote: | > the overheads of establishing a fab process anywhere near | the incumbents are astronomical. | | That's a big opportunity in itself. | mschuster91 wrote: | > But longer term this opens the door wide open for new | competitors in the market and / or vertical integration. | | Not really. Chip fabrication requires _enormous_ upstart cost - | IIRC, TSMC plans with something like 10-20 billion $ - and a | lot of time, to the tune of three years at least | (https://pr.tsmc.com/english/news/2033). There are not many | companies in the world who have that amount of cash lying | around, and even the ones who do like Apple still resort to | using TSMC. | | Not to mention it's not just the machines from ASML and a host | of other vendors plus the cost of building factory-sized ultra | clean rooms, but you also need the expert staff trained to | operate the entire setup _and_ a lot of fine tuning of | parameters which are closely guarded secrets... | dingaling wrote: | > There are not many companies in the world who have that | amount of cash lying around | | Which is why establishing a chip fab to me seems like an | obvious national goal. It's a booming market with costs of | entry that few private companies can afford, why not make it | a national capability? Resilience and profitability in one | package. | mschuster91 wrote: | Even for a nation, that is a _lot_ of money - Germany 's | budget is about 500B EUR, a 10-20 B EUR investment would be | a 2-4% of that. | bluGill wrote: | IT doesn't have to be. You can be producing chips in a month | if you are willing to pay. A clean room can be created, and | the process of making of making chips one at a time in labor | intensive processes is known. Just that nobody is willing to | pay $50k each for their chips, and you need to get that price | to pay for all the skilled labor to make a chip one at a time | in a lab. | | It takes years to setup a fab, but in the end it is a lot | more cost effective, which is nobody is bothering to do the | manual process even though we know it will work. | Neil44 wrote: | I was speaking to a car dealer client the other week and heard | some funny stories, like selling off cheap batches of vans with | various non-essential electronics missing - just holes in the | dash - and the promise that units would be available to fit | later. | m23khan wrote: | Here in Toronto, Canada: | | One fallout of this is the rise in prices of old / used cars. To | give you an idea, a 2018 Toyota/Honda minivan is Canadian dollars | 10,000 higher than pre-covid times. | | It's ok for folks who have a newish car and want to buy another | used car as their current car prices would have increased. But if | you are like me, who drives a 15+ year rusty old car and is | desperate to buy a 3-4 year old car, then good luck. Not only are | the prices much higher (and your car's value is junk) but at the | same time, inventory (even for used cars) is super low. | | I would have loved to live in a City / Country where car is not | necessary but this city I live is built for cars... | | Purely as a joke: | | Maybe car manufacturers should revive the production lines to | produce 1980s Toyota Cressidas, Camrys and Chevy Impalas. | Scoundreller wrote: | Many countries have a funny concept of strategic industries. | | In mine, dairy is a strategic industry that is coddled by | government so that we can have a local source. But every country | thinks that so there's foes and allies that can supply us UHT or | powder milk on a moment's notice. And if our milk supply | disappeared tomorrow, everyone over 1y could substitute with | 10000000 different things for nutrition. | | Cars are another. Every country props up its auto industry, so | why worry about a domestic supply? | | Meanwhile, there are critical components, pharma ingredients or | other inputs built in 1 factory in a country we could likely end | up in a big dispute with. | | Just goes to show that industry protection has nothing to do with | risk/dependence on that product, and everything to do with | picking and choosing which industries are important voting bases. | quadcore wrote: | On that matter, I think (just a not-so-well-informed opinion | but still plausible) most countries should urgently protect | their software development industry and dramatically reduce | taxes on those companies. Because the day US/China automated- | production AIs will get to its prime, nothing produced in your | county will have any value whatsoever beside land. Ferrari and | Rayban? Near-zero market value tomorrow. | fsloth wrote: | "Because the day US/China automated-production AIs will get | to its prime" | | I think this time is quite a bit far off. But eventually will | have sourcing price of just the raw materials. That said and | regarding your next point - | | "Ferrari and Rayban? Near-zero market value tomorrow." | | On this I disagree strongly. Current trend is that IP becomes | constantly more important. So that while manufacturing costs | for said items may tumble, IP laws likely protect the sale of | items branded as such. And the price difference does not | likely result in cheaper prices, but in a bigger revenues. | [deleted] | quadcore wrote: | That's interesting thanks. I guess there is a limit to the | price of IP. Say if the glasses cost $0.50, can you sell | that $400 really? | [deleted] | eloff wrote: | Are you in Canada by chance? I have fond childhood memories of | smuggling cheese across the border from the US because the | dairy protectionism has resulted in prices that are 3x higher. | We used to do that with electronics too, but Canada has no | electronics industry so it's weird why it was so much more | expensive. The gap has decreased in recent years. | cutemonster wrote: | > picking and choosing which industries are important voting | bases. | | And on a bribes and corruption basis, to some extent, too? | | For example, I never thought about what are the strategic | industries, when voting. | mywittyname wrote: | Most voters aren't as rational as you are. Though, I suspect | that you would not vote against your livelihood if it became | a political topic. | | West Virginia has "Friends of Coal" license plates. Indiana | has IUOE license plates. etc. | unityByFreedom wrote: | Indeed. The goal is to _not_ have the government pick | industries. Politicizing who gets aid to any greater degree | would only serve to further subdue innovation. | throwawaygh wrote: | _> For example, I never thought about what are the strategic | industries, when voting._ | | You're clearly not a dairy producer in Wisconsin, a military | contractor in Virginia/Maryland, or a property owner in | Southern Pines, NC. | diveandfight wrote: | Is there something uniquely strategic about property owners | in Southern Pines?? If anything, based on my knowledge, | military contractors would be the strategic play down there | (just as in VA/MD). | throwawaygh wrote: | Camp Mackall, Fort Bragg, the complex around those two, | and an officer corps/civilian contractor base that enjoys | golf. | | I was just giving it as an example of how whole tertiary | industries that aren't directly part of the military- | industrial complex will none-the-less vote (R) like their | lifestyle depends on it, and for the same reason as | contractors. | sandyarmstrong wrote: | Yup! In 2008 I was in my first job, working for a defense | contractor, and my boss seriously could not wrap his head | around the idea of me voting for Obama. In his mind that | should have gone completely against my own self-interest. | | But he also saw the job as a lifetime career, which is | partly generational and partly just a different mindset | because a lot (most?) of the engineers there were former | military. | | I will say, though, that his mindset generally made for a | very friendly and nurturing team experience. | unethical_ban wrote: | Indeed, there seems to be a difference worth noting between | "industries that currently employ a large number of the | population with little transfer of utility to other industry" | and "objectively basic needs for a society". | | I figure there are also different definitions of strategic | depending on the size and capability of an economy. The US is | large and geographically fortunate enough that it theoretically | "could" be almost entirely self-sustaining if it set its mind | to it. Fuel, semiconductors, transport, lumber, food, guns. | guerrilla wrote: | > Indeed, there seems to be a difference worth noting between | "industries that currently employ a large number of the | population with little transfer of utility to other industry" | and "objectively basic needs for a society". | | Did you consider that it's because people need an income to | survive? Employment is objectively a basic need for anyone | who doesn't own sufficient capital being that they have | nothing else to sell but their labor. | unethical_ban wrote: | I didn't say that keeping people employed was a bad thing. | I was making a distinction in definition, not in value. | jollybean wrote: | It's definitely worth keeping a skeptical eye on non-market | interventions, but there are a ton of good reasons for it. | | For auto - companies do not exist in isolation. They're a huge | pillar for other things, especially the local economy. | | If you were the CEO of a 'region' that actually owned all of | the businesses, this would show up in your balance sheet: it | would be perfectly acceptable to lose money in your auto-making | 'division' if it meant that the 'education division', | 'healthcare division', 'civic division' were made profitable. | | Japan also makes a ton of money exporting it's cars so it's | valuable. | | Finance, telecoms, farming and entertainment all have different | reasons for being supported but the impetus in most cases is | rational. | | If anything we probably need more high end fabs and this whole | 'single source with 24/7 operations' is maybe not worth it, we | might just have to be paying a little more for our chips. | nickff wrote: | Highly visible industries tend to get a disproportionate number | of subsidies, because the population can relate to them, and | politicians aren't that clever either. Film and television are | good examples, and fishing tends to get a lot of attention too. | namelessoracle wrote: | Pretty much everyone understands that computer chips are | needed for everything these days though. | | The population can relate just fine. It's just there's no one | rich and powerful who wants to make the investment that is | making it an issue. | Johnny555 wrote: | I'm not sure that the population _can_ relate to building a | semiconductor ecosystem in the USA -- when a state gives | incentives to bring movie production there, people think | "Well look at all of those jobs and movies give our state | great exposure", but when the government wants to spend | billions helping to build a next-gen fab plant here, then | it's like "wait, I paid thousands of dollars for my phone | and computer, why are we paying them to build plants here, | don't we pay them enough!?" | | You may say "But semiconductors are used in far more | devices than phones and computers", but I'm not sure the | average person realizes that. Well maybe they are now when | they can't buy the car they want because it's delayed due | to semiconductor availability. | l33t2328 wrote: | I'm pretty sure the average person knows computer chips | are important. | | > wait, I paid thousands of dollars for my phone and | computer, why are we paying them to build plants here, | don't we pay them enough | | This line of reasoning isn't generally extended to any | other area of production, so I don't see why it would | apply here. | Johnny555 wrote: | Yet there's plenty of people that speak out specifically | against semiconductor subsidies: | | https://foundersbroadsheet.com/does-the-semiconductor- | indust... | | _Supply and demand shocks will work themselves out | fairly quickly if just left to market forces without | government involvement. But a large section of the US | population is under the delusion that if there's a | problem, only government can fix it._ | | https://thehill.com/opinion/international/560338-governme | nt-... | | _One part of the legislation, the CHIPS Act, allocates | $52 billion to subsidize the construction of new chip | factories in the United States. Officials believe it | could result in seven to 10 new U.S. factories. Although | a national security case can be made for it, too much | subsidy can do more harm than good._ | namelessoracle wrote: | People understand just fine. They understand that pretty | much everything they own these days has a computer chip | inside it. | | Using a simple example people understand they can't get | consumer electronics like Xboxs, Playstations, and | Switches because of the electronics shortage. People | understand there is a car part shortage due to | electronics. These aren't high information people talking | to me about this. It's understood there's a chip shortage | right now by the general population. | | People are fine with and nobody really argues that | America should support a steel industry. Frame the | argument the same way and most people would be ok with | supporting a technology infrastructure local to America. | | The other issue that hasn't been touched on is that a | chip subsidy will probably only benefit 1 or 2 states, | where as agriculture and other commodity level subsidies | get spread out so there's less political will to make it | happen. (along with a zero sum attitude in politics that | if X state is getting money it means my state is not | getting that money) | | It's actually a pretty critical geopolitical issue, sense | there's a real chance that China makes a move on Taiwan | soon (soon being within the next 10 years), which will | result in either the destruction of alot of the chip | infrastructure or China with global control over chip | infrastructure. | | I'm kinda surprised countries like Japan and Korea aren't | making moves to address this by starting their own fabs. | (Maybe there are?) | bradknowles wrote: | Note that Samsung is frequently considered to be the | second best chip fabrication company in the world, behind | TSMC. That's part of why Samsung is the single biggest | supplier of technology to Apple. | | Canon is the other major vendor of chip lithography | equipment, but I don't know where their EUV processes | are, or what the major chip manufacturing companies are | in Japan that they would be sourcing for. | jvanderbot wrote: | How much would it cost to set up TSMC inside US borders? One | president cycle? 4 F-35s? One SLS? A nuclear submarine? | | According to this page, sorting by cost, | https://en.wikipedia.org/wiki/List_of_semiconductor_fabricat... | | the most expensive fab is 33 Giga$. TSMC is 17G$. pennies on | the dollar in our 1-3Trillion infrastructure bill. | | Make america fab again. | | EDIT: it appears this is in the 2T infrastructure bill. | https://www.eetimes.com/biden-ups-ante-to-50-billion-for-chi... | blueblisters wrote: | 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. | cogman10 wrote: | The US has a bunch of fab engineers as well. The problem | isn't having the engineers, it's having the actual higher | tech fabs. | bradknowles wrote: | With respect, we don't have that many fab engineers any | more. At least, not of that quality. And most of the ones | we do have are already locked up by other employers, like | Intel, IBM, and the other companies that still have some | fabs here in the US. | | Sure, we can do small scale cutting edge prototype fabs, | but the few production fabs we have here are not TSMC | quality (go ask Intel), and they are already fully | allocated. Many of those might not exist here in the | country at all, if it weren't for the requirements from | the US military and certain other classified customers to | have certain types of chips made here domestically. | | We used to have a lot more fab engineers here in the US, | but we outsourced those jobs and sent them overseas. And | the people who used to do that work have moved on to | other careers, or retired. | | And the reason why Silicon Valley has so many EPA | disaster area cleanup sites is because of the fabs(and | related businesses) that used to be endemic in that part | of the country. Fabs aren't clean businesses to run. | You're going to have to find a place where you can run | those dirty kinds of businesses, and that's either going | to be extraordinarily expensive, or even impossible, due | to legal restrictions on the use of toxic chemicals, | etc.... | | There's a reason why those fabs are overseas. And all | those reasons are why it's going to be extraordinarily | hard for us to pull that work back. There's a reason why | Steve Jobs and Tim Cook have both said "those jobs aren't | coming back". | neither_color wrote: | We pay junior engineers who work at social media companies | six figures so why cant we pay taiwanese fab engineers | enough? | fragmede wrote: | The risk model is different. The cost of setting up an | gorgeous tech company office in pre-Covid San Francisco | is _trivial_ compared to setting up even poor-quality | fab. Not that we (the US) should shy away from doing it - | the Silicon Valley is called that because semiconductors | are made out of silicon, but SV is also full of Superfund | sites (for many reasons, but IC manufacturing isn 't a | light industrial process, and is ridiculously capital | intensive. A few million dollars, and a few months, and | that social media company will have an MVP and started | proving traction in their chosen niche. (It'll take | closer to a decade to _actually_ get somewhere with it eg | tiktok, but MVP can be demoed to investors far sooner.) A | few years, and closer to a billion dollars, and you might | have broken ground on the fab. | 1270018080 wrote: | We do pay them "enough." They do the job for that price. | Why are they not payed more? Consumers care more about | price, and capitalism cares more about the bottom line, | than the ethical treatment of workers. | blueprint wrote: | dont worry - we print USD locally | jonny_eh wrote: | So few people realize the untapped, and unique, power | this provides the US. | [deleted] | robocat wrote: | Surely that depends on the staffing costs versus the | overall costs (interest/financing cost I would be the | largest cost?). | | If staffing costs are 5% of of marginal costs, then making | them 10% is fine if your residual income/profit is high | enough. | | I suspect you put a fab in Asia because you get higher | profitability, not necessarily because you wouldn't make a | profit at all in the US. | | Can anyone comment on what percentage of costs for say TSMC | go on staffing? | jvanderbot wrote: | I agree with your points, but poaching talent is just fine | in my book. And profitability should be considered, but not | required. Most national defense programs are ``profitable'' | in that they are paid by us. Chips are a cheap strategic | win in the scope of things. TSMC's entire operating budget | is a miniscule line item next to the cost of threatening | supply chain to downstream industries, or strategic loss | from TSMC being nationalized by China (or ... going to war | to defend against that) | twobitshifter wrote: | Do you have a source for the best Taiwan engineers working | for minimum wage? | nostrademons wrote: | 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-... | gruez wrote: | > Prices in many foreign countries are wonky though, | because of different cultural & economic systems. | | You should just adjust for PPP. The world bank estimates | taiwan's GDP (nominal) to be 759M, but adjusted for PPP | it's 1,403B. If we do the same adjustment for wages, we | get $3165 per month, or $18.19/hr. | nostrademons wrote: | Even adjusting for PPP is complex though, because | different goods have different cost adjustments. Actually | _buying_ a condo in Taiwan isn 't cheap - I think my in- | laws said it was around USD$500K for a 3BR/2BA in one of | the Taipei exurbs, and can go up past $1M for luxury | condos near a city center. That's close to Bay Area | prices on McDonalds wages. A lot of Taiwanese youth are | pretty much priced out of many markers of adulthood (not | unlike many American Millennials), and can't do much | other than eat, work, and play videogames. To have a | house of their own and a job with the potential for | career advancement, they basically need to wait for their | parents to die. That's not really captured in PPP | numbers, the same way that rampant asset inflation hasn't | been captured in the American CPI. | ericjang wrote: | +1 to these Taipei real estate price estimates. Note that | TSMC is headquartered in Hsinchu County, and I think real | estate is much cheaper there (please fact check me on | this though). | | source: Parents are from Taiwan, and I have relatives in | Taiwan who tell me similar price estimates. | throwawayboise wrote: | McDonald's is paying $15 where I am now, and begging for | applications. | gentleman11 wrote: | McDonald's is also forcing noncompetes on new hires. | Nobody should work for them | | Edit: my source (potus) was mistaken apparently. A better | source is below and involves non poaching and different | restaurants (not McDonald's as far as I can tell) | | > About 80 percent of fast-food workers are constricted | by no-poaching clauses, according to Healey's office. The | other fast-food chains targeted by the states' | investigation are Arby's, Five Guys, Little Caesars and | Popeyes Louisiana Kitchen. | | https://www.washingtonpost.com/news/wonk/wp/2018/07/09/11 | -st... | falcrist wrote: | That was a bogus claim made by Biden. Looks like hourly | employees don't sign non-competes. | | See: | | https://www.factcheck.org/2020/07/bidens-false-claim- | about-m... | | https://www.politifact.com/factchecks/2020/jul/28/joe- | biden/... | zsmi wrote: | 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. | Kye wrote: | Isn't TSMC working on expanding into the US? | cronix wrote: | Yes, but from what I understand, it won't be the most | advanced plant making the smallest feature sizes, so it's | not like Apple is going to be utilizing that plant (maybe | for ancillary chips, but not main processor). | Understandably, TSMC keeps a tight reign on their top-tier | production methods, which is their reason for being #1. | | It's also 3 years away from opening in AZ (2024). Then they | have to fine tune the equipment and processes over x runs. | New plants tend to have low yields until those processes | are smoothed out and perfected. You don't just set up a | plant and start churning out chips with 98% success rate at | 5nm once the factory is built. It probably takes 5-6 years | from construction start to churning out quality chips in | numbers that are actually profitable. | bradknowles wrote: | And the machines they're going to be running take years | to build. And they have to be built custom for each site. | Not just for each site, but also each location within the | site. Just moving a machine a couple of feet can cause | massive delays as they have to effectively rebuild the | machine for the new location. | | ASML has engineers who go out and spend months or a year | or more, just taking various measurements of the location | inside the building at the site where the machine will be | operating. Then those engineers go back to Eindhoven to | oversee the building of that machine from the ground up, | and run through proving cycles. Then the whole thing has | to be taken apart and shipped and then rebuilt at the | site. And then there are months afterwards as the team | does further work and testing before they can finally use | that machine for production purposes. | | The Saturn V rocket was much easier to build and move. | Nothing the rocket industry has can compare to the | difficulty of building and moving these machines. | | Disclaimer: I worked as a consultant at ASML for several | months, helping them to rebuild their Unix infrastructure | systems that they used to support the engineers who did | all that design and build work. | nebula8804 wrote: | Seems like long term the human race is going to lose this | ability if something serious is not done to reduce the | complexity of building these things. This pandemic has | shown that everything is super fragile and with Climate | Change on the horizon I cannot believe they decided to | build this damn thing in Arizona of all places. Maybe the | collapse people were right and we should be working on | CollapseOS | | [1]: https://collapseos.org/ | datameta wrote: | They are indeed, in Arizona. First they are going to have | employees train on-site in Taiwan (will get housing for | themselves and their families for duration). | api wrote: | This makes it easier for the US to spin up more, since we | gain more trained workers who understand these processes. | datameta wrote: | I thought similarly - this is true if we can have | lossless knowledge transfer. I imagine we would have to | put what is learned into practice before translating it | into distributed knowledge for a US fab workforce. | zsmi wrote: | The US does produce ~10% of the global chip supply today, | and much of the equipment used in the world's factories, | and a very significant portion of the software needed, is | made in the U.S.A. This is an economic issue. Not a | knowledge gap. | baybal2 wrote: | > it easier for the US to spin up more, since we gain | more trained workers who understand these processes. | | Given that they will return | phreeza wrote: | I assume that is if you already have the know-how. Starting | from (almost) scratch would require more upfront work, right? | jvanderbot wrote: | The US isn't starting from scratch. And presumably the | total cost includes all the R&D cycles. TSMC was started by | a Texas Instruments employee. | | But, if we assume they were, just double the cost as a | sign-on bonus for all the engineers and poach away. | | This is problem that can be solved with money, and not a | lot of it in the grand scheme of things. | jasonwatkinspdx wrote: | You vastly underestimate the institutional knowledge | necessary to operate state of the art fabs. Intel has | been at the forefront of the field for decades, and even | they are stumbling vs the current challenges. TSMC was | founded over 3 decades ago. That it was founded by a TI | employee says nothing about the situation today. | | The US is subsidizing a TSMC plant here, which should | help the situation, as it'll give us access to their | engineers and cross pollination. But it's still tiny | compared to the need if we want to move the majority of | our chip imports to domestic. | jvanderbot wrote: | I agree that I'm underestimating the startup cost. That's | inevitable, I think. I can only counter by saying that I | think we're also underestimating the benefits of being | self-sustaining at the scale of TSMC, especially with the | changing political landscape re: China. | dan_quixote wrote: | This is a huge hurdle. There is actually some chip/silicon | fab sites that never left (only scaled down considerably | from their peak). A family member has worked at one for | many years as an engineer/manager. When he tells me stories | about the insane complexity of their process engineering it | really hits home. Impurities at the nanometer scale can | ruin 10 million dollar batches of silicon. Nasty chemicals | are piped everywhere at the plant - the kind that explode | if touching oxygen in the atmosphere or acids that dissolve | bone before they noticeably affect your skin. | | Running such a production is difficult. | alfalfasprout wrote: | We're doing it but obviously Taiwan isn't going to give up | their smallest die processes (only older processes) since it | keeps the US at least unofficially allied with them. | eurokc98 wrote: | Reuters previously reported that TSMC plans to build as many | as six factories at the Arizona site over a 10- to 15-year | span. https://www.reuters.com/technology/tsmc-says- | construction-ha... | dave_sullivan wrote: | Government can't make a website, let alone a chip fab. Talk | to Intel and ask them why we've fallen behind. Do any VCs | want to fund a direct Intel competitor? I doubt it. | | Making chips seems to be quite a bit more complicated than | making and launching rockets, I don't think even Elon Musk | could do it. | jvanderbot wrote: | Just subsidize it. I'm not asking for the Fab Czar, I'm | asking for the NSF, DARPA, and national subsidies for it. | Accelerated permitting, tax breaks, tarif support, state vs | national investments, accelerated green cards for key | personnel, and price breaks for a "buy US Chips" initiative | for the first 5 years until things get serious and exports | ramp up. I'm spitballing over morning coffee, but come on, | this seems obvious. | | Exports won't offset operating costs here in the USA, but | perhaps we could apply some ingenuity to that through | national research investments and the ensuing startup | ecology. The ancillary benefits of funding research and | small business infrastructure around the big fabs would be | huge. | | Sandia national labs has a ~3.5 annual Giga$ budget! That's | _entirely_ publicly funded and represents about half of | TSMC's operating budget (https://investor.tsmc.com/english/ | encrypt/files/encrypt_file... , looking at 50% profit | yielding ~12 G$) | pertymcpert wrote: | Why do you keep using Giga $ instead of $3.5bn? | cma wrote: | EUV LLC was already heavily funded by DARPA in the 90s | and is why we are able to have export restrictions on | ASML machines used by TSMC for the latest EUV nodes etc. | bradknowles wrote: | And people seem to be forgetting that ASML is a Dutch | company. It's the worlds leading producer of the chip | lithography equipment, and the other quality companies in | this space are in Japan. | zsmi wrote: | Will this do? https://www.eetimes.com/biden-ups-ante- | to-50-billion-for-chi... | nebula8804 wrote: | We are lucky to have a Dem in office so we at least get | _something_ vs just spinning our wheels. Who knows, the | next republican might just tank this strategy in the long | run anyway. | jvanderbot wrote: | Yes. That's precisely what I'm asking for. | Retric wrote: | The US government manufactures a lot of classified chips in | house. It's unclear what their exact capabilities are, but | looking at funding they could in theory be ahead of the | industry. | thedougd wrote: | The 18F group is more than capable: https://github.com/18F | nebula8804 wrote: | They are probably referring to the Obamacare initial | rollout which predates 18F right? | gregors wrote: | The UK Gov seems to be doing an ok job - | https://github.com/alphagov | bumby wrote: | > _Government can 't make a website, let alone a chip fab._ | | Tbf, many (most?) government websites are built and | maintained by private companies. Remember the ACA website | debacle a few years back? The government was mad at the | contractor for building a shoddy product. They claimed they | would take action against them but I'm not sure anything | happened. If the government should be held to task on | anything it should be an inability to write good contracts | or hold companies feet to the fire. I've heard civil | servants are unwilling to to the latter because they don't | want to hurt businesses or are afraid of legal protests. | wincy wrote: | Anecdotal, I know, but the saddest interview I've ever | done was a state government web developer. I was writing | a js on the whiteboard, setting up a problem that started | something like | | var a = 1; a = 2; | | Before I got any further they blurted out "that's false! | The second line is false" and this was someone who had | been writing production code for the government for the | last five years. | | I honestly just felt really bad for them, more than | anything. | SavantIdiot wrote: | Part of the reason fabs are spread out is capitalism: if you | manufacture the part in the country, you don't pay import | taxes (e.g., Intel's Ireland fab debacle). | | Another part is lax environmental laws. Hillsboro Oregon is | embroiled in a suit with Intel where Intel dumped 100x the | fluorine into the air that they claimed when D1X was first | pitched. Don't need to worry about that stuff in Asia (for | now). | | Also, lead time. The x-ray litho machines take years to build | and test. There are only two companies that make Intel's | testers, and the lead time is years. So a "quick fix" isn't | possible. | | Speaking opinion: in the long term, it is mostly rich people | trying to get richer that caused this. If greedy CEOs and | shareholders would just be humans for once and think about | the future we wouldn't have this trainwreck. That ain't ever | gonna happen. | CamperBob2 wrote: | _Speaking opinion: in the long term, it is mostly rich | people trying to get richer that caused this_ | | And the chips in question exist in the first place | because...? | SavantIdiot wrote: | Because Gordon Moore, Andy Grove and Robert Noyce wanted | to improve integrated circuits to do amazing things with | technology. Not rape the planet to become trillionaires. | You realize there are other motivations in the world for | doing things, other than just money, right? Perhaps you | don't based on your reply. | vondur wrote: | Heck, didn't Apple finance expansion of TSMC so Apple could | ensure that they received priority when ordering chips? | ed_balls wrote: | in a few years there will be 10x number of factories. Covid | just sped things up. It's too critical for army and other | industries. Food and army cannot be outsourced. | dheera wrote: | Cost isn't the issue, it's that we have incompetent buffoons | as presidents these days. | | https://www.youtube.com/watch?v=TuW4oGKzVKc | | That's what a _president_ sounds like. | mhh__ wrote: | Nerva and Orion were both cancelled, it's not like they | just delivered everything. If Joe Biden said _tomorrow_ | "I'm going to wave a magic wand and we will have non-intel | x nm fabs tomorrow" then loads of people would be moaning | about big gov. or the cost etc. | theandrewbailey wrote: | It's not just incompetent presidents, it's incompetent | politicians at every level. | shakezula wrote: | That's not a bug, it's a feature. | | Politicians like MTG and Boebert are part of the system | just to cheapen it. The crazier they are, the more off- | tilt they are, the better the strategy works, the more it | weakens the average Americans faith in the system. This | strategy started with Trump, but it's started permeating | every level of politics. The more wild they act, the more | they can insist that the other side is being just as | crazy. | nebula8804 wrote: | It started with Reagan. People just didn't realize that | it was the boiling frog scenario. It won't end with MTG | and Boebert. | NotSammyHagar wrote: | I agree that a president speaking to goals like that would | be incredible. But he didn't have almost half the country | supporting complete fantastical claims and a decent | fraction trying to overturn elections. | | But look what he did against racism vs Johnson (not that | much compared to J.), and they both still pushed the | Vietnam war. Kennedy had to work around the edges on | entrenched racism to maintain his Democratic majority with | southern votes. At least the parties are more honest about | their proclivities today. | rootsudo wrote: | Well, to be frank, there's precedent for why presidents | won't be like Kennedy. | freemint wrote: | > Make america fab again. | | America does fab. However not newest nodes at high capacity. | It just doesn't take building an identical factory and hiring | away engineers. There is a complete supply chain of | specialist companies which produce or fix the part the part | that goes into a machine that that ... . Not mentioning that | those construction costs are at economies of scale of | building factories. | | Such a thing can't be build in the US as every state needs a | piece of the pie. An US run copy will be more expensive even | when you ignore wages. Extra spare capacity for emergencies | is not sound either. | inglor_cz wrote: | Yeah, people underestimate the complexity of chip | production. It is not one fab that you need to build, it is | an entire ecosystem around it. | | EU has lately been thinking about localizing chip | production here, but they seem to be stuck in the same | fallacy: _we need a huge, gleaming fab on our soil_. No, | that is just the tip of the iceberg, unfortunately. | shadowgovt wrote: | > Every country props up its auto industry, so why worry about | a domestic supply? | | War. In the event a war breaks out, a running auto plant can be | re-tooled relatively rapidly into a light and heavy armor | plant. It's not even a question of whether allies could supply | tanks and troop transports; it's about having domestic capacity | to make them because enemies could execute blockades and | disrupt allied resource supply. | namelessoracle wrote: | I am skeptical that a modern automobile factory could be | converted to make tanks or airplanes at any kind of scale | using current designs. | | The stuff is so specialized and automated now that even the | workers probably wouldn't have much translatable knowledge as | WW2 days. You would i guess have a supply of welders to lean | on at least that would ramp up faster than someone fresh. | | But I doubt a factory that makes modern cars can handle | making M1 Abrams without so much additional tooling and extra | equipment that you are halfway to making a new factory | anyways. (they could probably handle making light vehicles | like cars and bikes at least) | | Maybe if we had mass production style designs that were built | purpose first to get cranked out. But we don't, and there | isn't profit in that for the Military Industrial Complex. | starfallg wrote: | That's the same reason why food security is so high up on | domestic priorities also. If a country is dependant on other | nations for food, then in case of war you just need to target | their logistics chain to starve them into submission. All | those subsidies make sense, if you view the nation-state as | primarily concerned with its own survival. | Scoundreller wrote: | This is Canada. We ain't going to run out of food. | | The funny thing about a centrally-planned dairy system is | that it takes very little disruption to destabilize it. | starfallg wrote: | As a fellow Canadian (living in the UK currently), we may | like to think of ourselves as an independent and | sovereign nation, but we are very much tied to the hip | with the US in terms of defence. Our food security | strategy hence is also aligned as such. | flavius29663 wrote: | this. If you look at all the strategic industry subsidies, | you will see this common denominator. Corn in the US is | stupidly subsidized, so much corn that it ends up in car | tanks. But guess who will not have a famine even if the worst | war + disasters strike? | | Car factories might not make good tanks, but the mechanical | engineers and tooling knowledge is invaluable and can't be | scaled up overnight. | | Same with solar panels, there's a reason both Obama and Trump | imposed protective tariffs. One of the few areas both parties | agree to. PV panels are the future of energy, so you need to | have domestic factories no matter the cost. | hypertele-Xii wrote: | > guess who will not have a famine even if the worst war + | disasters strike? | | _Worst?_ Really? You think corn fields survive nuclear | war? An asteroid the size of you know what? | jbay808 wrote: | > PV panels are the future of energy, so you need to have | domestic factories no matter the cost. | | Another benefit of domestic factories is domestic | innovation. It's much harder for an engineer coming out of | university and going through their career working at an | office computer terminal to ever make a breakthrough | innovation, if they can't step inside the factory to see | how things are really done. | | If that factory is down the street, it's much easier to do | an apprenticeship, get a tour, or chat with the manager | about their pain points. If it's in another country, you'll | have to schedule a formal visit and you'll probably need to | be a very important customer for that to happen. | | Grad students coming out of a research lab would tend to | focus on getting an extra 0.2% cell efficiency, but it's | more likely that the innovation that makes PV competitive | is something like reducing the scrap rate, or figuring out | how to run cells through the QC machines more quickly. | Scoundreller wrote: | > Corn in the US is stupidly subsidized, so much corn that | it ends up in car tanks | | What would the land be doing without subsidies? | freemint wrote: | Serve nature? Keep bio diversity and be a buffer for | nature. | NotSammyHagar wrote: | Except for getting subcomponents and today ics are the | crucial thing. What do you bomb first, the ic manufacturing | of the other side? Or take it away by force (like Taiwan's). | sonthonax wrote: | Is that still true now? | hypertele-Xii wrote: | Armored vehicles are a little over 100 years old invention. | That's only a few human generations. | shadowgovt wrote: | Great question. It's still doctrinally true (i.e. | governments believe it is true; it was one of the reasons | cited for the US federal government buying key stake in | domestic auto manufacturers instead of letting them go | bankrupt during the real estate market crash), but whether | light and heavy armor is _actually_ of military worth in an | era of drones and air power is a question I don 't have the | military training or knowledge to answer. | starfallg wrote: | Yes, because heavy industry produces light and heavy | armour, and heavy industry is also required to produce | military drones and other weapons. | bumby wrote: | Yes, I remember an article on HN a while back that | referenced a DoD report stating a dwindling manufacturing | base as a major national security risk. Related, they track | a "manufacturing readiness" metric | mywittyname wrote: | 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. | onepointsixC wrote: | This is just wrong. | | The US loses many war-games against China in the _short_ | term as China has local numerical superiority of weapons. | US armed forces are spread all around the world while | almost all of the PLA is near mainland China. In the | opening salvos of a Taiwan conflict China would flatten | US bases in the region which would be devastating. | | But long term China is effectively an Island. Its | geography means that it imports nearly everything it | needs by Sea. It imports 10 Million barrels of oil a day. | It is not food secure. It imports nearly all of the raw | materials it needs. While the PLAN could dominate their | near shore, they cannot escort super tankers from the | Middle East all the way back to China. The USN has had a | carrier strike group in the Persian Gulf for decades. | | The missile argument is also just nonsense. | hypertele-Xii wrote: | Explain how a war between _nuclear superpowers_ ends with | anyone _winning?_ | baybal2 wrote: | You have 1 superpower, and 2 upcoming challengers. | | US has enough nuclear munitions to outright defeat 1 | equal superpower in a first strike scenario. | vkou wrote: | > US has enough nuclear munitions to outright defeat 1 | equal superpower in a first strike scenario. | | I wouldn't call half the population of the US dying in 30 | minutes, and most of the other half over the next 30 days | to be much of a 'victory', and I don't want the DoD to | even consider employing anyone who would. | huge87 wrote: | This is in line with my intuitions; do you have any | sources so I can read more? | mywittyname wrote: | Sure! | | https://www.stripes.com/theaters/us/2021-07-27/US-China- | mili... | onepointsixC wrote: | That doesn't support your core thesis that the US will | lose a protracted war and that mass producing missiles is | going to actually led to planes being destroyed. _That 's | not how that works._ | NotSammyHagar wrote: | Notice this resembles somewhat (in reverse) the WW2 | situation with high quality German tanks and Japanese | Zeros etc and the us making many more tanks and planes | compared to the Germans and Japanese. But we are on the | other side of that now. | dylan604 wrote: | How many tomahawks does it take to destory these | factories? | mywittyname wrote: | So, apparently the best opening salvo is to take out USA | comms satellites and that essentially cripples American | offensive capabilities. Modern tomahawks are heavily | reliant on comms networks to hit long-range ground | targets. | | Plus, any destroyer launching these at targets deep in | Chinese territory will be within range of Chinese | missiles. And, as we saw in Syria, Russian air defense | systems are pretty effective against Tomahawks, and we | should expect Chinese systems to be at least as | effective. | onepointsixC wrote: | >So, apparently the best opening salvo is to take out USA | comms satellites and that essentially cripples American | offensive capabilities. Modern tomahawks are heavily | reliant on comms networks to hit long-range ground | targets. | | No they aren't. They were designed with the assumption | that GPS wouldn't be available and instead will rely on | terrain tracking. | | >Plus, any destroyer launching these at targets deep in | Chinese territory will be within range of Chinese | missiles. And, as we saw in Syria, Russian air defense | systems are pretty effective against Tomahawks, and we | should expect Chinese systems to be at least as | effective. | | What are you talking about? We had satellite imagery with | holes in the ground that disproved the Russian claims | that they shot down most of it. | | Nothing you said is factual. | dylan604 wrote: | I can't decide if some of these scaremongering stories | are from the military industrial complex to convince more | funding into new things, or just anti-propaganda to give | pause to rushing into new conflicts. | onepointsixC wrote: | It's neither. The US is in an incredibly bad position | right now because of three decades of under investment. | After closing too many public yards after the cold war | now the USN is barely able to keep up with regular | maintenance during peace time of it's vessel's, let alone | during a war. The average age of most American vessels is | greater than that of their sailors. All while they're | asked to face down the PLAN which now outnumbers them and | is newer. | zsmi wrote: | Probably not too many. But I wonder, are there more | Chinese factories or Tomahawk missiles? I'm not totally | sure. China is a very large country. | dylan604 wrote: | I'm sure the manufacture of tomahawks is pretty much on | stand-by for the order to increase production. Civic | pride and what not. Totally has nothing to do with the | stock price. | NotSammyHagar wrote: | How many subcomponents do they have on hand, especially | cpus? I bet not many. | dylan604 wrote: | So the opening move would be to invade a non-hostile | country to ensure you have all of the chips! Then once | that is secure, you can then target the country you | actually want to have hostilities with. I can see no | flaws with this plan. Execute! | alisonkisk wrote: | Isn't the reverse also true? | lallysingh wrote: | Yup, but that leaves you at a draw for existing assets | and you depend on production capacity after that. | jollybean wrote: | It's definitely not true today in 2010 because auto | plants in 2021 cannot be 're-tooled' to make tanks. | | Also, US China conflict depends on entirely 'where' and | 'over what' and what each nation is holding up it's | sleeve. | | China does not have $50K rockets that it can use to down | 'reasonably stealthy fighters' and as we have seen | before, tactics combined with good tech gives | overwhelming odds. For example, if (big 'if' but entirely | plausible) the US can maintain air superiority in a | particular region ... then it will basically maul | whatever is before it. As just one example. | | China is building 100 subs that are a pretty big threat | to any navy ... but we also don't know about advanced US | tech that may render them completely moot. | | If there is no huge leverage by one side, it happens on | land, and over a long time ... the then 'home team' will | win. | starfallg wrote: | 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. | onepointsixC wrote: | 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. | ak217 wrote: | How does Taiwan block mainland blue water access - any | more so than Okinawa? | starfallg wrote: | China has a plausible pretense to invade Taiwan. Okinawa? | Not so much. | baybal2 wrote: | > 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 | inglor_cz wrote: | Interestingly, fear of Western blockade and interruption | of import of vital resources was what motivated the | Japanese to go to war in 1941. | humaniania wrote: | Nuclear armed countries going to war is supposed to be an | extinction level event. That's the whole point. It's | supposed to be unthinkable. | https://en.wikipedia.org/wiki/Mutual_assured_destruction | baybal2 wrote: | How the essential farma became nearly 100% reliant on foreign | manufacturers is I think the most exemplary case of this | nonsense. | | I read some year ago that there were laws in US which at least | somehow discouraged the pharma from shipping manufacturing | abroad, and it was the big pharma itself which lobbied these | laws out. | | This is how China held US at gunpoint in the early days of | COVID -- "Stay put, or we pull 90%+ of your antibiotics supply" | NotSammyHagar wrote: | I don't think china did that, any supporting news articles? | kevin_nisbet wrote: | Yea this is very interesting. I suspect another side to this | though is I don't know that one country can easily or safely | not participate in this chosen industry support. | | Especially in capital intensive industries, say cars, all of | the competing countries are propping up or bailing out their | auto industries. So even if companies should theoretically die | and get replaced, there is a structural disadvantage as the | competition in other countries has an insurance policy against | companies failing (bailout / subsidy / tariffs / strategic | protection / etc). | imaginariet wrote: | As Taleb likes to say, an efficient system is the opposite of a | robust system, kind of by definition. | | We are now witnessing the effects of our modern hyper-efficient | just-in-time global manufacturing system. | akg_67 wrote: | Actually, Toyota moved away from JIT after 2011 earthquake when | several of it's factories had to stop production due to lack of | parts from other factories impacted by earthquake. One of the | change was increased inventory levels of components. | | Toyota is one of the last automaker to reduce production due to | the current chip shortage, because they had enough chips for | 18-24 months of production. | | Edit: It seems some of Toyota factories in Southeast Asia have | shutdown due to Covid spread in those countries resulting in | shortage of parts supplied to factories in Japan. Reported to | be 40% reduction in production. | patentatt wrote: | And it's the same with our healthcare system and hospitals. | Because they are run as businesses, hospitals are finely tuned | to be mostly full most of the time. When COVID fills up 30% of | your beds, it quickly overwhelms the system and it crumbles. | This is why healthcare needs to be publicly owned, because | robustness is necessarily inefficient, and inefficient is | incompatible with capitalism. | imaginariet wrote: | In UK, where NHS is publicly owned, it was actually policy to | have 90% occupancy of ICU beds. If it was less than that, the | "extra" beds would be removed. | iamgopal wrote: | Why ? What's the rationale ? How they arrived at 90 percent | figure ? | KuiN wrote: | Do you have a source for that quite extraordinary claim? | monocasa wrote: | Not the parent, and not a backup for the specific claim, | but I know that Tory governments since Thatcher have been | taking the strategy of misapplying business efficiency | tactics to NHS, then when they don't make sense and cause | worse outcomes claim that it's because government was | involved at all and call for privatization. | infamouscow wrote: | From a public health standpoint it makes more sense to have | two hospitals with 100 beds at 90% capacity than one | hospital with 300 beds at 60% capacity. It's leads to | better patient outcomes to have the hospital staff work | overtime compared to rapidly hiring and training new staff | whilst the hospital is being overrun. | HideousKojima wrote: | Robustness isn't incompatible with capitalism, it's | incompatible with any system where the government is willing | to swoop in and bail out companies that fail. Companies that | plan around failures/shortages/disruptions lose the ability | to profit from their planning, while those that didn't plan | ahead get showered with free money or cheap loans. | whall6 wrote: | I don't understand why this is getting downvoted | considering this is almost verbatim what Taleb preaches. | WillPostForFood wrote: | he forgot the trigger warning: this post does not blame | capitalism for all modern ills. | peytn wrote: | No, the government restricts facility size. Look up | "Certificate of Need laws" if you'd like more information. | monocasa wrote: | Those exist because the hospitals are privately owned. An | area doesn't want hospital companies getting into a pricing | war and then both going under leaving the area without | hospital service at all. | | There'd be no reason for it with a public health care | system. | monocularvision wrote: | The government tries to keep medical care expensive to | avoid competition that might result in some instability | so the cure is ... government running health care. | [deleted] | boramalper wrote: | Relevant: _The Security Value of Inefficiency_ by Bruce | Schneier | | > This drive for efficiency leads to brittle systems that | function properly when everything is normal but break under | stress. And when they break, everyone suffers. The less | fortunate suffer and die. The more fortunate are merely hurt, | and perhaps lose their freedoms or their future. But even the | extremely fortunate suffer -- maybe not in the short term, but | in the long term from the constriction of the rest of society. | | https://www.schneier.com/blog/archives/2020/07/the_security_... | monkeynotes wrote: | Actually Toyota's manufacturing process was changed after | Fukushima and was one of the only companies that plans for | situations like this: | https://www.autoblog.com/2021/03/09/toyota-how-it-avoided-se... | | Edit, what the other poster said. | AzzieElbab wrote: | yeah, but about everyone else? | sumtechguy wrote: | They now learn the lesson Toyota learned in 2011. | wiz21c wrote: | You should be upvoted 100 points. That's the elephant in the | room. Basically selfish behavior lead to global problem. So no, | we can't let big corps rule the world alone. ___________________________________________________________________ (page generated 2021-08-19 23:01 UTC)