Elon Musk says the chip scarcity is a “short-term” drawback
Elon Musk, CEO of Tesla Motors, speaks to the media next to his Model S.
Nora Tam | South China Morning Mail | Getty Images
Tesla CEO Elon Musk said Friday that the ongoing semiconductor crisis will be over next year.
The tech billionaire said he saw chip shortages as a “short-term” problem rather than a long-term one.
“A lot of chip factories are being built and I think we’ll have good capacity by next year,” Musk said at an Italian tech event that was streamed online on Friday.
Musk did not specify which chip plants he was referring to.
Chip heavyweights Intel and TSMC have announced plans to build new plants in the US, but they won’t go online for a few years.
Glenn O’Donnell, vice president research director at consulting firm Forrester, believes the shortage could last through 2023.
“Because demand will remain high and supply limited, we assume that this shortage will last through 2022 and 2023,” he wrote in a blog post in April.
The global chip scarcity is having a major impact on a wide variety of industries, but the automotive sector has been particularly hard hit. Big names in the industry such as Ford, Volkswagen and Daimler had to stop production at various points due to a lack of chips and cut their production targets.
Impact on Tesla
During the company’s first quarter earnings, Musk said Tesla had some supply chain issues before referring to the chip shortage.
“This quarter, and I think we’ll continue to see this a little bit in Q2 and Q3, had some of the toughest supply chain challenges we’ve ever faced in the life of Tesla, and the same difficulties with the supply chain, with parts – across the board Range of parts. Obviously, people have heard of the chip shortage. It’s a huge problem. “
Consulting firm AlixPartners forecast this week that chip shortages will cost the automotive industry $ 210 billion in sales this year alone.
“Of course, everyone was hoping the chip crisis would weaken by now, but unfortunate events like the COVID-19 lockdown in Malaysia and ongoing problems elsewhere have made things worse,” said Mark Wakefield, global co-head of automotive and industrial Practice at AlixPartners, in a statement.
Automobile manufacturers use semiconductors in everything from power steering and brake sensors to entertainment systems and parking cameras. The more intelligent the cars get, the more chips they use.
In 2019, Tesla began producing cars with custom AI chips that help the on-board software make decisions in response to what’s happening on the road.
Musk said in July that Tesla’s Powerwall product, a household backup battery, is “lagging” due to chip shortages.