Assessing Semiconductor Supply Issues, Giga Berlin Battery Update

Automatic TRANSCRIPT

Everybody robbing our here and today we're going to be talking about the semiconductor supplier issue that has been affecting the automotive industry as a whole and we do have a few other topics to go through as well. This is a live episode because after we go through this. I do have some thoughts to share. But i thought it'd be best shared live so we're gonna do the kind of normal episode structure But it will be live so bear with me as always but we'll get into it will start off just looking at the stock today so finish down five point three percent to eight hundred and four dollars eighty two sons. I compare to the nasdaq which is on the video. But down a quarter of a percent so it was a tough day for tesla today especially relative to the broader market other automakers. Did you know at least the ones. I looked at fare worse than the market today as well thing. Gm ford were right around down to percents neo. Probably in that ballpark as well So i don't know that this drop was entirely isolated to tesla but certainly tussle moved a little bit further perhaps related to the supply of semiconductor. So let's move into that topic For whatever reason. I've had i don't know fifty to one hundred people. Ask me about this over the last two days whether that's in the youtube comments or on twitter or on patriae on a lot of people for some reason seem to be incredibly interested in this in the last forty eight hours even though this has been something that's been discussed in the automotive industry since back in mid december And tesla has already talked about it a little too so we'll go through tussles comments. I'm here as well. So essentially what's going on. I'll go into some links here in a second. But what's going on here is that there is the semiconductor supply shortage which is a factor of multiple different things that factored into it so primarily what has been driving it is two things the pandemic and then the rise in some areas of consumer electronics. So the work from home movement during the pandemic has caused increase supply for things like laptops and stuff like that. That people are upgrading for working from home. The five g cycle with phones has caused an increase from what i gather in semiconductor needs and then the next generation consoles with the xbox one whatever it's called now and the bs five launching those things have worked together to create more more demand in the consumer electronics base and then in the automotive space because of the shutdowns that were experienced in the first half twenty twenty the a lot of automakers cut their orders or their contracts with semiconductor suppliers to help get through that period of time. So what that is caused. Is those autumn those suppliers to necessarily want to cut production. And things like that. They worked through Their safety stocks. So let's let's get into you some comments here from Chipmakers the first one. That i wanna look here. This is from microchip technology. So this is from a couple of weeks backer. Just not only one week back. But they kind of talk about how they got into the situation that they're in In terms of semiconductor in the automotive supply chain so they're talking about how their customers generally pulled back very hard. During the pandemic there was no backlog visibility in this environment. They had no choice to down inventories and safety stock to protect themselves from what looked like severe economic contraction and they saw similar similar actions from their suppliers that worked that they were together for Actually producing their semiconductors so they said during his time no one in the industry was adding capacity. Obviously given the uncertainty about win things would recover And that uncertainty extended significantly as the bottom of market as well so one of the things that they talk about here. That will come back. A little bit later is that they're offering this microchip. Preferred supply program called bs to offer the prioritized capacity to companies. That are willing to work with them. To order. twelve months of continuous non cancelable non reschedule will supply So they're not guaranteeing capacity for that but they're prioritizing people that are willing to make those longer term commitments and because if we rewind it back to the for salvatore nineteen because other because a lot of other because a lot of automakers were uncertain about their demand they were unwilling to give a lot of certainty to these two suppliers. So that's kind of brought the semiconductor situation into where it is today and they're trying to work through this now and that's impacting. A lot of different automakers couple other quotes here just from people in the industry so this one is from continental Major supplier in the space. They're talking about lead. Times for semiconductors saying what with lead times of six to nine months. The semiconductor industry has not been able to scale it fast enough to meet this unexpected growth. In automotive demand which really is a return to previous levels not necessarily new growth than they continue saying quote the bottlenecks from the semiconductor industry expected to continue well into twenty twenty one causing major disruptions and continentals production. So that gives us a bit of a timeline in terms of how this issue looks. We don't necessarily have a scale from that. Then let's move into one of their quote here. This is from Tmc one of the obviously major manufacturers. I think they do like seventy percent of some semiconductors or something like that so specific to their automotive customers They continued to decrease demand for cms t s emcees semiconductors in third quarter of two thousand nineteen. The chipmaker only began to see southern recovery automotive orders in the fourth quarter. Their ceo said earnings call earlier this month

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