Notes From All Over -- "We're Mad As Hell, And We're Not Gonna Take It Any Longer" Edition -- January 14, 2021

UK: Boris Johnson given bombshell warning -- lift the lock down or face leadership threat. Enough is enough. His days are numbered unless ... link here -- from MP who ousted Theresa May. 

Panama Canal congestion: link here. 

Chips: semiconductors in short supply -- The WSJ. When I first decided to add "chips" to the list of those things that I wanted to track in 2021, I had no idea this is where we would end up: a huge shortage. I was mostly interested in the Apple M1 chip. But now, the big "chip" story is the global shortage. Toyota has already shut down production in China due to the shortage and now says the shortages could continue through the spring. Look at this: Taiwan Semiconductor Manufacturing Co -- TSMC -- wow -- 

Semiconductor companies are asking their customers for patience as the industry works through a sharp increase in demand from makers of everything from cars to consumer electronics.

The chip shortage has caused prices to rise for certain semiconductors, delays in filling orders and auto makers to idle factories. If the problems persist, consumers may see delays in getting new cars and some electronic devices, and possibly higher prices.

There is no quick fix to the situation, either. Adding new chip-making machinery can be expensive and slow, and some of the deepest supply problems are taking place with older production lines that are less lucrative for manufacturers.

“In the whole semiconductor industry there is very little [spare] capacity right now—everything is doing well,” said Risto Puhakka, president of VLSIresearch, an industry-analysis firm. “We’re coming off a record investment year, and the demand continues to grow.”

The shortages add to the upheaval currently affecting the semiconductor industry. Intel Corp. this week outsted its chief executive, Bob Swan, after product delays, and mobile-phone chip giant Qualcomm Inc. added to a deal-making frenzy.

Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip maker, said Thursday it was working with the car industry to address critical shortages. Chief Executive C.C. Wei also said TSMC’s customers are likely to boost chip inventory to protect against future bottlenecks. The manufacturer said it was boosting capital investments by at least 47% this year from 2020 amid surging demand.

Suppliers as diverse as graphics chip maker Nvidia Corp., America’s largest semiconductor company by value, and NXP Semiconductors NV, a Dutch supplier of automotive, industrial and communications chips, are being affected by supply crunches.

Demand for laptops has skyrocketed, and remote work during the Covid-19 era has increased appetite for cloud-computing services and the data centers behind them. On top of that, a surge in demand for chips that go into new 5G phones has put a squeeze on manufacturing capacity, chip companies say. And U.S. restrictions on Chinese telecom giant Huawei Technologies Co. led competitors to try to steal market share.

Much more at the link.

 Bloomberg: missing chips snarl car production at factories worldwide.

After first wiping out auto demand, the virus is now hindering parts supply: chips used in vehicles are harder to come by because semiconductor manufacturers allocated more capacity to meet soaring demand from consumer-electronics makers such as Apple Inc.

And while the newest cars require more chips, so do the latest consumer gadgets. Smartphones using so-called 5G connectivity require 40% more semiconductors than older 4G versions. Chip foundry Taiwan Semiconductor Manufacturing Co. reported record fourth-quarter revenue last week, with new 5G iPhones taking up a large chunk of capacity.

The auto-chip shortage stems from overly conservative demand estimates made early last year as car plants closed to cope with the onset of the pandemic, De Vos said. Once the plants re-opened, vehicle sales rebounded more strongly than anticipated after governments unleashed stimulus packages and commuters avoided public transport.

Toyota, the world’s No. 2 automaker, said the impacted lines were at its factory in Guangzhou, in China’s south. The suspension could result in a cut in January’s output of as much as 30% depending on how long it drags on, the Nikkei reported earlier Tuesday, without attribution. Toyota jointly operates the site with Guangzhou Automobile Group Co. Toyota is additionally lowering output of a pickup made in Texas.

Honda, which had to scale back output at its U.K. plant last week, said it will reduce manufacturing of the Accord, Civic and Insight sedans, as well as the Odyssey minivan and Acura RDX, a crossover sports-utility vehicle. The Japanese automaker is also reducing output by about 4,000 cars at a domestic factory, while Nissan Motor Co. is adjusting production of its Note hatchback.

VW said last month it would have to change manufacturing plans. Fiat Chrysler Automobiles NV is temporarily closing a Canadian plant and delaying the restart of output at a Mexican Jeep factory until the end of January.

In North America, Ford is idling a SUV factory in Kentucky.

Semiconductor-based components are set to account for more than 50% of a car’s manufacturing cost by 2030, up from about 35% now, according to a report by China EV 100 and Roland Berger.

Much more at the link.