One Million Missing Cars, One Million Times More Processing Power

Written by Adam English
Posted September 9, 2021

Supposedly this was going to be over by the end of the year, yet here we are.

General Motors is idling six plants this month, four in the U.S.

Ford is idling a plant near Kansas City.

Toyota is slashing worldwide production by 40% this month.

This is not going away, and even when this crisis eases, the next is already looming.

A handful of car companies are doing better than others, but none are being spared.

Tesla blamed supply chain problems for delaying a new version of the Roadster to 2023.

Volkswagen's CEO is saying it is losing market share in China. Daimler is hurting. The list could go on and on.

Worldwide numbers are fuzzy, but the chip shortage has impacted the production of more than a million vehicles in the U.S. alone, be it delays or cancellations.

The U.S. adjusted selling rate for the month has plummeted to 13.09 million vehicles last month, down from a peak of 18.5 million in April. Inventories remain at historic lows with no chance for a recovery in sight.

Ford in particular is hard hit, especially its iconic F-150 line. Even as car and truck prices soar, its August sales fell by 33.1% year-over-year.

Ford Europe's chairman of the management board thinks this won't still be going in 2024. Even that may be wishful thinking.

New electric vehicles are far more complex than the gas-powered economy models being made today that all these companies are planning on phasing out.

A Ford Focus uses about 300 chips for various functions throughout the vehicle. Ford's new EV designs use 3,000.

Similar increases are in the works for any and all carmakers that are trying to capture the ballooning EV market share in the next couple decades.

Even if chip makers could meet today's demand, there is an even greater need to fulfill, and chip production lines take years and billions to build. A stubborn shortage was around even before the pandemic and booming car and truck demand.

We'll be hearing about shortages year after year after year.

Part of the solution is in simply ramping up existing design production, but that won't be enough beyond the short-term.

We'll also need to see more advanced chip designs put into use to drive efficiency and processing power. Far more than most people understand yet.

From cars to computers to phones to seemingly mundane household appliances, everything will be affected.

This chip shortage promises to be the start of an industry-wide move away from silicon-based wafers in high-tech applications.

We've hit the limit to what silicon can do, quite literally. The physical properties of silicon don't allow transistors to be packed any tighter onto chips. Some now pack 50 billion transistors two nanometers apart in the same area as your thumbnail.

Moving to a different base for the chip design unlocks further gains that are essential to modern electronics manufacturers want to make today.

The need is staggering. As top Google engineer Jeff Dean explains, “It turns out that [we need] more than one million times the computing power of the present, not just a tens-of-times increase.”

Silicon wafers won't get us there. Not by a long shot.

Carmakers may have been blindsided by the limitations of chip makers and may be still ignorant of the ongoing crisis that is coming, but a legendary branch of the U.S. Department of Defense is not.

It is already investing seed money in companies that can push chip design into a new era with its Electronics Resurgence Initiative.

Only a handful of companies were putting some serious work into this new field, and they're poised for years of exponential growth.

One in particular stands out as a winner to the Outsider Club's Jimmy Mengel, and his research is already paying off for his Crow's Nest readers.

Take care,

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Adam English

follow basic @AdamEnglishOC on Twitter

Adam's editorial talents and analysis drew the attention of senior editors at Outsider Club, which he joined in mid-2012. While he has acquired years of hands-on experience in the editorial room by working side by side with ex-brokers, options floor traders, and financial advisors, he is acutely aware of the challenges faced by retail investors after starting at the ground floor in the financial publishing field. For more on Adam, check out his editor's page

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