To lower the shortage of chips V or increase the additional chip supply I, roadblocks R need to be removed.
Even in retirement, the things I learned in school prove very useful. Take Ohm’s Law, V = I × R. It means: If you apply a voltage V over a resistance R, a current I will flow proportionally to the voltage. This law not only works for electricity but also for rivers and garden hoses. And for understanding the current worldwide shortage in semiconductors.
The shortage can be seen as a voltage V. Applying Ohm’s Law, a current I of additional chip supply starts running depending on the resistance R. Therefore, to speed up fixing the shortage, R must be lowered. In other words: get rid of the roadblocks.
If the biggest three semiconductor companies Samsung, TSMC and Intel build chip factories, resistance R will become lower. These companies work very efficiently and can add capacity both fast and reliably. Note that it takes at least three years after breaking ground before a new fab starts producing chips. But the chips are needed today – to build cars and other products to keep the economy running.
Another way to lower V, the difference between supply and demand, is to lower demand. As a thought experiment, we could stop buying bitcoins. The exchange rate will plummet and mining them won’t be worthwhile anymore. The server farms can now be deployed for more useful things, so demand for new server farms, and chips for servers, goes down. A quick win! A nice side effect is that the 130 TWh (!) per year these server farms need can also be redirected towards something useful.
America’s efforts to block the construction of semiconductor factories in China by depriving the country of state-of-the-art equipment, however, only increase R, making the problem worse. The US and Europe building their own fabs will hardly lower R either, maybe even increase it, because startup problems and the lack of a supportive local ecosystem will cause these factories to run at suboptimal efficiency for at least a couple of years. Setting up local semiconductor factories is a hobby of politicians who want to be “strategically autonomous” and “technologically sovereign.” They want to play with the big boys, at any cost.
Car manufacturers have been very arrogant in the past and mistreated their subcontractors. Now they’re paying the price. They misinterpreted the consequences of the corona crisis and canceled orders. When they realized their mistake, just-in-time delivery wasn’t available anymore. As a solution, they want to make their own chips to avoid non-delivery. This will result in R increasing as car manufacturers really don’t know how to do that. It’s a highway to disaster.
Regular cars today are estimated to contain 100 million lines of code. The software for an F35 fighter jet amounts to about 25 million lines. In my humble view, a fighter jet is much more complicated than a car, so clearly, car software is much too complicated.
Running these lines of automotive code requires a considerable amount of complex onboard computer systems. As a result, every car carries a lot of chips that do effectively nothing. Maybe car manufacturers should downscale their onboard systems at least by a factor of two. Then the chips that aren’t needed anymore don’t have to be purchased, and the production of cars can start again without a shortage of electronics.