[HN Gopher] Chip shortage: Toyota to cut global production by 40%
___________________________________________________________________
Chip shortage: Toyota to cut global production by 40%
Author : midnightcity
Score : 492 points
Date : 2021-08-19 11:15 UTC (11 hours ago)
(HTM) web link (www.bbc.com)
(TXT) w3m dump (www.bbc.com)
| ceva wrote:
| That is good news for planet earth!
| folli wrote:
| Why? Because older, less efficient cars are being kept on the
| road for longer?
| thrwyoilarticle wrote:
| The question of whether to keep an old car or buy a new,
| cleaner car is difficult, with many important unspecified
| variables such as who 'owns' the emissions due to the
| manufacture of a car (the manufacturer? the first owner? all
| owners?).
|
| This isn't true for mileage though. If you move closer to
| work, your commute will emit less.
| RutZap wrote:
| I believe that driving an old car for longer has a smaller
| environmental impact than consistently driving newer cars as
| the bulk of emissions is during the manufacturing process. I
| have no data to support my statement, it's just my hunch. I'd
| be very keen if someone with the right knowledge can approve
| or disprove my statement.
| Tade0 wrote:
| The opposite is true - the manufacturing process is
| responsible for an average of 7-10 tonnes of CO2, while the
| same vehicle over its lifetime will emit more than 50
| tonnes from the exhaust.
|
| Moreover manufacturers have been reducing their carbon
| footprint lately. As an example VW reports that 70% of the
| energy the use in plants is provided by renewable sources.
|
| That being said while emissions rules have been getting
| more stringent over the years, they're increasingly being
| followed through introducing EVs, not improvements in
| engine efficiency.
| lostapathy wrote:
| > As an example VW reports that 70% of the energy the use
| in plants is provided by renewable sources.
|
| This is a great start, but not where most of the carbon
| embodied in a new vehicle comes from. The energy used by
| the VW plants keeps the lights on, air conditioned, and
| powers tools for assembly. Most of the carbon embodied in
| a car comes from the energy it takes to mine raw
| materials and process them into useful metals.
| burntwater wrote:
| This seems to be the crucial bit that is always missing
| from these discussions. I don't doubt that the CO2
| emitted in the assembly of the car is less than in the
| driving. But I'm curious about all the other
| environmental impacts (of which CO2 is just one small
| bit). The destruction of wildlife habitat, the poisoning
| of ground water, etc, that's involved in the retrieval
| and processing of the raw materials, on up through the
| chain.
| Tade0 wrote:
| > Most of the carbon embodied in a car comes from the
| energy it takes to mine raw materials and process them
| into useful metals.
|
| Yes, and that is included in this estimate.
|
| Producing a tonne of steel emits 1.85t of CO2. The
| estimate for mining and processing is "just" 270kg/t:
|
| https://www.researchgate.net/publication/324486263_Analys
| is_...
|
| This pales in comparison to the 20 tonnes of fuel a
| typical car is going to work itself through throughout
| its lifetime. And all this fuel has to be first extracted
| and refined.
| zelos wrote:
| Not true at all, ~80% of emissions from an ICE car are from
| using and servicing it.
|
| https://www.iea.org/data-and-
| statistics/charts/comparative-l...
|
| Looking at that chart I think you could build a brand new
| ICE car, throw it away, build an EV and drive that instead
| and still come out ahead?
| lotsofpulp wrote:
| > Vehicle assumptions: 200 000 km lifetime mileage
|
| I was under the impression decent quality ICE vehicles
| are proven to last at least 320k km these days, and can
| easily last 15+ years.
|
| Have electric vehicles even been in use long enough to
| have sufficient data to compare?
| caf wrote:
| If we take as given that _" decent quality ICE vehicles
| are proven to last at least 320k km"_, then after
| accounting for both vehicles that are less than decent
| quality, and vehicles destroyed due to accident,
| malicious damage or poor maintenance long before they
| reach that figure, then a fleet average of 200,000 km
| doesn't seem out of the question.
| lotsofpulp wrote:
| The same factors would seem to apply to EVs (except
| perhaps poor maintenance, but I am not knowledgeable
| enough about EVs to be sure), so for the purposes of
| comparison, I figured apples to apples would be comparing
| expected lifetimes of both assuming they are not abused
| or neglected.
| caf wrote:
| It seems to me that they are using an expected lifetime
| (in the "expected value" sense) of 200,000 km for both
| types of vehicles.
|
| If those factors apply equally and dominate the reasons
| vehicles reach EOL, then the expected lifetime not
| varying significantly between the vehicle types looks
| like a reasonable assumption.
|
| Using the real expected lifetime taking into account the
| circumstances that tend to render a vehicle permanently
| unserviceable in the real world looks like the correct
| approach to determine how manufacturing costs are
| amortised over the vehicle lifetime.
| ghaff wrote:
| "Easily"
|
| At least for a snowy area, those numbers are probably on
| the high side for reliable transportation but not 2x on
| the high side.
|
| Presumably, an EV would at least need a battery
| replacement well before that point.
| lotsofpulp wrote:
| I presume an EV would rust the same as an ICE due to road
| salt/ice melt.
| istjohn wrote:
| Electric vehicles are far simpler mechanically, so I
| expect they will last much longer.
| metalliqaz wrote:
| only if they have been built to do so.
|
| the same busted (and hard to repair) body parts will
| occur in both. Think AC, window motors, lamps and
| switches, etc.
|
| plus, none of the manufacturers seem to be investing in
| easily replaceable batteries. They'd rather you buy a new
| car. May as well right? the batt replacement is 60% of
| the cost!
| bottled_poe wrote:
| Still better for the environment by decades.
| chrisseaton wrote:
| We're trying to switch everyone to electric. That's not going
| to happen if we can't build new cars.
| lotsofpulp wrote:
| A far better way to reduce energy consumption is to not move
| mass in the first place.
|
| Not building new cars certainly helps with that goal (since
| older working ICE cars do not junked anyway, they just go to
| someone else).
| riskable wrote:
| Well Toyota, specifically made bets that the world would
| _not_ be moving to electric cars and thus, aren 't producing
| them.
|
| So yeah, Toyota (again, specifically) reducing production
| actually _is_ better for the environment.
| phkahler wrote:
| And here I was picturing a 4-axis machine...
| belter wrote:
| "Porsche will provide cars with 'fake chips' to reduce delivery
| times"
|
| https://news.ycombinator.com/item?id=28042518
| laydn wrote:
| That makes no sense. I wonder what they mean by "fake" chips?
| Are they simply not placing the chip on the board, or are they
| using a footprint compatible different chip (unlikely), or are
| they completely redesigning the board with another chip which
| has much better availability? (most likely)
| jtbayly wrote:
| Or leaving out the infotainment system.
| detaro wrote:
| Presumably they are building cars but leave entire modules
| out, and then fit them later as supply arrives. Has some
| benefits over stopping production, if you can afford to have
| a stockpile of cars around.
| nickthemagicman wrote:
| I looked for a simple non-electronic car recently to buy, and
| found out that the government has mandated numerous safety
| systems requiring electronics like backup cameras, no seatbelt
| alarms, blind spot monitoring, lane assist etc, and in the
| upcoming infrastructure bill there is a rider to add
| breathalyzers to every new car made in America. (ref below)
|
| Is there an officially designated cost/reduced risk ratio that
| policy makers can go by to determine if a regulation is worth
| while?
|
| Is a regulation that costs 1 billion dollars to save 10 lives at
| 100 million a life considered worthwhile?
|
| Is a regulation that costs 1 billion dollars to save 1 million
| lives at a cost of 1000 a life worthwhile?
|
| Is there even an officially designated cost per life saved for
| new safety regulations?
|
| If not it seems like a slippery slope, and the government can
| never overreach as long as it can justify the regulation by
| saying it saves a single life.
|
| Reference: https://time.com/6086981/bipartisan-infrastructure-
| bill-brea...
| frankchn wrote:
| The DOT and the NHTSA considers that value to be $6.3 million
| per "statistical life" in 2009 dollars [1]
|
| [1]:
| https://www.nhtsa.gov/staticfiles/administration/pdf/Value_o...
| selimthegrim wrote:
| You might want to look up the marginal cost of a backup camera
| what with CCDs these days
| nickthemagicman wrote:
| The manufacturers add a significant markup I imagine.
|
| My original point is what's the cost benefit ratio boundary
| of enforced safety laws?
| throwaway894345 wrote:
| What are these chips and what is preventing us from scaling up
| capacity? I'm not challenging that it's difficult, but the
| reporting seems shoddy. Maybe I'm the only one who wants to
| understand this stuff, but these kinds of questions always seem
| obvious to me (same with COVID vaccine manufacturing).
| acdha wrote:
| Here's a good rundown: it ultimately all comes back to chip
| fabs being huge operations with massive upfront costs which
| makes them sensitive to both the pandemic's direct effects and
| secondary problems like the way the auto manufacturers slashed
| orders in 2020, forcing the chip manufacturers to sign other
| contracts to avoid idling that much capacity[1], and unrelated
| problems happening at the same time like cryptocurrency pulling
| capacity away from useful applications.
|
| https://www.eetimes.com/the-chips-are-down-with-no-relief-in...
|
| 1. I'm not sure how much of this has been independently
| verified but this commenter blames the auto manufacturers
| heavily: https://news.ycombinator.com/item?id=26931498
| throwaway894345 wrote:
| That's a really good HN comment, thanks for sharing!
| aazaa wrote:
| > Taiwan Semiconductor Manufacturing plans to build new factories
| in the US and Japan
|
| I can't help but think that this massive shortage is setting up
| and equal an opposite reaction 2-3 years down the road: a glut as
| all this new capacity comes online. Especially given that because
| companies are now scrambling for chips, they're likely to over-
| order to ensure future supply.
| melfrey wrote:
| Will the car price starts to increase due to the chip shortage?
| avelis wrote:
| Price increases already happened in the US for used cars. This
| will only continue the premium for used cars.
| stevewodil wrote:
| Why is it not affecting new car pricing as dramatically? And
| why would that continue? Used car prices cannot surpass new
| car prices surely, so at some point new car prices will be
| raised because of the low supply and high demand, or new car
| orders won't be fulfilled for months later
| bluGill wrote:
| Used cars have surpassed new car prices in the past.
| Generally because new cars can't actually be bought at any
| price. A car today is sometimes worth more than a better
| car that doesn't exit.
| baxuz wrote:
| Ordered a Yaris Hybrid in June.
|
| Still no info on the order, except that the factory in France is
| on shutdown in August till the 23rd. Except:
|
| > Until now, Toyota had managed to avoid doing the same, with the
| exception of extending summer shutdowns by a week in France
|
| Which means it reopens in September...
|
| > Toyota is to slash worldwide vehicle production by 40% in
| September because of the global microchip shortage.
|
| Oh boy. Hopefully my order is in one of the first in the queue.
| varispeed wrote:
| There is a lot of scalping going on. I keep an eye on certain
| parts and as soon the stock comes up, it disappears within
| minutes. Then you can buy all those chips on AliBaba at 10 times
| the price. I think government should look into that as this is a
| huge problem for many businesses.
| rcMgD2BwE72F wrote:
| On one hand, Toyota buys so many chips that their supplier will
| probably prioritize their orders.
|
| On the other hand, Tesla is tiny compared to Toyota but is
| probably more flexible and can adapt faster, e.g by using alt
| chips with new firmware and by using fewer chips per vehicles (to
| be proven, but we know Model Y has half the number of ECUs of
| Mach E / ID.4 for instance).
|
| Also, without dealers, Tesla could better manage their build-to-
| order system and pricing (to push customers towards high margin
| vehicles and forgo volume growth while the shortage continues)
| itsoktocry wrote:
| > _to push customers towards high margin vehicles_
|
| Wait, isn't this what people tell us is wrong with dealerships,
| and why the Tesla method is superior?
| rcMgD2BwE72F wrote:
| Not a sales method, just raising price on the cheapest
| models. I meant pull not push.
| JKCalhoun wrote:
| So the new car thief will yank the computer(s) out of newer cars,
| sell them on the black market.
| bluGill wrote:
| No, because the computer is tied to the VIN, and you need a
| dealer to change that. Dealers will check to see if the VIN is
| stolen.
|
| Not all cars have that, manufactures have been using the above
| to stop theft for years.
| 1-6 wrote:
| My Toyota Prius is still sitting around without a catalytic
| converter on it. Procrastinating because I'm not being called
| back to the office yet.
| waterside81 wrote:
| Can someone explain to me why this wasn't the case before covid?
| Are the companies who are ahead of the automakers "in line"
| ordering more than before covid?
| Saturdays wrote:
| Simplest answer: Demand has gone up overall for technology like
| tvs, computers, game consoles, etc... Meanwhile, during covid
| the ability to scale (production and supply chain) to meet that
| demand has been difficult.
| bluGill wrote:
| Cars are not a large market compared to cell phones and other
| users of ships. Cars are louder than the rest, but not bigger.
|
| They typical car lasts 10-15 years. Cell phones about 2. More
| people have a cell phone than a car. Sure the car has more
| chips, but not by enough to make them bigger than phones.
| (Phones and cars mostly don't use the same process)
| neals wrote:
| Come on, we all know this problem and we all know the solution.
| It's probably red-circuits that we are talking about here. We've
| all been there: you have your yellow belts full of green-
| circuits, but the red ones are just so much more complex. You
| need to set up the entire oil production chain for that, which is
| tedious and you probably rushed it just 'get a few red circuits
| so I can get my electric furnace'...
|
| I say, take a step back, take some time and really automate
| plastic-bar production (yes, even the oil wells and refineries,
| and don't just put rocks in a container, belt them over there
| like a grown-up)
|
| Only after producting enough for a full red belt, should you
| continue expanding into other branches, like robots and faster
| belts.
|
| Don't they teach this stuff anymore?
| spsesk117 wrote:
| I love playing Factorio, but it's moments like above when it
| starts to stop feeling like a game and it starts to feel like
| refactoring code at work.
| blunte wrote:
| Factorio is a nice and simplistic (and fun, for a while) way
| to demonstrated many aspects of software and product
| development.
|
| You go through basic product planning and design, first quick
| MVP, then some feedback loops where you recognize some needed
| design changes, etc. Then once you have it figured out, you
| want more.
|
| So you start scaling up. That scaling often necessitates
| refactoring, because it necessitates space and time
| management (no sense having a bottleneck in your system which
| limits your growth potential).
|
| Then you have the aliens which represent unexpected problems
| and failures.
|
| A while back someone posted about playing Factorio with job
| candidates as a way to see how they thing and solve problems.
| This is probably much better than most tech interviews. If
| you can be decent at Factorio, you can probably be pretty
| decent as a software developer.
| TeMPOraL wrote:
| I'd laugh but then I saw this comment:
| https://news.ycombinator.com/item?id=28233436.
|
| Yup, Factorio is a nice way to learn about supply chains.
|
| Unfortunately, like almost all videogames, it assumes the whole
| system is run by a benevolent dictator (i.e. the player). In
| real life, most of the complexity and most of the waste comes
| from the system being built incrementally and operated by great
| many parties in a mix of cooperative and competitive
| relationships.
| neals wrote:
| I think you're still allowed to laugh
| swiley wrote:
| Ah yes, the blackstart situation. So terrible once you switch
| to nuclear.
| jameshart wrote:
| Think of biters as a metaphor for competitors, taxes, and
| regulatory compliance.
| wonderwonder wrote:
| So new cars are going to be come more expensive due to supply
| limitations and in turn used cars will continue to become more
| expensive as they can rise to a certain % of the new car price.
| At the same time housing prices continue to sky rocket. Seems
| like not a great time for someone just stepping into adulthood
| and financial responsibility.
| oldsklgdfth wrote:
| > stepping into adulthood and financial responsibility
|
| The timing of my life events is one of the things I am most
| grateful of.
|
| I graduated in 2014 and within a couple years I bought a house.
| Strong job market for an employee and low interest rate.
|
| I know people that were getting PhDs, because they started
| undergrad in the aftermath of the housing bubble and couldn't
| find jobs when finished. I also know people that decided to buy
| a house before the bubble and are still stuck underwater,
| preventing them to pursue opportunities not in their area. I
| also know people that went into medicine as tuition became
| ridiculous and have no way of servicing their student loans.
|
| I guess what I'm getting at is count your blessings. Others may
| not be as fortunate as you.
| ren_engineer wrote:
| but stop and think for a second about all those short term
| profits Wall Street made by outsourcing all of our crucial
| manufacturing! Those congressional bribes don't pay themselves
| either! /s
|
| the worst part is our government is rewarding them for bad
| behavior, the article mentions the billion dollar chip subsidy
| program. So these companies made money outsourcing and will now
| make more by bringing it back. Instead they should put a
| massive tariff on any chip not made in the US. Companies that
| invested here would be rewarded for loyalty
| dcolkitt wrote:
| What short term profits? The car industry has among the
| lowest margins in the entire economy.
|
| Moreover the chips were never outsourced. Toyota never made
| its own chips, nor is it feasible to. You seem to have some
| sort of idealized view where a company internally
| manufactures everything it needs starting from raw materials.
| That's not how it works, and that's never how it worked.
| ren_engineer wrote:
| "silicon valley" is the name because of all the chips that
| used to be made here, US used to lead the world in chip
| manufacturing
|
| Toyota is just a symptom, every other car manufacturer and
| other industries are facing shortages as well. The US
| economy is now strangled because our supply chain got
| outsourced for "efficiency" that didn't account for
| potential disruptions
| lotsofpulp wrote:
| > Instead they should put a massive tariff on any chip
| not made in the US. Companies that invested here would be
| rewarded for loyalty
|
| Voters would have rewarded politicians who supported
| these tariffs by voting them out of office for making all
| their toys more expensive. Everyone likes cheaper stuff
| and more stuff in the short term.
| ren_engineer wrote:
| voters have complained about stuff being made in China
| for years and if it was framed from a nation security
| perspective you'd get wide bipartisan support. The
| current chip subsidy program literally just got wide
| bipartisan support, it's extremely popular
| lotsofpulp wrote:
| Now that the effects have been felt, yes. But not a few
| decades ago when the majority were enjoying cheaper
| goods. Even now, I do not see broad support for tariffs
| in order to bring production back to the country.
| misja111 wrote:
| It's a bit too easy to blame this only on Wall Street. First
| of all companies have outsourced their production facilities
| to lower production costs. The parties benefiting from this
| were:
|
| - shareholders (more profit)
|
| - consumers (lower prices)
|
| Second, you could say shareholders == Wall Street, but you
| could just as well say that shareholders are pension holders,
| banks, insurances and small private investors. All of these
| simply want to have return on their investment that is as
| high as possible. If that's good or bad is an interesting
| question, but the bottom line is that very few people are
| without blame here.
| ren_engineer wrote:
| you'll notice I also blamed congress for effectively being
| bribed to allow this to happen. The government's job should
| be to prevent stupidity like this from happening,
| Department of Defense at the very least should have been
| sounding the horn of how our supply chain issues are
| national security issues
|
| plenty of people have been warning for decades how the
| reliance on manufacturing from other countries could have
| major consequences. The fact that a small island like
| Taiwan is probably the most important geo-political issue
| in the world could have been prevented with a little bit of
| long term planning
| xyzelement wrote:
| > just stepping into adulthood and financial responsibility.
|
| I am older than that (40 and my wife is 35) and while we have
| been independent professionals for a while, we now have a 1
| year old so this summer for the first time in our lives we
| bought a house and a car.
|
| It was definitely harder to find a house (mainly less
| availability driving competitive bidding) and it took a little
| longer to find a car and we ended up having to pay MSRP.
|
| However the thing I can say is - the incremental cost/hassle of
| having to do these things during the pandemic supply crunch is
| almost irrelevant compared to having to do this stuff at all.
| We paid say 3% more for the car and ok maybe 10/20% for the
| house than we would have otherwise, obviously that's painful
| but if I was "just stepping into adulthood and financial
| responsibility" I'd look to avoid this stuff altogether.
|
| EG: do you need to own a house? If you're a single person,
| "throwing away" money on a relatively inexpensive rental might
| be much wiser than "investing" in a house in a seller's market.
| Likewise, if you're young and single then you should relatively
| easily (depending on where you live of course) arrange your
| life to not need a car. It was very easy for us in NYC, of
| course may be different for you.
|
| The point is that in my mind, "adulthood and financial
| responsibility" don't have to translate "got my own house and
| car" but simply "making wise financial decisions given my
| situation" so if there's room to be flexible, be flexible.
| BossingAround wrote:
| The fact that you can weather the extra costs doesn't mean
| it's "no big deal," which is how your posts comes across to
| me.
| xyzelement wrote:
| The point of my post was to give the OP some pragmatic
| advice, on the bigger-deal lever he has in his life.
| Obviously there's a marginal drop-off of who can afford X
| if X goes up even a little.
| gnopgnip wrote:
| CPI is showing a 45% increase in used car prices over the
| last year.
| fartcannon wrote:
| When I was in my early 20s, someone gave me this exact
| advice. I didn't have much money and they said that real
| estate was too expensive and I should just invest/rent. Fast
| forward to today, I paid 8x more for my small sad house than
| I would have then and my investments on my small amount of
| money didn't make up the difference.
|
| The market is so screwed up that even a crash that halved the
| price would still be 4 times price back then.
| xyzelement wrote:
| Finance guy here, two things. You are looking at it in
| retrospect. "I should have bought a house" is no different
| than "I should have bought X stock" when you're looking at
| the price history backwards. At the time, it could have
| gone up or down. EG we just bought a house, I have many
| reasons to expect that it could drop in value over the next
| bunch of years.
|
| Second, you may not be doing proper calculations. I would
| not have - before I bought a house. Do you count property
| taxes, upkeep, larger water and electricity bills, possibly
| longer commute times/needing a car, relative lack of
| mobility, air conditioner/heating/roofing/siding/repair,
| lawn maintenance, etc.
|
| Yes sure, if I bought _this_ house 10 years ago, it would
| have been great. But I wouldn 't know 10 years ago that I'd
| want this house, and for example dealing with all the above
| shit as a single man would have been stupid. There were
| also points in my life where I was very open to relocation
| for the right job, something home ownership would have put
| friction on.
|
| it's very common to think of only a pro or a con of a
| decision (if I bought earlier, it would have only cost X)
| but you're not factoring the risk that existed at the time,
| nor the commitment you're creating on yourself, not the
| carrying costs I described above.
|
| May not be relevant to you but I feel fine about "losing
| out" on 20 years of house appreciation (if I bought at 20
| not 40) because I avoided all that stuff for 20 years, too.
| fartcannon wrote:
| Whatever helps you sleep at night :D
|
| My parents bought a detatched home at 20 with minimum
| wage jobs. I bought a townhouse at 40 with a high paying
| career. My kid is going to be 60 by the time he can
| afford a home.
|
| It's fucked. Buy now.
| lastofthemojito wrote:
| Reminds me of what I've heard Porsche aficionados say:
| "You can't pay too much for a classic Porsche. You can
| only buy it too soon".
|
| They're not making any more of them, and demand and
| prices only go up (until maybe one day they don't, I
| don't know).
| xyzelement wrote:
| >They're not making any more of them, and demand and
| prices only go up (until maybe one day they don't, I
| don't know).
|
| You can say that about anything - limited run beanie
| babies, bitcoin, whatever. It's all true until it's not.
|
| In the case of classic Porsches, next time you hear
| someone say that, ask them (a) what's gonna happen once
| boomers die out. Do genX/Z/millenials give a shit about a
| classic Porsche the way a boomer would? (b) what happens
| if/when we replace ICEs with electric and the gas station
| infrastructure goes away (not saying it will happen but
| it's one likely future path.) In the world where you
| can't get gasoline, is a classic car still valuable?
|
| I don't know the answers to these questions but unless
| the person who is giving you advice has modeled this out,
| their advice is of no value.
| xyzelement wrote:
| > It's fucked. Buy now.
|
| Ok you certainly should go for it, but I'll give you one
| analysis that I have. We bought in a NYC suburb (for a
| bunch of reasons) and here's what I think constitutes
| price risk for me.
|
| At the end of the day, a house is worth what someone can
| and is willing to pay for it. Right now, there's reasons
| the demand is high for near-NYC housing because (a)
| people aren't sure they need to be near NYC long-run and
| don't want to risk it (b) it's an easiest move to make to
| leave the city and not go far (c) supply is low because
| with covid, fewer people are willing to have an open
| house (d) now everyone is in a rush to upsize so space is
| at a premium.
|
| All of these are demand factors that can change. EG: (a)
| it may become clear in 1-2 years that permanent remote is
| an option for many people, relieving demand pressure on
| NYC and the area. (b) once people are comfortable with
| leaving the city they may be comfortable moving further
| afield. (c) the pent-up supply of folks who didn't sell
| in 2020/2021 may come to market, especially if a and b
| occur, causing people to want to sell before it's "too
| late" (d) everyone who needed up upsize may have done it,
| relieving that pressure.
|
| Also, for New York state specifically, with the number of
| wealthy people leaving the states, it feels inevitable
| that state and property taxes will rise, making all of
| this even less attractive.
|
| And finally, interest rates are ridiculously low right
| now, rising rates will be a damper on prices when that
| happens.
|
| Obviously there plenty of reasons it could also go up,
| but if your model is so simple "it's fucked so it's
| always goes up" you may get fucked too.
| zsmi wrote:
| > All of these are demand factors that can change.
|
| Don't forget: Cities actually allowing housing stock to
| increase. Very unlikely but hopefully not impossible...
| fartcannon wrote:
| Agreed. Same with stocks. It's all gambling.
| devoutsalsa wrote:
| Rents are going through the roof, too.
| nosianu wrote:
| And when you try getting that hole in the roof fixed, you
| might run into even more problems:
|
| "Roofing Industry Faces Unprecedented Supply Disruption"
| (April 27, 2021)
|
| https://www.roofingcontractor.com/articles/95590-roofing-
| ind...
| wonderwonder wrote:
| Wonder how much of that is driven by people actually
| being home to answer the door when roofers knocked during
| Covid. Completely anecdotal but I got a new roof during
| the covid lock down and so did 3 of my neighbors and its
| mainly due to being home to answer the door and the
| roofer being able to get insurance to cover the cost.
| Scoundreller wrote:
| I get it if insurance covers it (without jacking your
| rates for perpetuity to pay for it), but alas, how do you
| work from home while being re-roofed?
| ghaff wrote:
| NYC (esp. Manhattan and parts of Brooklyn) is pretty
| exceptional in the US with respect to there being no
| expectation of car ownership. You _can_ get by in other
| cities out of school (especially given app-enabled rides,
| Zipcar, etc.) but the general expectation is car ownership.
|
| As for housing, it's perfectly normal to rent for a while
| until you know you want to settle down in a location for an
| extended period of time.
| ipqk wrote:
| The difference being that lots of people want to keep those
| inflated housing prices high (nimbyism), whereas nearly
| everyone wants car prices to go back to normal.
| yalogin wrote:
| Car prices won't go back to normal again though. They will
| come up clever financing schemes to make people pay but the
| prices will never be reduced.
| wyager wrote:
| This is mostly just a reflection of the fact that the value
| of the dollar has declined precipitously over the last 18
| months. Dollar prices are sticky, so it can take a bit of a
| shock for inflation to "kick in", but we've had plenty of
| shocks to go around.
| jondwillis wrote:
| I'll add a bit of a pedantic point: the dollar hasn't
| really lost any value _against other currencies_ (DXY)
| over the past year. In fact, it is a little higher.
|
| It has lost value against lots of commodities and "real"
| goods.
| smeyer wrote:
| I don't think it's fair to attribute "most" of this to
| inflation. Car prices have been rising much faster than
| many other components of CPI, so even in real rather than
| nominal dollars cars are getting more expensive.
| wyager wrote:
| The stuff people actually care about has been rising
| faster than CPI. Cars, housing, meat, metals, lumber,
| etc. are all going through the roof. Inflation is a
| vector, and any reduction to a scalar involves taking the
| dot product of that vector with a weight vector. Under
| _my personal_ weight vector, and I suspect _most
| people's_ weight vector, inflation is a lot higher than
| CPI.
| wonderwonder wrote:
| Food prices are insane right now. I used to leave the
| grocery store with a spend of ~$90 now I average ~$120.
| Its anecdotal but it adds up.
| JackPoach wrote:
| There's huge inflation in many things related to making
| cars (chips, steel, shipping costs as many cars are still
| being shipped across the ocean, labor costs, etc.). We are
| likely to be in the very beginning of significant inflation
| cycle, with probably double digit inflation which will
| eventually drop to 4-4.5%. I wouldn't expect to prices to
| drop any time soon, nor have 2% inflation. My bet is that
| fewer and fewer new cars will be sold in the next few years
| (3-5) with prices rising 4-10% each year.
| ptero wrote:
| It's not just cars, the prices are rising across the
| board (not evenly), so we have pretty high inflation if
| you add in the items official estimates excluded.
| tms2x2 wrote:
| When do we get 30 year loans to buy a car?
| beached_whale wrote:
| I would say it is more self perpetuating. With housing prices
| growing as they are, people are saving less for retirement
| and putting that money into their house with a plan to cash
| out, move to the country, and retirement.
| dalbasal wrote:
| Nimbyism exists, as do more concrete constraints in urban
| locations but...
|
| The way house prices work, often, is more or less banks
| determining prices via mortgage eligibility. Banks agree that
| a house is worth X. They lend X. That becomes the price.
| Buyers tend to be available.
|
| People are so quick to see that credit expansion fuels price
| inflation in other areas, even the economy at large, but
| somehow diminish or ignore this with housing.
|
| Obviously, supply constraints avoidable or otherwise, affect
| supply. In any given year though, the supply of housing does
| not change a ton. Where they do, you don't tend to have wild
| inflation... though you do often see bigger houses.
|
| It's impossible to decouple housing from monetary policy.
| Housing is one of the few ways that buying power gets from A
| to B, where B is not a financial institution or direct
| spending.
| sandworm101 wrote:
| >> whereas nearly everyone wants car prices to go back to
| normal.
|
| There is a significant voice that would like to price cars
| out of private ownership. Traffic, pollution, safety, urban
| sprawl ... pick your evil and someone wants to eliminate
| private cars for that reason.
|
| I regularly read about how the next wave of cars will all be
| somehow "shared", that we will whistle and they will appear
| at our doorsteps ready to carry us off to our 9-to-5 jobs in
| shiny glass office towers. I just don't see that happening
| anytime soon. Total conversion to electric cars in 10 years,
| maybe. Conversion to total ride-sharing and/or mass transit,
| doubtful in 30.
| nsizx wrote:
| That's like 0.1% of people
| razius wrote:
| The 0.1% that matter.
| ThePadawan wrote:
| I live in a country with a working public transport system.
|
| I'd prefer it if ICE cars were as expensive as possible in
| order for the planet not to burst into flames.
| wonderwonder wrote:
| I don't think it's necessarily NIMBY or at least my
| understanding of it that makes people want to keep housing
| prices elevated. If I buy a house at an inflated price, I
| want the house value to continue to rise as a large degree of
| my financial security is tied up in that house. My ability to
| refinance, take cash out and eventually even sell that house
| are tied to it continuing to escalate in value. In the US
| this is particularly true as so much of out net worth is
| essentially our home value. As inflation increases and
| peoples ability to save is even further reduced this will
| become even more of an issue.
| BurningFrog wrote:
| NIMBY-ism doesn't make people want housing prices to rise.
|
| The wish to inflate housing prices causes NIMBY-ism!
| teorema wrote:
| Not really a great time for anyone really, at least from the
| vantage point you're referring to.
| dahfizz wrote:
| If you're an established adult who owns a house and two cars,
| your assets have skyrocketted. You're having a great time.
| codesnik wrote:
| how? can you capitalize on that upside somehow? sell them,
| live in a tent until prices are down?
| mlac wrote:
| Yeah they are not liquid assets... my concern is if one
| of my cars dies...
| dahfizz wrote:
| Trade it in. You'll still pay MSRP on the new car, but
| you will get way more for your trade in than it is worth.
| dcolkitt wrote:
| You can pull out home equity in a cash out refinance.
| Borrow at 2.5%, then roll that into index funds averaging
| 8%, and turbo-charge your retirement goals.
| i_haz_rabies wrote:
| "put it all on black!"
| bluGill wrote:
| yeah. That might work out, but my investments are
| diversified more. I have real estate in the form of my
| house. I have stocks and bonds in my 401k. I have
| government in my social security. They are completely
| separate, so if any one fails I'm still okay. (well if
| the government fails I'm probably in trouble no matter
| what, but social security is limited at best)
| malfist wrote:
| I capitalized on it by buying a new car and selling my
| old one. I sold a 3 year old camaro for $1000 less than I
| paid for it. I didn't get very much off MSRP of the new
| car, but I got way more value from a three year old
| camaro than I ever expected to get.
| heliodor wrote:
| So... you got more for your used car and paid more for
| your new one.
|
| Which is exactly the point being made by the parent
| comment that you can't capitalize on the upside. You'd
| have to sell and step out for a while.
| malfist wrote:
| What do you mean I can't capitalize on the upside?
|
| Sure, my purchase costs went up some, but no where close
| to the additional value I got over normal for my sale.
| Put it this way, I paid a few hundred dollars, maybe a
| thousand dollars more for the car than I would normally,
| but I sold my old car for thousands more than I normally
| would have been able too.
|
| That's capitalizing on the upside for sure.
| dahfizz wrote:
| Used cars used to be worth x% of a new car.
|
| Today, they are worth x+y% of a new car.
|
| If you trade up now, you will pay less for the new car
| than if you traded up two years ago.
|
| Similar situation for houses. Even if we assume all
| houses have inflated by the same rate, you can still
| downsize and cash out. Your existing $600K house is
| inflated 25% and you can sell for $750k. You downsize to
| a $400k house which is inflated to $500k. You oversold
| for $150k, but only overpaid by $100k and you pocket the
| difference.
| mikeyouse wrote:
| Obviously most people can't do this but a family member
| was recently approached by the dealer who sold him his
| most recent work truck. He's driven like 30k miles on it
| in the past 2 years and it was a $75k Chevy diesel.
| Dealer offered him $90k to buy it back from him (to sell
| to someone else) and my family member said "Sure". So he
| made $15k on an asset that should have lost 1/2 its value
| by now. Obviously rare and hard to take advantage of but
| some people are absolutely capitalizing on the weirdness.
| alistairSH wrote:
| But what does he drive now? If the truck was just a toy
| that didn't need replaced, then good for him. But that's
| not the case for the majority of people.
| bluGill wrote:
| There are lot of construction workers driving around 20
| year old trucks. Those who own a company and don't use
| the truck as a limo to show off to customers value the
| extra money in their pocket. The more the truck is
| abused, the older it will be (concrete and rocks are
| abusive to the body of trucks so those industries get the
| oldest ones)
| wonderwonder wrote:
| I assume that in most situations like this the original
| person with the truck would have to replace that truck.
| In this case he now has to pay 90k for the truck he
| originally paid 75k for.
| dahfizz wrote:
| Or hobble along with a "free" $15k clunker until prices
| go back down.
| mikeyouse wrote:
| Perhaps, but it's not uncommon for these places buying
| new-off-the-lot high end trucks (my family members'
| included) to have a dozen+ vehicles at their disposal.
| He's planning on using his 5-year old similar HD truck
| until the market thaws a bit, but it's also overkill for
| most everything he does. One of the many work vans his
| business owns can likely do 95% of the work. They're
| mostly just buying the big ones for clout and due to
| generous tax writeoffs.
| frockington1 wrote:
| I bought another house and am renting the old one out.
| The new house has an interest rate at 2.3% while
| inflation is over 5% with conservative estimates.
| dahfizz wrote:
| HELOC's are very common. You can cash out on all that new
| home equity and install solar panels, build an extension,
| put in a pool....
| alistairSH wrote:
| That's assuming you have the cash-flow to float the new
| loan. If you bought the home 5+ years ago, that might be
| true, but for anybody who bought recently, that's
| probably not an option.
| burntwater wrote:
| The chasm between the lower class and even the middle class
| is widening by literally the week.
| gonzo41 wrote:
| Spend 5K on a really nice commuter electric bicycle. You'll be
| doing a solid for the Environment and you'll have an EV that
| makes you fitter.
| lordgroff wrote:
| I live 50km from work now (thankfully looks like mostly
| remote forever, the COVID silver lining), but I used to bike
| to work before I had kids.
|
| I don't know that I'd do it again. The number of avoided-
| death-by-split-second close calls that I racked up in about
| five years is just too high... Now that I'm a bit older and
| have children, seems irresponsible.
|
| This is in a city with relatively developed bike
| infrastructure, including separated lanes in some places.
| (Some) drivers just don't give a damn, and while I wish it
| was different, I don't see it changing any time soon either.
| rcMgD2BwE72F wrote:
| This is so sad. We did not build cities for humans but for
| machines that, we thought, would serve humans well. We got
| it so wrong.
| wonderwonder wrote:
| This is great in theory but not so great when you are food
| shopping for a family or you need take the kids to get new
| shoes.
| yourusername wrote:
| High end bike parts are also in short supply. Popular
| electric bikes also have months long waiting lists.
| alistairSH wrote:
| FWIW, my local bike shop has a pile of electric-assist
| commuter/townie bikes ready for riders. Supply chain for
| bikes is definitely broken right now, but they're out there
| - you just have to look and wait and look some more.
| bongoman37 wrote:
| If you have a kid that's not a workable solution, moreover,
| safety is a huge issue on 2 wheelers.
| acdha wrote:
| I've taken my son on an e-bike daily since he was 11 months
| old - he loves it compared to being in the car. There are a
| range of products on the market handling up to 4 kids and
| with creature comforts like rain shields.
|
| I use one of these:
| https://yubabikes.com/cargobikestore/electric-boda-boda/
|
| A relative uses one of these in the Boston area, year
| round:
|
| https://www.ternbicycles.com/us/bikes/472/gsd
|
| A friend loves this for their family:
|
| https://www.r-m.de/en-us/bikes/packster-70/
|
| Not cheap, but an order of magnitude less than a car
| ($10k/year by AAA's numbers) over the lifetime of the bike.
| steve_adams_86 wrote:
| For anyone with a small commute I'd recommend this too.
| Our Yuba (spicy curry) has around 3000km on it over 2.5
| years, is going strong, and I'll still be commuting ~30km
| per week over the next year with it taking my 4 year old
| to daycare then going to work. I'll likely continue
| commuting with him on it to kindergarten and perhaps
| early grade school.
|
| It wasn't cheap initially ($7000 CAD), but the cost per
| km drops enormously every year while the bike still rides
| as well as ever. The kids have all loved it, too. My
| youngest is disappointed when we drive places - he wants
| to walk or ride all year.
|
| We do have a temperate climate which helps. Our cold days
| in winter are typically around 5 degrees outside of cold
| snaps, but even then we rarely dip below 0.
|
| It's a major quality of life improvement for us. They're
| amazing grocery getters, you don't get all sweaty on
| them, kids tend to love it, and they're quite a bit
| easier to buy, maintain, and park than a car.
|
| We went with the spicy curry because of its insane cargo
| capacity (we've used it for its full capacity many times,
| especially while bike camping), but you can spend far
| less if you don't need to carry that weight.
| fires10 wrote:
| My problem with 5K on an electric bike is the 50 mile commute
| one way to work in inclement weather.
| neon_electro wrote:
| Fair enough - doesn't sound like you were ever the target
| audience for a commuter bike to begin with.
| dijit wrote:
| The three most cycle heavy cities in Europe all get more
| rainfall than London.
|
| (Amsterdam, Copenhagen, Malmo)
|
| Something else is the problem. Maybe infrastructure or
| terrain.
| dshoemaker wrote:
| I think the 50 mile one-way commute may be more of the
| problem here. I can't imagine traveling that far for work
| daily.
| [deleted]
| carlmr wrote:
| My problem with dropping 5K on a bike is that they get stolen
| [deleted]
| dont__panic wrote:
| In the US city that I live in, cars get stolen an awful lot
| too. And not just puffers (cars left with the keys in the
| ignition to warm up on a cold day) -- I've heard of plenty
| of locked recent-year cars stolen from private locked
| garages with no keys at all. I believe car theft is up at
| least 500% from pre-covid.
|
| And that's to say nothing of the opportunistic catalytic
| converter thefts if you park your car on the street
| overnight.
| paunchy wrote:
| Most of these thefts utilize "relay attacks" that
| simulate the key being in close proximity to the car,
| using directional antennas to interrogate the key that's
| sitting in the house and then relay it back to the car.
| The solution is to disable the proximity feature, but
| that's inconvenient.
| carlmr wrote:
| Where I live I'd guess the rate is 100 bikes stolen for
| every car.
|
| With a bike you don't expect it to be there after locking
| it in the street for more than 15 minutes. I don't know
| anybody personally whose car was stolen.
| rcMgD2BwE72F wrote:
| In France, all bikes must now be marked to prevent theft
| https://www.bike-eu.com/laws-
| regulations/nieuws/2021/01/fran...
|
| Is there similar plans in the US or at least some states?
| blunte wrote:
| It's been "not a good time" since 1975. Prior to that, at least
| in first world countries, you could start with less
| intelligence and have a much better chance at class improvement
| and even financially secure retirement than now.
|
| On the other hand, if you're in politics, finance, or executive
| business management, it's been a really, really great last 40+
| years.
| candyman wrote:
| I wonder if there will be a long term shift in supply chains
| toward less "asset light" and more vertically integrated
| operations with sourcing moved closer to end market demand.
| GordonS wrote:
| Is there a credible estimate of when the chip shortage is likely
| to be over?
| baybal2 wrote:
| Digitimes tell of q3-4 2022
| flyinglizard wrote:
| Does anyone know the particulars of the shortage? Talking more
| about the commodity chips. Very hard to get anything from TI, ST
| or Microchip. Which fabs and nodes are specifically overloaded?
| baybal2 wrote:
| Not nodes, wafer sizes. Most severe shortages are on 200mm.
|
| 200mm had 12 month lead times before COVID, now we talk about
| years.
| adamcharnock wrote:
| I'm not sure if this will answer your specific questions, but I
| found this HN comment from a few months ago to be some very
| interesting background:
|
| https://news.ycombinator.com/item?id=26931498
| btbuildem wrote:
| I don't see this raised anywhere -- but what's so bad about
| producing fewer cars (the poor neglected shareholders and exec
| bonuses aside)?
|
| It's almost as if we would need to lean into this, reducing
| growth and producing fewer cars would be in line with efforts to
| mitigate the drivers of climate change.
|
| What if car manufacturers pivoted their KPIs and focused on
| making long-lasting, serviceable vehicles? Toyota is already the
| worldwide leader in these, as evidenced anywhere that's not
| smoothly paved suburbia-land.
| dmix wrote:
| Used car prices was up something like 90% and even renting cars
| is way more expensive already. This is just going to further
| constrain supply.
|
| I tried renting a car and despite being sold out in the vast
| majority of places well ahead of time it was 2x the normal base
| price.
| eldaisfish wrote:
| Consider for a moment the people outside the developed world
| whose lives are greatly improved by cars.
|
| Scarcity drives prices up putting things out of their reach.
| tlocke wrote:
| Cars tend to diminish quality of life. Local, walkable and
| cyclable neighbourhoods on the other hand enable people to
| flourish. When people have to travel by vehicle, trains and
| trams are superior to cars.
| bluGill wrote:
| Cars are only diminish quality of life when there are too
| many in a given area. For every person along the way though
| a car is a greater improvement than no car. Sure each one
| harms the overall quality of life, but the individual is
| better off.
| eldaisfish wrote:
| how do you propose people in rural Africa transport their
| goods to markets? Cycle and trams? Perhaps electric buses?
| 5e92cb50239222b wrote:
| Have you even been to the developing world? We mostly drive
| old junkers that were discarded by Americans and Europeans
| after 15 years of use for breaking and polluting too much.
| eldaisfish wrote:
| this comment is a textbook example of how out of touch many
| here are.
|
| The developing world also makes cars. India - to name just
| one - is among the largest exporters of vehicles to several
| countries in Africa.
|
| No, people in the developing world do not drive hand-me-
| downs from the West.
| jcranberry wrote:
| Need to keep that supply of junkers coming though!
| crazypyro wrote:
| >(the poor neglected shareholders and exec bonuses aside)
|
| Well, to provide a different perspective, there are car plants
| around the US that have been shutdown for months and the people
| formerly employed there haven't been able to work.
|
| Not necessarily arguing that more cars are better, just its not
| only shareholders and executives who are hurt by the chip
| shortage.
| itsoktocry wrote:
| > _It 's almost as if we would need to lean into this, reducing
| growth and producing fewer cars would be in line with efforts
| to mitigate the drivers of climate change._
|
| Newer cars pollute far less than old cars.
|
| > _What if car manufacturers pivoted their KPIs and focused on
| making long-lasting, serviceable vehicles?_
|
| They do make long-lasting, serviceable vehicles. Where have you
| been?
| gberger wrote:
| > Newer cars pollute far less than old cars.
|
| More cars pollute more than fewer cars.
| itsoktocry wrote:
| > _More cars pollute more than fewer cars._
|
| It must be nice to live in a sunny place where you can walk
| or bike to work.
|
| Unfortunately, the rest of the world, including that which
| services fancy "green" neighbourhoods, require vehicles.
| mnadkvlb wrote:
| Can someone explain, why this is not reported as in what
| inflation looks like ?
|
| when Supply cant meet demand we get higher prices, what am i
| missing here ?
| itsoktocry wrote:
| > _Can someone explain, why this is not reported as in what
| inflation looks like ?_
|
| What do you mean "this is not reported"? Are you actually
| looking at the BLS inflation reports?
|
| The fact is, semi-conductor price increases make up a tiny
| proportion of the average person's cost of living.
| thaumasiotes wrote:
| That's not really the usual concept of "inflation". Every
| commodity fluctuates in price. Inflation is when the price of a
| unit of money falls. Conceptually, it's very easy to
| distinguish "cars cost more dollars because cars are more
| expensive" from "cars cost more dollars because dollars are
| cheaper". In practice, it's difficult to measure the value of a
| dollar. But in general, inflation looks more like the price of
| everything going up, and less like the price of cars going up.
|
| (Currently, a lot of different prices _are_ going up, and
| current inflation is high. But you can 't just point to Toyota
| raising prices and say "See? This is what inflation looks
| like!" That is what inflation looks like, but it's also what
| not-inflation looks like.)
| vvarren wrote:
| This so-called "transitory inflation" is really starting to seem
| like it will parlay into full blown inflation.
| riggins wrote:
| https://www.nytimes.com/interactive/2021/08/18/opinion/infla...
|
| "In July, some of these sectors (used cars in particular)
| experienced a big deceleration in inflation, bolstering the
| argument"
|
| https://news.yahoo.com/us-used-car-bubble-burst-141009925.ht...
|
| "The price index for used vehicles rose 0.2% in July, after
| having risen at least 7.3% in each of the previous three
| months. The category was one of the few, along with hotel rooms
| and airfares, that drove recent inflation, the economist Paul
| Krugman pointed out on Twitter. "Combined, these three sectors
| account for...more than 1/2 [half] of inflation over the past
| three months," Krugman wrote. In May, in fact, a full third of
| the overall price rise was due to the surge in used car
| prices."
| CrazyPyroLinux wrote:
| Regardless of prior _academic_ work, Krugman 's Twitter and
| NYT opinions are blatantly partisan rather than scientific.
| Whatever he says, do the opposite. https://contrakrugman.com/
| (edit: slightly more specific and less ad-hominem)
| jtbayly wrote:
| Used cars have a natural price cap, and my understanding is
| that it has been reached. They are too close to the price of
| a new car to go any higher.
| cableshaft wrote:
| Yeah, I normally buy used, and this time I just bought new
| (technically I leased new, but it's the first time I'm
| leasing a car in my entire life), because it just didn't
| make any sense to me to buy a used car for almost the same
| price as a new car.
| lucasmullens wrote:
| Maybe, but with new cars being sold for above MSRP, that
| natural price cap is rising.
| the-dude wrote:
| If you can get a new car. In theory, a used, available car
| could be worth more than an unobtainium.
| nszceta wrote:
| The price of a new car is whatever the dealer is willing to
| let it go for. MSRP is a starting point, not the final
| price, which can be literally anything.
| el-salvador wrote:
| Not everywhere though. I recall Venezuela had unusual car
| prices about a decade ago.
|
| Car dealership inventory was very low due to currency
| controls and wait times at car dealerships increased to
| months.
|
| A slightly used car, inmediately available for sale, was
| more expensive one than a new one with months wait.
| JimTheMan wrote:
| A shortage is not inflation
| hirako2000 wrote:
| Supply and demand change is what increases or decreases
| costs. If demand don't adapt, there will be inflation to
| force it to adapt :)
| JimTheMan wrote:
| 'Inflation' is not the price increase of a single thing to
| demand/supply.
|
| Inflation is the systemic increase in all costs of what a
| household would buy as money itself become less valuable.
|
| Prices 'inflating' on a single product because there's a
| shortage of... base materials or whatever is not inflation
| as an economic term.
| hindsightbias wrote:
| I bought 2x4s for $3.60 last weekend.
|
| Just a month ago, HN was rife with lumber apocalypse.
| throw0101a wrote:
| > _This so-called "transitory inflation" is really starting to
| seem like it will parlay into full blown inflation._
|
| A lot of the people screaming about inflation were doing so
| using the argument that there's too much spending and the
| "excess" money supply will cause the US to turn into Zimbabwe (
| _Fed printers go brrrrrr_ ): demand-pull inflation.
|
| The price fluctuations caused pandemic-related supply issues
| (cost-push inflation) don't have much to do with money supply
| and stimulus packages.
|
| * https://en.wikipedia.org/wiki/Inflation#Keynesian_view
|
| If things get too hot, it's easy enough for interest rates to
| be pulled up, but given un/employment isn't at pre-pandemic
| levels, policy makers may let things ride for a while.
| vvarren wrote:
| My argument doesn't hinge on the excess spending. Rather, the
| increase of costs due to a labor shortage, chip shortage,
| construction materials shortage, etc. is having a compounding
| effect across the whole economy.
| frockington1 wrote:
| The Fed doesn't seem to care about inflation adding even more
| burden to the poor. But hey, at least all the asset rich
| political donors are happy
| sprafa wrote:
| How is this related to the chip shortage and Toyota?
| 3pt14159 wrote:
| When the supply of goods goes down, it pushes prices up.
| wiz21c wrote:
| Only if you let greediness exist.
| compscistd wrote:
| But inflation has to do with the supply of money, not the
| supply of goods, right? Genuine question
| throwawaygh wrote:
| No, inflation has to do with the price of goods and
| services. Inflation is defined as "a general increase in
| prices and fall in the purchasing value of money".
|
| Inflation can be caused by many things: reduced supply,
| increased demand, expectation of future price increases,
| degradation in the quality/desirability of alternative
| products (eg bond yields), and, yes, an increase in the
| amount of dollars chasing an asset class/product/service.
|
| Re: your original question, to be a bit pedantic, the
| supply of money _on its own_ cannot cause inflation in
| consumer goods except via extremely odd channels (e.g.,
| inflation expectations). A trillion dollars sitting in a
| bank account has approximately no effect on prices. Like
| a bullet in a chamber, money at rest has no effect on
| consumers ' experience of inflation until it's propelled
| forward.
|
| But it's important not to conflate causes with
| definitions. Also, attributing causes of inflation to
| particular instances of inflation is often _extremely_
| and _inherently_ political. The inflation we 've seen in
| consumer goods is a complex phenomenon with many
| disparate causes. Beware of anyone selling you a "just-
| so" story for the cause of inflation in a few dozen
| disconnected goods and services.
|
| Especially if that story aligns perfectly with their
| ideology/product/investment/political campaign.
|
| And even more especially if they start the story by
| conflating _one possible cause_ of inflation with the
| very definition of the thing.
| ajmurmann wrote:
| There is really three types of inflation: 1. Demand
| driving higher prices 2. Increased cost driving higher
| prices 3. Expectation of inflation driving higher prices
| and this inflation itself
| ModernMech wrote:
| Inflation has to do with purchasing power of a dollar
| decreasing. I would argue that inflation is something
| measured at the scale of the entire economy, and you
| can't say much about inflation looking at a single
| commodity, or even a single sector.
| devttyeu wrote:
| Kind of both? If I were to come up with a formula, I'd
| say 'prices = GDP / SupplyOfGoods', where GDP is just
| 'MoneySupply * MoneyVelocity'.
|
| If supply goes down, prices go up. If money supply grows,
| prices go up. If money velocity (number of times money
| changes hands in a given period) goes down, prices go
| down, etc.
|
| (It's worth noting that in 2020 when money supply
| exploded, money velocity fell by a lot, which is why GDP
| fell, and why there wasn't that much inflation)
|
| edit: s/inflation/prices/
| ItsMonkk wrote:
| People think of inflation like they think of the oceans.
| If the ice caps melt and water melts in, the shore lines
| from New York to Tokyo rise slightly. If you track this
| rise, that's inflation. That's not how it works, and it's
| not what the CPI tracks. Inflation is much more analogous
| to inland water, you know, lakes and rivers.
|
| If you give the bottom 80% of the income distribution
| more money, they will spend it right away like a river.
| If you give the 81-90%, portion of it will be saved in
| their lake(say, a 401k) and they will spend some of it.
| And if you give the top 10% more money, they save all of
| it in their reservoir.
|
| The way that we have been introducing new money into the
| system is not by melting ice in the middle of the ocean.
| We also haven't been raining all over. The key way that
| new money has been introduced over the past 50 years is
| by lowering the interest rate. When you lower the
| interest rate, what happens is that people refinance, and
| suddenly they can pay less, but quickly realize, oh, I
| can also borrow more, so they do.
|
| I'll show you a few numbers, which I got by going to the
| zillow housing affordability page with default settings.
| I only modified the interest rate, all other values stay
| the same.
|
| Year | Average Interest Rate 30 Year Fixed | Home you can
| Afford
|
| 1981 | 18.39 | $124,797
|
| 1991 | 9.00 | $200,862
|
| 2010 | 6.26 | $244,531
|
| 2020 | 2.67 | $328,569
|
| And so what we see people and REITs and companies doing
| is taking out larger and larger loans, and putting those
| dollars into assets. Companies take out a bond and buy
| back their own stock. And why wouldn't they, it's
| profitable because the environment makes it so. And that
| money flows throughout the system. We can track the
| inflow of all of this money by looking at say.. the M2.
| This seems to be the crux of your point, if the amount of
| money in the M2 has gone up by 40x since 1971, why is
| inflation not out of control?
|
| The CPI is a measure for inflation that does not track
| the oceans water level. The M2 tracks that, and as you
| can see the M2 is out of control. The CPI doesn't track
| stock purchases. If the CPI were to track stocks weighted
| at 1971 levels, inflation WOULD be out of control. The
| CPI tracks, specifically, an average of tangible items
| that the bottom 80% spends their money on. Therefore the
| inflation number is based on the height of certain
| rivers. Now that's an important figure to keep in mind,
| after all if you get inflation in that bracket and income
| isn't rising, you quickly run into a revolution. And so
| that's what the FED has found, if you track the CPI you
| get the perfect amount of heating to boil the frog
| without them noticing.
|
| But when you introduce money into the system by lowering
| interest rates, you are in effect giving the money in
| proportion to the assets already owned. Someone bought
| that home in 1981, and someone with the same exact income
| would bid 328k for it today. You basically tripled(and it
| was a leveraged sale, so 15x!) that home owners asset,
| without any need to compare anything else, like actual
| income rises, or for instance SF has moved upmarket which
| would also effect prices. And so if you don't have much
| assets, it's a desert. If you do, it's a rain forest. And
| because the wealthy already have all that they want,
| demand for those items that the bottom 80% spend their
| money on doesn't change. So the supply and demand of
| those items don't change. So the CPI value stays the
| same. But money was introduced. If you take a look at the
| velocity of the M2, the M2V, you can see this take place.
| The wealthy get the gains of the new M2 dollars, and
| store it away. The more dollars created, the lower the
| velocity.
|
| The lower the velocity, the lower inflation. But that
| rain is being stored in the reservoirs. If inflation
| causes stored wealth to lose value it's like a dam bursts
| and the wealthy start to spend and not save their money,
| it starts as a trickle and ends in a tsunami.
| lordnacho wrote:
| The problem is when those things affect each other.
| Otherwise we wouldn't care.
| macksd wrote:
| It's is often talked about that way: Wikipedia at least
| defines it as a general price increase. And that still
| gives you many of the same effects as a money-supplu-
| triggered inflation. Many annuities are worth less. The
| dollars in a savings account are worth less. The minimum
| wage becames worth less...
| mguerville wrote:
| Inflation is just when prices go up, for whatever reason.
| Increased supply of money can cause it (and does more
| often than not), but decreased supply can also do that as
| it moves the price equilibrium. Unfortunately we have a
| bit of both at the moment, money supply shot up and lots
| of supply chains slowed down.
| fab1an wrote:
| If there are fewer goods, prices usually increase, as
| there is relatively more money chasing fewer goods.
| selykg wrote:
| Inflation is the rise in costs for goods.
|
| If the supply of these chips causes a loss in supply of
| in demand items, like cars, then it will cause an
| increase in the price of cars.
|
| The thoughts are that this is temporary, until the
| components that are in low supply can catch up and meet
| the demand.
|
| But if the lack of supply lasts for too long then people
| become used to the increase price and manufacturers can
| just keep the price there at the inflated price. Now it's
| permanent inflation. Or that can happen if the supply
| doesn't keep up with the demand.
| [deleted]
| mkj wrote:
| This central bank says it's prices going up. https://www.
| rba.gov.au/education/resources/explainers/inflat...
| rz2k wrote:
| While possible, look at lumber prices now[1] in the context of
| articles from April saying that the high prices would persist.
|
| Economists who study these phenomena tend to be a better guide
| than reporting that is in the middle of reacting to dramatic
| signals like shortages and fast price changes.
|
| [1] https://tradingeconomics.com/commodity/lumber
| mensetmanusman wrote:
| This is a huge deal, imagine that the production of one Apple
| AirTag means one less vehicle produced.
| aembleton wrote:
| I'm sure a car has many more chips than an AirTag.
| icegreentea2 wrote:
| The article (and others about this topic) indicate that the chip
| shortage isn't just a static. They all claim that chip and other
| supply chains (all based on South East Asian) are all under new
| pressure from delta strain spread.
|
| In fact, I wonder how much of this really is chip supply vs
| general supply. Most articles on this open with headlines about
| chip supply, but then contains quotes from Toyota about "supply"
| and "parts" in general.
| wallaBBB wrote:
| Much of the ECUs OEM are purchasing from Tier 1 suppliers
| (Denso for example - a Toyota spinoff) who are directly hit by
| IC shortage, so that's why they are talking about overall
| supply. Also Japanese OEMs and suppliers tend to favor ICs from
| Renesas, and Renesas has been hit particularly hard this year
| [1].
|
| [1] https://www.renesas.com/us/en/about/press-room/notice-
| regard...
| creeble wrote:
| Highly anecdotal, but I spoke to Bilstein about some seemingly
| unobtainium shocks yesterday. Pre-pandemic these part numbers
| were common as dirt.
|
| They said their sales were up 50-60% over the last 18 mos, and
| that raw materials supply is down by a similar margin.
|
| These are _shock absorbers_ , not chips or toilet paper.
|
| It seems like we're seeing the delayed effect on supply chains
| over the pandemic. There is surely no value in hoarding shock
| absorbers, and if distributors were the hoarders, they seem to
| just be sitting on them, not raising prices.
| ruuda wrote:
| Yeah, this also makes no sense to me:
|
| > The Covid pandemic boosted demand for appliances that use
| chips, such as phones, TVs and games consoles.
|
| SOCs in phones and game consoles are produced on very different
| processes than chips used in cars, no? Cars don't need the
| smallest dies or most energy-efficient chips. These industries
| are not competing for the same capacity. Or am I missing
| something?
| petre wrote:
| > SOCs in phones and game consoles are produced on very
| different processes than chips used in cars, no?
|
| Yes, some of them are different. Consumer chips are not
| industrial norm, they have narrower environmental operating
| ranges.
|
| The foundries producing automotive chips shifted production
| to consumer chips during the lockdowns, as the auto
| production lines were on hold. This caused supply chain
| disruptions. Add to that US > China IP export bans and you
| have a black swan event.
| [deleted]
| kube-system wrote:
| Not everything is a purpose built CPU, GPU or SoC on cutting
| edge nodes. There are many general purpose ICs that are
| boring and ubiquitous: Display drivers, power conversion,
| amplifiers, microcontrollers, etc.
| fouric wrote:
| Hypothesis: there's a correlation between shortage of chips
| made with cutting-edge processes and chips that are not,
| because a lot of them are made by the same companies (and the
| supply-chain issues are impacting _companies_ not just
| _product lines_ ). For instance, in addition to having the
| bleeding-edge 5nm node, TSMC has a _lot_ of larger nodes and
| specialty non-digital-CPU nodes, too[1].
|
| [1] https://techtaiwan.com/20210816/tsmc-speciality-
| technology/
| gameswithgo wrote:
| modern car entertainment systems often use some of the same
| parts as tvs/game systems/pcs etc
|
| perhaps the engine ECU is not the chip that is in low supply
| detaro wrote:
| They certainly overlap. SoCs aren't the only chips in game
| consoles or other devices, different kinds of chip production
| have shared supply chains that themselves are struggling,
| SoCs used in cars aren't necessarily that different from the
| ones in other appliances (e.g. NVidia Tegra X1 is used both
| in the Nintendo Switch and some cars, and probably a pile of
| other things) ...
| technothrasher wrote:
| I can't speak for Toyota, but for my own electronics
| manufacturing business its definitely a chip specific shortage.
| We don't really have huge problems getting most stuff, but
| digital ICs are more and more just simply unobtainium, with
| vague lead times of 1-2 years.
| whiteboardr wrote:
| @kliment had a pretty good summary on this:
|
| https://news.ycombinator.com/item?id=26931498
| kristofferR wrote:
| Good! Toyota has been sabotaging clean cars because they can't
| compete [1][2].
|
| Most well known car brands have great electric cars now, but
| Toyota and their oil lobby buddies are trying to halt the
| progress. The decline of Toyota sales is good news for the world.
|
| [1] https://www.nytimes.com/2021/07/25/climate/toyota-
| electric-h...
|
| [2] https://insideevs.com/features/524481/toyota-hybrid-
| pioneer-...
| heresie-dabord wrote:
| Large-battery EVs (LBEVs) are an unscalable luxury, both for
| cost and recharging infrastructure. Even if Toyota has chosen
| to advance its interests more aggressively, the criticism of
| the EV market is valid.
|
| The electrical infrastructures of the US and the EU are not
| able to support a total adoption of EVs, especially not LBEVs.
| Consumers appear to be choosing LBEVs, not small-battery EVs.
| They want range even though most people need only a range of
| less than 100km. [1]
|
| Toyota's (or anyone else's) hybrid vehicles are a better choice
| for combination short-range/long-range drivers, where short
| trips are clean, and long trips use the energy density of
| petrol.
|
| IMHO what Toyota should be doing is adding a larger battery to
| its hybrids, e.g. 17 kWh instead of 8.8 kWh. I believe the
| Honda Clarity has a 17 kWh battery.
|
| From your articles:
|
| "Toyota's view is also that countries are jumping in with the
| idea of the electric-vehicle endgame without a real plan, and
| it's more political showmanship than sound planning," Mr. Liker
| said.
|
| Toyota will inevitably be marketing EVs, though.
|
| "For one, China, an important market for Toyota, has moved
| aggressively to require automakers there to make electric
| vehicles. That has spurred Toyota to start producing electric
| cars under a joint venture."
|
| [1] https://www.greencarreports.com/news/1128626_why-you-
| really-...
| da_big_ghey wrote:
| Toyota is not "sabotaging clean cars", only trying to delay
| regulations.
| Ma8ee wrote:
| So not sabotaging, only obstructing. I'm so pissed at all the
| auto-makers (with the exception of Tesla). The writing has
| been on the wall for at least a decade in large neon letters,
| but they all seem taken by surprise that they suddenly have
| to produce electric cars.
| CountDrewku wrote:
| Psst you can avoid all of those issues by not buying
| Toyota. Stop trying to regulate everyone else into what you
| want. If these EV's are so good it shouldn't be an issue at
| all.
| space_rock wrote:
| Stop polluting the cities and atmosphere and then it'll
| be none of our business
| CountDrewku wrote:
| I bike religiously so sorry you're not going to one up me
| on the "polluting" less scale. Are you going to come take
| my ICE vehicle from me? Didn't think so.
|
| Drop the authoritarianism it's unbecoming. There's a
| great country I can suggest you to move to if you want
| government control over everyone, feel free to PM me for
| details.
| da_big_ghey wrote:
| Position in many of cases I have heard has been that
| electric vehicle is just as good. Are you taking a
| position that they are representing some quality of life
| decrease and that the state must force us to accept this?
| space_rock wrote:
| Do whatever you want but if you pollute the atmosphere
| you'll pay for it. Communism doesn't work. User pays
| da_big_ghey wrote:
| This still is not "obstructing". Only it is trying to slow
| down coercive mandate alone, no obstacle to consumer buying
| an electric car on own initiative!
| hownottowrite wrote:
| Please write back when Tesla learns how to correctly apply
| paint to a car or fit body panels, or well, pretty much
| everything else that makes an actual car a car instead of a
| disposable gadget.
| kristofferR wrote:
| Tesla does not equal electric cars. Most well known brands
| have great electric cars now, not to mention all the new
| brands like Nio and Polestar.
| greenonions wrote:
| Ah yes, the most important function of a car, the paint...
| skhr0680 wrote:
| If you want a car to last more than five minutes, then yes,
| paint is very important
| altcognito wrote:
| Rust is a thing.
| jve wrote:
| Don't know if any Tesla car is aluminum, but Tesla Model
| P surely is.
|
| Edit: Alright, maybe declining trend:
| https://electrek.co/2017/08/22/tesla-model-3-body-alloy-
| mix/
| rightbyte wrote:
| I wonder if old alu cars will suffer from metal fatigue.
| orwin wrote:
| The tone of GP is poor, but yes, the paint is really
| important if you want your car to last more than 5 years,
| especially if you live near the sea. And if you only take
| your car out on weekend and summers and can not put your
| car in a garage, a poor paint job will cost you even more.
| colordrops wrote:
| The concerns you express aren't noticable or bothersome
| except to a small percentage of enthusiasts. Teslas are
| mechanically far more reliable and require less maintenance
| that other cars.
| altcognito wrote:
| Most people would consider the ability to put together the
| stuff you do see as a pretty good indicator of your ability
| to put together the stuff you can't see.
| lotsofpulp wrote:
| They have not even been out long enough to make that claim.
| Especially when comparing to Toyota.
| throwaway0a5e wrote:
| >Especially when comparing to Toyota.
|
| Toyota been saying "don't worry guys, we fixed the rust
| issues, the new ones won't be rusting out" every year
| since 1985 and running a more or less rolling recall
| since the 00s.
|
| Or was that not the implication of your comparison?
|
| Teslas will last a long time because the most important
| indicator of vehicle reliability is one that they share
| more or less 1:1 with Toyota, customers who who put very
| easy miles on vehicles and dutifully maintain them.
|
| That said, I fully agree that we have nowhere near the
| length of data set we need to know how Teslas will fare
| in terms of reliability and longevity (not the same
| thing) after adjusting for how they are used.
| itsoktocry wrote:
| > _share more or less 1:1 with Toyota, customers who who
| put very easy miles on vehicles_
|
| Like all the Toyota trucks used in military operations
| around the world? Those kind of "easy miles"? Comparing
| these two companies, with _vastly_ different scales of
| operation, is kind of silly.
| throwaway0a5e wrote:
| <rolls eyes>
|
| The edge between manufacturers in any given measurable
| attribute of vehicle performance is far, far smaller than
| a bunch of screeching fanboys on the internet would have
| you believe. If it weren't you'd see far less diversity
| of vehicles on the road.
|
| The humvee is also used by militaries all around the
| world. It's not known for particularly great reliability.
| Militaries have a much difference set of objectives when
| it comes to labor vs supply chain complexity vs cost than
| civilian entities and individuals do.
|
| Poor countries in Africa and the middle east use Toyotas
| a lot for the same reason they still use 7.62
| intermediate cartridges a lot. It's what they have, it's
| what their supply chains are tuned for. It does the job
| they need, not necessarily with maximal efficiency but
| well enough they can't justify the cost of switching.
|
| Meanwhile in the civilian market Toyotas cost more, don't
| do good incentives/rebates and financing is more limited.
| This drives people on a budget to other brands. This
| means Toyotas wind up in the hands of people who treat
| them proportionally nicer. A Tacoma rolls off the lot and
| into an upscale garage. A Colorado rolls off the dealer
| lot and into a commercial fleet where it will be driven
| by a bunch of people who aren't paid enough to care. A
| Camry will have one ass in one seat for the first 100k
| and it will go from home to work and home to work. An
| Altima will spend its first 100k dragging a family of
| four all of the places they need to go. A Sienna's first
| owner will go to home Depot, buy 3000lb of pavers and
| rent the truck to drive it home. A Town and Country's
| first owner will put that in the van without thinking
| twice.
|
| See what I'm getting at here? Being expensive up front
| means that only people who can afford to be nice to
| things get their hands on them, at least initially, that
| means the vehicles rack up more miles and years before
| they see hard use. Any vehicle not fundamentally flawed
| to begin with can look reliable in the hands of these
| people. I can present other examples of this if Toyota is
| too emotional of a topic for people to discuss.
|
| Also it should go without saying that we're talking in
| broad generalizations here.
|
| I do agree with you that the scale difference between
| Tesla and Toyota is massive and comparison between them
| is silly.
| lotsofpulp wrote:
| While there might be a slight effect of Toyotas being
| used less intensively because disproportionally higher
| income people buy them, I doubt it is a material effect.
| The people that are not going to put pavers in their car
| because they can afford not to and want to keep it nice
| are buying Denali Yukons or other more expensive, luxury
| vehicles.
|
| Toyota did not start expensive, and even now it is not
| the most expensive ($/mile). They earned that reputation
| over many years, and while they may have raised prices,
| the resale market does not show any evidence of the
| quality slipping.
| lotsofpulp wrote:
| > Or was that not the implication of your comparison?
|
| The implication of my post is Toyota operates on a
| different scale than Tesla, and due to insufficient time
| having passed since the advent of Tesla, a claim cannot
| yet be made. I referenced Toyota because of its
| objectively highly ranked reliability based on resale
| price and famously low maintenance costs.
| space_rock wrote:
| You're talking to the parent comment that is making early
| claims about quality? Oh ok it's only allowed to making
| negative claims about Tesla
| lotsofpulp wrote:
| > Oh ok it's only allowed to making negative claims about
| Tesla
|
| I do not understand what this means. But I am simply
| stating that the data for ICE vehicles is far longer and
| the dataset larger, especially for Toyota and other
| reputable brands, to make a conclusive claim that Tesla's
| reliability (and even maintenance) is less over the whole
| life of the vehicle.
|
| Although I do not doubt that it is possible for electric
| vehicles to achieve this claim, and maybe Tesla already
| has.
| papercrane wrote:
| The data doesn't bear that out. Tesla's have consistently
| ranked near the bottom in reliability surveys and indexes.
| They're amazing cars, but they've got a long way to go on
| the build quality and reliability measures.
| Veliladon wrote:
| Toyota was one of the few (only?) companies to keep a large
| stockpile of chips on hand to continue production in case of a
| supply interruption. They kept something like two years worth on
| hand.
|
| I guess 18 months of doing the extremely heavy lifting for the
| whole industry has taken its toll and now they're in the same
| boat.
| Unklejoe wrote:
| I just wonder how deep this goes down the line of third party
| suppliers. Like, I know a lot of auto manufacturers use Bosch
| or Siemens for their ECUs, so I would think it's really out of
| their hands. Then again, maybe they have terms in the contract
| to force Bosch to maintain a certain inventory?
| dd36 wrote:
| I thought Toyota invented not doing that.
| varispeed wrote:
| Power 101: Preach one thing, do the opposite
|
| It is smart to project to the world that just in time
| manufacturing is effective and then stockpile parts. This
| will get you ahead of competition if there is a problem like
| we experience now.
| zeke wrote:
| One big advantage of low inventories is you do not have to
| fix or trash lots of parts if they were made out of spec. In
| the case of chips the odds are they are all good. It is just
| the cost of ownership but not the cost of refitting.
| throwaway0a5e wrote:
| >One big advantage of low inventories is you do not have to
| fix or trash lots of parts if they were made out of spec
|
| Instead you either stop/slow production or shove them in
| your products and hope for the best.
| hef19898 wrote:
| You know a function called Supply Chain Management
| exists, right?
| throwaway0a5e wrote:
| It _should_ go without saying that there are nuances in
| implementation. What I 'm describing here is a
| fundamental tradeoff of JIT systems. If you get the wrong
| thing delivered it throws a bigger wrench into things
| because you don't have the buffer. Can you make this rare
| enough that the amortized cost is low enough to make JIT
| overall cheaper? Of course, that's why everyone does JIT.
| Jtsummers wrote:
| > If you get the wrong thing delivered it throws a bigger
| wrench into things because you don't have the buffer.
|
| JIT, in Lean, does _not_ mean no buffer, it means as
| little of a buffer as you can get away with. If you have
| issues with delivery like this on a regular basis, then
| you 'd increase the buffer size (at least temporarily)
| and also take your suppliers to task for sending the
| wrong thing over and over.
|
| The buffer size should be increased if any upstream
| supply issues exist that regularly cause a shortage.
| Ideally, you should address those issues themselves, but
| if you have and they can't (or won't) be fixed then you
| increase your buffer to accommodate reality. However, the
| shortage is itself a signal. Too high an inventory
| permits supply issues to persist without being addressed
| for a long time _because_ you never get the signal about
| the issues with them (the downstream production
| slowdowns).
| hencq wrote:
| > JIT, in Lean, does not mean no buffer, it means as
| little of a buffer as you can get away with.
|
| Yeah, spot on. One of my college professors used to
| compare it to a river with rocks in it. If you want to
| safely sail on the river, you can either a) keep the
| water level high enough or b) remove the rocks. In a
| production system inventories/buffers are the water level
| and variance is the rocks. The philosophy of JIT is to
| remove as much variance from your system as possible so
| you can lower your buffers. If you have identified areas
| of high variance you're forced to keep buffers until
| you've removed enough variance to lower your buffers.
| cptskippy wrote:
| > JIT, in Lean, does not mean no buffer, it means as
| little of a buffer as you can get away with.
|
| Eh... I would argue that JIT means making that buffer
| someone else's problem.
|
| I was doing EDI at a logistics firm that contracted with
| Seagate who provided HDDs to Hitachi for their SANs
| around 2006. Hitachi was doing JIT for their
| manufacturing, Seagate however was just speculating
| Hitachi's demand and literally stockpiled HDDs in this
| firms warehouses geolocated next to Hitachi's factories.
|
| We would pickup stock from Seagate and ship it to these
| warehouses where they would remain Seagate's property
| until Hitachi requested it, then we would simply transfer
| ownership to Hitachi.
|
| Interestingly, we used rail shipping as a buffer to
| reduce warehouse size by sending freight on
| slow/cheap/indirect routes.
| Jtsummers wrote:
| In this case you have two buffers. Seagate/you have a
| buffer for the outflow based on expected consumption
| rate. Hitachi almost certainly has some buffer of their
| own. This is not unusual with physical goods where you
| have the transportation time and cost to consider (which
| you/your employer took advantage of).
|
| If Hitachi couldn't consume your delivered HDDs as fast
| as they were delivered and anticipated any kind of
| delay/disruption could ever happen, they'd have some
| buffer of their own.
| cptskippy wrote:
| In this case Hitachi didn't have a buffered supply. The
| warehouses were located literally across the street. The
| products were palletized at Seagate's factory in
| quantities matching Hitachi's product lines then
| delivered to the warehouse in a cadence closely matching
| Hitachi's consumption rate. So when Hitachi placed an
| order, a pallet was pulled and the ownership of the
| serial numbers on that pallet were transferred to Hitachi
| as it was delivered.
|
| The logistics firm was the buffer allowing Seagate's
| product rate and Hitachi's consumption to be asymmetric
| in nature.
| hef19898 wrote:
| The last bit works, as long as the slow transportation is
| closely controlled. I tried it once, in the end warehouse
| space was cheaper.
|
| EDIT: What you describe sounds more like VMI, vendor
| managed inventory, than JIT. Both require half way
| reliable forecasts and collaborative planning so to worl
| properly. Have to agree so that both solutions tend to
| push inventory risk to suppliers. Done correctly, overall
| inventory does decrease so.
| cptskippy wrote:
| JIT and VMI go hand-in-hand, they aren't mutually
| exclusive. Implementing JIT is to impose VMI on your
| suppliers.
|
| The interesting thing was that Seagate avoided managing
| inventory by outsourcing to the logistics firm. The stock
| was technically Seagate's until it was ordered by Hitachi
| but the logistics company took immediate possession as
| pallets rolled out of the factory.
|
| > The last bit works, as long as the slow transportation
| is closely controlled.
|
| It didn't need to be controlled, just scheduled. You knew
| you need x units by d. The factory output n per week, so
| you could stagger shipments by way of different lines.
|
| All of the inventory was tracked by serial numbers and it
| was interesting to watch it move because supply was often
| delivered to the warehouse out of order or shipments
| weeks apart arrived simultaneously.
| hef19898 wrote:
| The way I used was VMI to avoid the limited flexibility
| of JIT, bit yes both concepts tackle the same problem.
| What you describe sounds like a lot of fun to run on a
| daily basis, would have loved to do that!
| a9h74j wrote:
| I wonder if Toyota was a little slower at starting to
| expedite, for having had a large buffer stock already in
| hand.
| akg_67 wrote:
| They changed after 2011 earthquake when several factories
| couldn't continue production because parts were not coming
| from factories impacted by earthquake.
| dgellow wrote:
| That changed after 2011 earthquake
| danparsonson wrote:
| I don't think that's exactly true and actually may be a
| common misconception - see
| https://www.youtube.com/watch?v=b1JlYZQG3lI for a much better
| explanation than I could provide.
| Ekaros wrote:
| And then they invented that maybe they should keep poorly
| sourceable parts at hand. And chips are those. Unlike nuts,
| bolts, metal and plastics. Which you can easily find
| replacements for.
| The-Bus wrote:
| Plastics have actually experienced a pretty significant
| shortage this year, with resins and other components being
| hard to source[1]. Polaris, for example, would build their
| entire vehicle except the seats, then build and attach them
| once the plastic resin for the foam became available[2].
|
| 1) https://www.ntotank.com/blog/resin-material-market-
| shortages... 2) https://www.wsj.com/articles/supply-chain-
| bottlenecks-drive-...
| jnorthrop wrote:
| Yes, they more or less invented the concept of just in time
| delivery, but they also suffered supply chain issues after
| the Fukushima earth quake. After the latter incident they
| made the risk calculation that inventory of some parts was
| worth the expense.
| [deleted]
| Spooky23 wrote:
| Wall St in general and Jack Welch in particular embraced the
| "avoid owning anything" at any cost model to juice the books.
| [deleted]
| hef19898 wrote:
| JIT is probably the most mis-understood supply chain concept.
| Kiro wrote:
| How?
| hef19898 wrote:
| Because people equal JIT with close to zero buffer
| inventory. JIT is basically a concept of defining the
| _correct_ and _minimal_ buffer. If that 's close zero,
| cool. If it's more than zero, cool as well. It also puts
| a lot of emphasis on lot sizes and lead-times. No one in
| the right mind would implement JIT for stuff involving
| sea freight without buffer stock close to production.
| wheelinsupial wrote:
| There are pre-conditions for products to be set up as
| JIT. As you mention, short lead times, but also things
| like high quality, high availability, and others as well.
|
| Toyota and a lot of the concepts that come out of Toyota
| are ideals to strive for. It doesn't mean everything is
| like that, which is hard to understand from just reading
| the lean literature.
| gameswithgo wrote:
| Chips are small, don't age fast. Make sense as an exception
| to the rule.
| bluGill wrote:
| Chips also go out of production suddenly (with only a
| couple years warning - which isn't anywhere near enough
| time to replace them all). thus any major manufacture has
| stockpiles of chips that are no longer in production that
| need to last until production of the widget switches to new
| chips and have enough left over as spare parts for existing
| widgets.
| davidrm wrote:
| > Chips also go out of production suddenly (with only a
| couple years warning...)
|
| No they don't, automotive semiconductors suppliers have
| an "obligation" to manufacture the component for at least
| 15 years, which makes managing the production output
| planning, spare parts etc. much easier. It's not like
| walking into your supermarket and finding out that your
| favorite brand of chocolate is no longer available. There
| are minor exceptions, and sudden changes in the demand
| might affect the immediate availability, but at the very
| least the part is almost guaranteed to be produced for 15
| years with defined notice policies. Microcontrollers
| don't have a pin-compatible drop in replacement when they
| get discounted, but many different ICs do, like power
| supplies, transistors etc., so discounting them is not a
| big deal.
|
| e.g.: https://www.nxp.com/products/product-
| information/nxp-product...
|
| > Participating products are available for a minimum of
| 10 years from product launch (15 years from product
| launch for many products developed for the automotive,
| telecom and medical segments), and are supported by
| standard end-of-life notification policies.
| bluGill wrote:
| Some of them get that, and car manufactures have learned
| the hard way how important that is and so demanding it
| more. However there are still a lot of parts where they
| can't get the 15 year supply in anything that meets the
| other requirements.
| lmilcin wrote:
| It is different to keep large inventory of everything because
| you are inefficient and can't function without it and
| different to decide to stockpile specific parts because of
| perceived potential risks while being efficient with
| everything else.
| minikites wrote:
| This is a misunderstanding of lean manufacturing. Lean is not
| about eliminating every stockpile, it's about thinking
| through your supply needs and only stockpiling what is
| necessary.
| nszceta wrote:
| Were manufacturers stockpiling what was unnecessary before
| lean manufacturing? It's an absurd notion that anybody
| would stockpile things without consideration of inventory
| costs.
| Jtsummers wrote:
| Yes, they were.
|
| Think of each stage of the system, not just the
| components you bring in but also the partially assembled
| components you produce along the way as well as the
| finished product. US auto manufactures (in particular)
| had an operating method where they kept inventories high
| at all stages. This wasn't entirely deliberate. They
| weren't saying, "We need 5000 car doors just sitting
| here." They were, instead, saying, "We can't stop making
| doors just because everything else down the line is
| stopped due to <event> so keep churning them out and pile
| them up." The tail end inventory of "complete" vehicles
| were sitting there due, often, to quality issues
| (misaligned assemblies, missing parts, whatever the
| reason may be).
|
| So inventory piles up everywhere along the chain, which
| also worked because there was a large turnaround period
| when retooling and equipment downtime (not always
| planned). Because _Nobody Ever Gets Credit for Problems
| that Never Happened_ [0] there was an underinvestment in
| maintenance and improvement efforts. High inventory
| across the line papers over this issue. Lean discourages
| high inventory in order to make these issues apparent so
| that they can get the attention that they deserve. Also,
| rework is viewed as waste so quality issues should be
| addressed when they 're discovered, not by assembling
| hundreds or thousands of vehicles incorrectly and then
| fixing them, fix the assembly line issues causing that
| misassembly.
|
| [0] https://web.mit.edu/nelsonr/www/Repenning=Sterman_CMR
| _su01_....
| hef19898 wrote:
| They did stockpile everything due to not having a plan or
| consider costs. That also had the strange side effect of
| constantly running out of parts. In some way, stuff
| worked by accidentally having the right stuff on hand at
| the right time in sufficient quantities. TPS is all about
| having a plan for this stuff.
| sct202 wrote:
| Sort of, it would come down to suppliers would
| historically only sell in large quantities to maximize
| their production efficiency, so the per unit production
| cost would be minimized by running a long production run.
| But this would potentially cause scrap if the final
| product did not sell well to expectations or if there was
| a design error, and then also increased working capital
| as the inventory levels would spike really high with
| infrequent supply from the vendor instead of being more
| constant with more frequent replenishment.
|
| And then multiply across everyone in a supply chain for a
| single product having to deal with waiting to receive
| giant parts orders from their vendors before they could
| start their own giant order to supply their customers.
| doikor wrote:
| After the 2011 earthquake they came to the conclusion that
| for some hard to source parts you have to keep a big
| stockpile.
|
| Basically if a part can only be produced by one or two
| parties there is too much risk of that source going away and
| disrupt everything else. This also applies all the way down
| the chain so if you got part A that can be made by 20
| contractors but if all of those contractors depend on the
| same source then that part is also on the list of "stockpile
| this part enough to get over most disruptions"
| a9h74j wrote:
| Should this be called the left-pad moment of just-in-time?
| KaoruAoiShiho wrote:
| Not really, Toyota handled the shortage the best and was
| the last to cut production. The supply disruptions simply
| lasted too long to be possible to compensate for.
| brobdingnagians wrote:
| Maybe this is a dumb question, but does anyone still produce
| cars without chips? It's possible, and in the current
| environment it seems like it would be a major competitive
| advantage-- and might be more reliable in general.
| andruby wrote:
| I don't think it's possible. At least not road-legal in
| Europe.
|
| There must be hundreds of chips in a modern car: Engine, ABS,
| wireless key, cruise control, radio, audio, electric windows,
| gps, battery management, airbags, seat-belt check, sensors,
| climate control, ...
| silon42 wrote:
| you could drop: wireless key, cruise control, gps easily
|
| possibly climate control (not needed for short rides, a fan
| will do), maybe even radio (can always add later) and
| electric windows
|
| I'd buy that car if it was cheaper... I'd need AWD though,
| trailer hitch...
| jhgb wrote:
| I'm not even sure you need to drop all of these. Lots of
| functionality could be centralized. The Apollo Lunar
| Module did everything with just one embedded computer.
| We've probably just traded more chips for shorter wires
| in many such cases.
| detaro wrote:
| "Without chips" is not really possible if you want to sell in
| first-world markets, way to many requirements (engine
| efficiency, safety features, ...) you would be hard-pressed
| to meet otherwise.
| raisedbyninjas wrote:
| Backup cameras are required now.
| kube-system wrote:
| Stability control has been mandatory in the US since
| 2012. I doubt there's any remotely reasonable mechanical
| way to accomplish that.
| fulafel wrote:
| EVs in lighter classes that don't have ESC requirements
| would probably work. A bit of battery design work for the
| analog BMC would be needed to use lithium chemistry but
| shouldn't be that hard.
| josephd79 wrote:
| probably not, regulation and crack down on pollution from
| vehicles. Have you ever rode in an older car that uses a
| carburetor instead of fuel injection? Nothing like the crisp
| smell of gasoline in the morning... or anytime you drive it.
| cuu508 wrote:
| Of course, you need _some_ electronics. Let 's rephrase:
| which cars from western mainstream manufacturers are
| currently the "lowest tech"? No infotainment, no digital
| dash, no touch-sensitive anything, as few sensors as is
| viable to still be road legal?
|
| And a related question: modern cars are full of tech
| because that's what market demands. Can we expect the trend
| to reverse at some point?
| bluGill wrote:
| > modern cars are full of tech because that's what market
| demands. Can we expect the trend to reverse at some
| point?
|
| No, they are nice to haves. anyone who is looking to save
| money on a car will buy a used car with those features
| because they get the cheaper price and the features.
| throwaway0a5e wrote:
| >No infotainment, no digital dash, no touch-sensitive
| anything, as few sensors as is viable to still be road
| legal?
|
| For compact/subcompact sedans/hatches and midsize sedans
| the OEMs typically make a super stripped down variant so
| they can advertise an insanely low "starting at" MSRP.
| Dealers don't typically buy a lot of them so they're very
| hard to find and you'll likely have little room to haggle
| on price.
|
| Nowadays there's a pretty long list of mandatory
| electronics and everything has at least one bus network
| in it but if you want to minimize the number of
| extraneous modules on that network then a stripped down
| economy car is your best bet.
| akiselev wrote:
| _> no digital dash_
|
| Rear view cameras are mandatory since ~2014 so I don't
| think this is possible.
| jaywalk wrote:
| He probably means no digital instrument cluster, which
| isn't necessary for a rear view camera. Most lower-end
| vehicles put a dedicated screen in the mirror for the
| rear view camera.
| lallysingh wrote:
| https://ineosgrenadier.com/ may hit the spirit of what
| you want best. There's still a screen, but mostly for
| Android Auto/Carplay.
| aembleton wrote:
| Probably the Dacia Sandero
| https://www.dacia.co.uk/vehicles/sandero.html
|
| Go for the Access version and you don't even get a radio.
| cuu508 wrote:
| James May on Dacia Sandero: "This car really does say
| that you have more sense than money. And if you happen to
| be astonishingly rich, think how _sensible_ it makes you.
| It 's anti-fashion, anti-consumerism, anti-obsolescence."
|
| https://youtube.com/watch?v=ELX7NJxnUX0
| jccooper wrote:
| No; it would be illegal in every major market, which if
| nothing else all require some sort of on-board diagnostics
| system. OBD has been required in California since 1988. India
| just recently required OBD on everything.
| jrwoodruff wrote:
| I don't even know if you can buy new off-road toys that don't
| have chips - four wheelers, side-by-sides, snowmobiles and
| the like. Pretty sure they all use electronic fuel injection
| these days, and that requires at least one chip.
| bri3d wrote:
| Even before EFI, almost all dirt bikes and snowmobiles
| built since probably the 1980s have had electronic
| ignition. You have to go pretty far back in time to find a
| vehicle of any sort with a points ignition that has no
| silicon/transistorized electronics in it.
| gameswithgo wrote:
| It is probably possible but would require complex mechanical
| solutions to meet modern efficiency and emissions
| requirements that would likely be far less reliable.
| ghaff wrote:
| >and might be more reliable in general
|
| Cars in, say, the 1960s were not "more reliable in general."
| It's not all semiconductor-related of course--they also
| rusted out quickly in areas that got snow--but 5 years/50K
| miles is about what you were looking at for vehicle lifetime.
| Also much lower fuel efficiency, to say nothing of lack of
| what we'd consider routine safety features today.
| ohples wrote:
| I seem to recall most cars built before the mid-80s just
| had 5 digit odometers.
| didgeoridoo wrote:
| The many Cubans driving cars from pre-1959 would be
| surprised to hear this.
| [deleted]
| ghaff wrote:
| The fact that clunkers can be kept running at some level
| for an extended period of time (especially if they're not
| somewhere that the frame will simply rust out from road
| salt) doesn't change the fact that what people in
| developed countries would consider reliable day-to-day
| transportation has a significantly longer life cycle than
| it used to.
| hef19898 wrote:
| Ever since working on Integrated-Logistcs-Support I take
| issue when terms like reliability are thrown around.
| Because in the end it's a result of looking at Reliability
| (stuff not breaking down often), Availability (stuff being
| functional when planned to be), Maintainability (how easily
| stuff can be kept functioning and repaired when broken),
| Supportability (how easy spares can be get) and Testability
| (how easy it is to find defects).
|
| On that, Availability is the result of all the rest. With
| the important part of _planned_ Availability, because that
| excludes stuff like planned maintenance. Arguably modern
| cars beat old ones in that category.
| ghaff wrote:
| I think that's true. What most of us care about in cars
| is that they work when we want to drive them someplace
| _right now_ , won't leave us stuck on the side of the
| road, and don't have prohibitive (time or money) planned
| maintenance.
|
| What's probably true is that older cars that aren't
| rusted out can probably be kept running by people with
| the appropriate mechanical skills even in the absence of
| proper factory/3rd party parts for longer than modern
| vehicles can. Given intact supply chains, modern vehicles
| are more available overall. But, to the point of the
| article, modern vehicles are more susceptible to lack of
| parts.
| hef19898 wrote:
| True, as an owner of a car from 1982 I agree. Requires a
| lot more preventive maintenance, e.g. oil changes every
| six months or 5-6k km, but runs perfectly fine when
| properly maintained. Also, I cam probably fix most issues
| with tools carried on board on the side of road. Enough
| to get to a proper workshop at least, I converted it to
| 2WD after killing a diff and drove for 200 km that way.
| If you cannot do that yourself, you're screwed so.
|
| That being said, if I'd go on a 2k + mile trip I would
| put in some work to get the car fit for this. Looking at
| my dads VW camper, I'll just fill up drinking water,
| maybe gas and fuel. Without a serious amount of
| preventive maintenance those cars do have a tendency to
| break down so. I guess we are just not used to this kind
| cars or machinery anymore.
| OldHand2018 wrote:
| Depending on the brand/model, the odds are pretty
| overwhelming that your car from 1982 has 5 or more chips
| in it.
|
| The chip-ification of cars has been going on for a
| really, really long time.
| hef19898 wrote:
| Mine has a total of three 35 amp glass fuses. And dual
| carbs. I can confidently say there are no chips in there,
| excluding the radio and the rests of the snack variant on
| the back seat. Sometimes I'd love EFI, 17 l / 100 km just
| hurts...
| ghaff wrote:
| I also remember when it was a good idea to carry spare
| fuses with you. I certainly don't in my current 10 year
| old vehicle and have absolutely no idea where the fuse
| box is (well I know the general vicinity where it
| probably is) without looking in the manual.
| hef19898 wrote:
| Oh, I have probably half a dozen or so in the glove box!
| The auxiliary circuit has a tendency to blow the fuse
| out... Still unable to figure out why...
| clipradiowallet wrote:
| > Also, I cam probably fix most issues with tools carried
| on board on the side of road.
|
| I think that is the largest appeal to me of older cars.
| There are only so many parts that can fail, and they are
| all repairable with some time and hand tools(and maybe a
| Haynes manual!).
|
| (for people unfamiliar, a Haynes manual is a 3rd party
| manual customized for most makes/models of automobiles.
| It describes with pictures how to perform [almost] any
| repair.)
| hef19898 wrote:
| Yeah, the Haynes Books of Lies! Kidding, they are great.
| Also I found that original workshop manual are sometimes
| better. Fun fact, Haynes has an owners manual for the WW2
| Panther tank.
| everdrive wrote:
| In addition, breakdowns were a much more regular
| occurrence. It wasn't unheard of for brakes to fail without
| warning. I hate computer-laden cars quite a bit, but as you
| say, cars have become much more reliable than they ever
| were in the past. (Written while parked in a 17 year old
| Toyota.)
| kwhitefoot wrote:
| My 1965 Volvo Amazon did 300 k miles before I scrapped it,
| in 1984, in favour of a 1976 Volvo 245. I only scrapped it
| because it wasn't worth anything, it was in perfect working
| order. The floor of 245 finally succumbed to Norwegian road
| salt in 1996 after 250 k miles but was otherwise in perfect
| order.
|
| I don't remember how far my 1965 Austin Mini van had done
| by the time I scrapped it in 1978 but I'm quite sure it was
| much more than 50 k miles.
| ghaff wrote:
| That was certainly not the norm however. I can clearly
| remember when 100K miles was considered exceptional and,
| as someone else noted, probably beyond what the odometer
| was designed for.
| eldaisfish wrote:
| this is survivorship bias, nothing more.
| kwhitefoot wrote:
| No it isn't. Survivorship bias would have been me
| claiming that because my cars lasted more than 50 k miles
| that therefore all cars did.
|
| I merely added a small counter argument to the idea that
| cars of the period were _necessarily_ short lived.
| eldaisfish wrote:
| But most were short lived. The lifespan of cars has been
| getting longer and pointing to the exception that bucked
| the trend is literally survivorship bias.
| hef19898 wrote:
| The bias is more that we go through cars faster,
| generally, then they die. And once a car isn't used
| anymore, it just rots away. Or it gets exported to some
| developing country to happily life for another couple of
| decades. How that would work with modern electronics, I
| don't know. Probably as long as electronics don't brick
| the car it should fine I guess.
| WillPostForFood wrote:
| _The bias is more that we go through cars faster_
|
| Is that true though? Average length of car ownership is
| at an all-time high of over 8 years. It was under 5 years
| just 20 years ago. Maybe length of ownership doesn't
| correlate to length of car life, but seems like a strong
| signal that car quality and lifespan is going up.
| CryptoPunk wrote:
| Capitalism really promotes planned durability.
| ghaff wrote:
| Cars are 1.) expensive enough and 2.) required by many
| people to work in order to get through the day that,
| while plenty of people also want the latest and greatest,
| most value reliability and long lifetime a lot. (To the
| point where these are tracked pretty carefully by
| organizations like CR.)
| UseStrict wrote:
| Vehicles made a massive leap forward with the introduction
| of electronic components - fuel injection, oxygen sensors,
| throttle control. Not to mention essential safety
| components like traction control computers and anti-lock
| braking. There's no way a vehicle without these features
| would pass any sort of environmental or safety regulation
| today.
| w-m wrote:
| All new cars in the EU need to have an automatic emergency
| call system since 2018: https://en.wikipedia.org/wiki/ECall
|
| That would be hard to pull off without chips. Although I
| guess you could keep it completely isolated from the rest of
| the car.
| Cloudef wrote:
| It is possible, but the cars will be taxed into oblivion,
| because of push to electric cars. This is nothing new in
| finland because nobody there buys new car anyways, and
| continues to recycle existing old cars. Though that will also
| soon become impossible due to rising taxes to get rid of the
| old cars. I'm not sure which here is supposed to be more eco-
| friendly in the long run, but I suppose if you make people
| impossible to own anything that'll eventually win?
| throwaway9870 wrote:
| You cannot build a modern car engine without chips, let alone
| a car. Also, no way to hit safety requirements without chips
| (air bag deployment for example).
| gameswithgo wrote:
| I mean yes, if you take that tautologically, since a modern
| car engine has a chip. But probably you could build an
| engine that meets modern requirements without. People
| forget how clever analog solutions can be. It would be a
| huge pain in the ass though, and take years.
| hef19898 wrote:
| No, not since the late 80s when electronic fuel injection
| became necessary to meet emission standards. The
| alternative, carbs, just isn't good enough anymore.
| teorema wrote:
| Ugh... in one of the these threads on HN someone said a
| manufacturer was doing that, or at least openly speculating
| about it, offering a low tech model. I think it was in France
| but my memory is fuzzy.
| pyb wrote:
| Dacia Logan ?
| NickNameNick wrote:
| Probably thinking of 'voitures sans permis', really small
| cars that can be driven in France by people without drivers
| licenses.
|
| (Including by people who've been disqualified...)
| gilbetron wrote:
| When I started driving in the 80s, there was always a real
| chance that the car wouldn't start, or have a problem
| starting. Even new cars. Now? Except for a dead battery, I
| haven't had that problem in years, and we don't buy/lease new
| vehicles very often (our two current vehicles are 4 and 17
| years old). ICs are far more reliable than old school
| electronics/mechanics!
| atonse wrote:
| I can't think of any system in a car today that doesn't use
| some chip somewhere.
|
| Wouldn't even power steering use it? Headlights?
|
| Engines would have engine control units running some kind of
| real-time OS, anti lock brakes, anti traction systems,
| airbags, power locks with wireless keys. Climate control vs
| just "AC fan on"
|
| Even some ignition systems have chips that do some kind of
| key exchange to start the car. (Yes you can bypass it but now
| you're making a car that's easier to steal)
| refurb wrote:
| No. US cars got chips starting in the mid-80's, so almost 40
| years ago.
|
| And they were actually much more reliable and efficient. Fuel
| injection was light years ahead of carburetors.
|
| And I'd argue it would be impossible to meet emissions
| without computer control of the engine.
| subpixel wrote:
| I just bought a Toyota at MSRP last week. I was considering
| waiting a little longer, glad I did not.
| phkahler wrote:
| Most auto companies don't take delivery of chips except for
| managing production of a few key modules like engine
| controllers. Most of the chips in your car are in components
| made by suppliers with circuit boards often made by a second
| tier supplier. Combine that with many chips having no alternate
| and I don't see how Toyota could really stay exempt from this
| problem. OTOH not every chip maker is having trouble keeping
| up.
| lostapathy wrote:
| Toyota doesn't have to physically hold the chips/modules to
| accomplish they. They have contracts with suppliers that lock
| in how much inventory the supplier has to have on hand, and
| how much supply they need locked in from their own upstream
| suppliers.
|
| One criticism of Toyota's production system is that they
| aren't so much "just in time" as it sounds on the surface,
| rather they just force their suppliers to run the warehouse
| instead of them. Which still makes sense - Toyota wants to be
| in the car business, not the warehouse and logistics
| businesses.
| bluGill wrote:
| Toyota is in the logistics business more than the car
| business. Sure cars make the money, but the logistics are
| the hard part of a large car factory.
| lostapathy wrote:
| In that way - one could argue they "manage the logistics
| business" - but that they don't actually want to do the
| logistics (or own the inventory/warehouses).
| mrfusion wrote:
| Has anyone considered redesigning the car to not need these
| particular chips?
|
| Do a massive push to target a different chip or even a FPGA.
| There must be something out there to run the software.
| 11thEarlOfMar wrote:
| If you have a taste for irony, my company makes critical
| components for semiconductor equipment. If we can't ship,
| equipment companies can't ship new equipment. If they can't ship,
| semiconductor fabs can't increase capacity to meet the demand and
| solve the shortage.
|
| We went line down last week due to shortage of a chip for our
| component.
|
| In reality, the shortage is somewhat self-inflicted, like toilet
| paper a year ago, but for whatever combination of real demand +
| hoarding, we can't get chips.
| throwawaygh wrote:
| A negative feedback loop in semiconductor supply seems like a
| situation where a government should just step in manage the
| market a bit.
| 1e-9 wrote:
| It is a _positive_ feedback loop, not a _negative_ feedback
| loop. See https://en.wikipedia.org/wiki/Positive_feedback.
| robotresearcher wrote:
| It's negative WRT the chip production rate.
| dev_tty01 wrote:
| No, there is a shortage, leading to a shortage, leading
| to a shortage, ...
|
| If it was negative feedback, the "error" (shortage in
| production) would lead to an error cancelling signal, and
| therefore an increase in production. Positive feedback
| has error leading to larger error, shortage leading to
| more shortage.
| a9h74j wrote:
| It does have negative external effects, as you observe,
| in the sense of a viscious circle. But even a viscious
| circle, mathematically, has positive feedback, resulting
| initially in a positive exponent growing against time,
| not a negative exponent damping out in time.
| robotresearcher wrote:
| Doesn't positive feedback require a positive loop gain?
| Right now, not enough chips are available to make new
| chips. So the loop gain is less than zero, damping the
| output recursively.
| throwawaygh wrote:
| I'm also confused by the confusion here... probably naive
| pattern matching? Reminds me of TAing undergrad courses
| where you could get more than half the class to confuse
| "positive feedback" and "negative feedback" on a midterm
| by just giving examples where stability = bad :)
| [deleted]
| robotresearcher wrote:
| Grandparent gives the choices of 'positive exponent
| growing against time' or 'negative exponent damping out
| against time'. Here we have a positive exponent damping
| (reducing) the output over time, because it's value is
| less than one, resulting in a negative loop gain. The
| Wikipedia article linked up thread defines positive
| feedback as having positive loop gain, and negative
| feedback negative loop gain.
| a9h74j wrote:
| IIRC, generally a positive loop gain greater than one
| will lead to diverging behavior aka instability, whereas
| even a positive-sign to feedback, if loop gain is "less
| than one" will not. I might be brain-farting here, but I
| cannot be precise anyway, which IIRC gets into plotting
| poles in a complex plane. (Cue joke my applied math
| professor would tell, about why all the Polish people
| were asked to sit in the right-hand aisle of an
| aircraft.)
| [deleted]
| robotresearcher wrote:
| Self-reply, too late to edit. Looks like I remembered the
| definition of loop gain incorrectly. This should say a
| loop gain less than 1, not negative
| zsmi wrote:
| The problem is, if the feedback signal is too slow in
| getting back to the thing which measure error (i.e. too
| much phase lag), then negative feedback can turn into
| positive feedback and this leads to an instability.
|
| One of the most complex pieces of the semiconductor fab
| is the building itself. Even with plans and permits in
| hand, it takes years to make one that can output at
| reason throughput and yield.
|
| This report is from 1999 and it hasn't gotten easier.
|
| https://www.imia.com/wp-
| content/uploads/2013/05/Construction...
|
| "Typically the product life of a semiconductor chip (nine
| to 12 months) is less than the time required to construct
| the facility and install the equipment for manufacturing
| (24 to 36 months). As such, the
| construction/commissioning process is a rapid, constantly
| overlapping and complex set of events. In addition,
| construction of semiconductor facilities is very complex
| and costly (about USD 1.2 to 1.5 billion) due to the
| extraordinarily sophisticated processes and equipment
| required to manufacture semiconductor chips."
| a9h74j wrote:
| Yes, and same situation in every mining-related commodity
| market. Multiple time delays of order several years.
| Large up-front investments. Large uncertainties in
| payoff. Look at the multi-year price behaviors in those
| markets and see too if there is much stability.
| CamperBob2 wrote:
| _" Typically the product life of a semiconductor chip
| (nine to 12 months) is less than the time required to
| construct the facility and install the equipment for
| manufacturing (24 to 36 months)._
|
| That's an absurd underestimate of market lifetime. I'd
| bet that fully 80% of the chips available in 1999 when
| that report was written are still in production today (or
| would be, if not for the crunch.)
| freemint wrote:
| Negative Vs positive is about the eigenvalue of the feed
| back loop not about the weighting how it affects external
| signals
| tbihl wrote:
| No, still positive. Negative feedback is self-righting,
| while positive feedback is amplification (to speak in
| very broad terms.)
| throwawaygh wrote:
| No! It's negative WRT chip production rate! I have a phd
| in controls and meant what I said; I assume
| roboticsresearcher also knows some freshman-level control
| theory ;-).
|
| Stability ==== good in undergrad engineering, but not
| here. We _DON 'T_ want production rate to be stable when
| we have a global supply shortage! Here, a negative
| feedback loop is stabilizing the system in an undesirable
| equilibrium.
|
| I.e., the function that's being controlled in "supply of
| chips", the stable state is "saturated supply", and the
| negative feedback loop that maintains that equilibrium is
| "starving chip fab suppliers".
|
| (meta: people down-voting comments on control theory
| terminology by two different experts in this field at
| least makes me feel a bit better about the signal:noise
| ratio on the vote counts on my other comments in this
| thread ;))
| alisonkisk wrote:
| It's not stabilizing if the economy is in a death spiral
| of failing interdependent companies who can't produce
| machines for each other.
| robotresearcher wrote:
| In control terms it is. There's a stable asymptote of 'we
| made no machines today' every day, until some external
| process breaks the dependency cycle.
| saltcured wrote:
| Only partially facetious here: you have mistakenly
| decided that it it clamps at zero. If we consider the
| hoarding aspects, the feedback continues into net
| negative chip availability. Before long, there will be
| roving gangs of looters taking back the chips you thought
| you already had! ;-)
| throwawaygh wrote:
| Yes, it's fair, I do assume that chip supply/demand isn't
| subject to the forces of roving gangs of looters :)
| [deleted]
| eplanit wrote:
| What experiences with which government would lead you to
| believe that bureaucrats -- most of whom have never run a
| company nor made a product -- would be capable of "managing
| the market"?
| dfxm12 wrote:
| I'm not sure experience running a company is necessarily a
| good thing here, or at the very least, not pertinent. Wall
| St.'s and the American people's interests are not
| necessarily in line. The US' previous president ran some
| companies and did not really do a good job in this regard,
| either, wrt his trade wars.
| eplanit wrote:
| You're simply wrong. The US's economy was doing _great_
| under the previous administration, and even top Democrats
| agreed that it was right to put strong pressure on China
| re: trade.
|
| https://thehill.com/policy/international/392636-schumer-
| on-c...
| dfxm12 wrote:
| Great for whom? Wall St. or the common American? Like I
| said, their interests don't necessarily align. Sure,
| maybe stocks were up (usually, not when Trump was
| threatening to shut down the government if he didn't get
| his wall, though), but that didn't trickle down to
| everyone and is _far_ from a total picture of the
| economy. Also, your article doesn 't support your claim.
| Schumer was praising Trump for being tough on China for
| the sake of being tough on China, not for managing supply
| chains well.
| mediaman wrote:
| Seriously? You're using Donald Trump, who specialized in
| brand licensing and being a television character, as an
| equivalency to all the manufacturing engineers and supply
| chain specialists working to resolve the problems created
| by a global pandemic that's killed millions of people?
|
| The amount of disrespect to highly skilled professionals
| in this thread working like crazy to respond to a massive
| exogenous shock, and then following it up with the idea
| that "well, the government should fix it" with no
| specific idea of how exactly, the government would fix
| it, is mind-bending.
| dimitrios1 wrote:
| The solution to a market inefficiency isn't to involve a more
| inefficient entity.
| blululu wrote:
| This is a pretty axiomatic view that governments can never
| be as responsive or as efficient as markets. The more
| commonly accepted economic wisdom is that they are usually
| less efficient and responsive than free market forces
| operating under ideal conditions. There is a lot of room
| for market failures, inefficiencies and temporal dynamics
| to change the balance. The are plenty of examples of
| government regulatory bodies that have a nice anchoring
| effect on the relevant markets. The Federal Reserve Bank,
| for example, responds quickly to changing market
| conditions, looks at the data and intervenes at a speed
| that keeps pace with the rapidly fluctuating market it
| regulates.
| throwaway0a5e wrote:
| It's unrealistic to expect people to hedge online
| comments about complex topics (like the one in question
| here) to the extent required to preclude "yes but" and
| "well akshually" type comments that complain about the
| lack of nuance. Yet despite these expectations being
| unrealistic everyone expects comments they disagree with
| to meet them.
| febeling wrote:
| I want to print and frame this comment.
| nyokodo wrote:
| > The Federal Reserve Bank, for example, responds quickly
| to changing market conditions
|
| The Fed was established by Congress and the Chair is
| appointed by the President, however the Fed is still a
| private institution. That independence makes it a very
| different organization than what most people mean by
| government.
| abfan1127 wrote:
| The Federal Reserve hardly responds to market conditions.
| Their free and open printing of money is arguably the
| greatest risk to our economy. Milton Friedman has great
| resources on this, including a video series from the
| 1970s (based on clothing alone) called Free to Choose.
| Its on Youtube, amongst other places.
| kube-system wrote:
| Natural boom-and-bust cycles are a huge risk to economies
| as well, despite the fact that they're natural and don't
| have anyone for which we can point a finger at.
| nickff wrote:
| The Federal Reserve was originally devised to put an end
| to the boom-bust cycle... Well before the Great
| Depression.
|
| If you're going to point a finger, the Federal Reserve is
| a very good institution to point at.
| imtringued wrote:
| I don't know what you mean by "natural boom and bust
| cycles" but credit cycles and other financial cycles are
| just a property of the money system. Alternative money
| systems do not have this property.
|
| The cycles only make sense because people like and want
| them. I.e. they love the scarcity of money. For example,
| in a depression the return on money is greater than the
| return on labor, people logically flock to money rather
| than labor even though real wealth is eroding as people
| stop working.
| imtringued wrote:
| I was looking for a comment like this:
|
| http://rootbug.com/how-could-it-be-solved/taxing-money-
| throu...
|
| Let me put it in my own words:
|
| If republicans think that unemployment benefits compete
| with private businesses on labor, then I get to think
| that 0% interest money competes with labor for capital.
|
| The fundamental problem is that the 0% lower bound
| combined with a deposit guarantee represents not only a
| minimum wage for capital. It also presents a job
| guarantee. A minimum wage doesn't guarantee you a job.
|
| So yes, the Federal Reserve is not responding to market
| conditions at all. It's artificially holding up interest
| rates at zero or above. This is causing massive
| distortions in the economy that can only be fixed by a
| swiss-army knife of policies. Among one of the needed
| responses is "free and open printing of money". The world
| economy is already flirting with disinflation (a
| reduction in inflation). If you don't have negative
| interest rates you will need a whole load of "money
| printing" to keep the system standing in place.
|
| The assumption that a scarce money system (i.e.
| guaranteed non negative interest) has a fixed velocity of
| money is absurd. Put interest at -5% and just watch
| everyone withdraw cash from their bank account. The
| velocity of cash would be basically be zero and the
| velocity of money on bank accounts would be extremely
| high. As the government is doing deficit spending all the
| money just piles up somewhere and ends up doing nothing.
| QE is even worse because you cannot spend centralbank
| reserves to buy groceries.
|
| https://youtu.be/j5l_Oeg6kMo
|
| Ok, let's do the negative interest thing. It sounds like
| a big hassle right? Just think about the benefits: The
| first step after negative interest ratess would be to
| adjust the inflation target to 0% meaning perfect price
| stability. Actually, you wouldn't target inflation at all
| because the negative interest rate completely replaces
| the need for inflation. You would target the CPI itself
| meaning your goal as the government would be to maintain
| a CPI of 100 for all eternity. Any deviation would become
| inexcusable. Meanwhile today inflation is a hack to make
| a broken money system work.
|
| Don't blame the fed. Blame the money.
| ramesh31 wrote:
| Ah yes, the Herbert Hoover approach.
| MagicWishMonkey wrote:
| I wonder how many of these people rant about how bad the
| government is while using GPS to navigate their way to
| work on government funded roadways.
| evilduck wrote:
| On the DARPA derived internet, no less.
| nradov wrote:
| DARPA funded the basic research. Then the actual Internet
| was largely built by for-profit private sector companies.
| That hybrid model seems to usually be the most effective
| for major new innovations.
| JohnWhigham wrote:
| DARPA funded most of the grant money used by research
| entities to create the various parts of the IP stack.
| That's not "basic research". Simply put, were it not for
| DARPA, we wouldn't have the Internet of today. We'd
| probably have something like it, but something a lot more
| closed off and walled garden-esque.
| abfan1127 wrote:
| As if those things wouldn't innovate in the market? Or
| because 1 thing came from the government, then all things
| the government touches are gold?
| ramesh31 wrote:
| The free market can do a lot when it has the basic
| requirements to operate, but the point is that government
| spending is the only solution when we end up with a
| chicken/egg problem as the OP pointed out.
| bumby wrote:
| This take might have some hindsight bias.
|
| While a lot of industry seem obvious and worth the
| investment today, when they were nascent that wasn't the
| case. Would GPS exist if private companies had to fund
| the rocket and satellite research just to tell you where
| you are on the map? Or would the aircraft industry exist?
|
| Most of those types of high-risk, nebulous reward (at
| least on short-to-near-term timescales) industries are
| predicated on government investment. SpaceX, as great as
| they are, probably wouldn't exist if they didn't have
| NASA as a customer.
| abfan1127 wrote:
| it certainly does have hindsight bias, on both sides. The
| Satellite TV and Radio industries spend the money to
| launch.
|
| Back in the 90s (during the age of early GPS), Motorola
| (iirc) tried to launch a satellite phone company too.
|
| NASA isn't that big of a customer. DirecTV was a huge
| consumer of rockets. As it turns out, SpaceX doesn't sell
| to them because they own their own rocket company.
| bumby wrote:
| > _The Satellite TV and Radio industries spend the money
| to launch._
|
| Correct, but this is an after-the-fact understanding.
| They spend money to launch _now_ because the industries
| are no longer nascent and being launched on platforms
| designed around government investment. The key to my
| point is that the government spends money when the
| industries are young and risky to develop platforms. If
| those platforms work out that helps the private sector
| have a less risky path down the road. This is why
| telecoms weren 't rushing to develop rockets in the
| 1960s.
|
| > _NASA isn 't that big of a customer._
|
| This is very much the same thing. Early on, NASA was
| really the only SpaceX customer and NASA helped keep them
| from going bankrupt [1]. In addition, NASA made early
| launches more palatable because the government is self-
| insured. Government contracts help usher along young,
| risky companies until they could have a less risky
| business model that the private sector feels more
| comfortable with. It's very similar to aerospace
| development over 100 years ago with the Wright brothers
| and Curtis vying for Army contracts. Without those
| contracts, they are as much hobbyists as entrepreneurs.
|
| [1] https://www.ndtv.com/offbeat/elon-musk-says-
| nasas-1-5-billio...
| adventured wrote:
| They can't even manage a trivial task like maintaining
| roads and bridges properly.
|
| You could have hardly picked a worse example than the
| government roads system (including our thousands of
| dilapidated bridges), which is in absolutely horrific
| condition and is a humiliating example for the
| government. It's the opposite of a good example.
|
| That's all due to lack of funding, one might suggest?
| They're not lacking for funds. They spent our money on
| blowing up other countries and then (occasionally)
| attempting to rebuild them. Vietnam, Iraq, Syria, Libya,
| Afghanistan, Korea and 497 other cases of meddling and
| foreign adventurism. There rests $10 trillion in
| infrastructure money. No, they have had plenty of our
| money to spend, and they chose to squander it.
|
| What ever would we do if we didn't have those hyper
| incompetent clowns to manage our roads.
|
| GPS is trivial. If Russia can do it, various US private
| corporations could easily do it just the same.
| anotherman554 wrote:
| US private corporations maintaining roads implies a
| society like the one depictive in the Robocop movies.
| It's fun to see you prosing that unironically.
| only_as_i_fall wrote:
| Then what's the solution? Seems like the government is the
| only entity that can intervene if market forces are counter
| to supply chain resilience. This is partially the
| justification for agricultural subsidies in the US, so
| clearly there is precedent.
| PaywallBuster wrote:
| Apple approach, invest in your supply chain
|
| Extra points by diversifying from China/Taiwan
|
| In direct opposition, Auto makers approach of minimizing
| inventory and producing "just-in-time" caused them to be
| vulnerable to supply chain or big market shifts
| baybal2 wrote:
| > Extra points by diversifying from China/Taiwan
|
| Take a look on the linkedin jobs in Shenzhen.
|
| The trend IS NOT towards diversification. In the last 5
| years since Trump's election, US multinationals were
| increasing their presence in China, not decreasing.
|
| Google for example said to open "a small representative
| office" in Shenzhen 2 years ago, now it's a full giant
| RnD centre in the Ping An Tower where they shipped all of
| Pixel's development.
|
| Apple had RnD offices in China for more than a decade,
| but they barely acknowledged their existence. Their
| people in the Kerry Plaza were prohibited by their
| contract to even show their employment for Apple in their
| LinkedIn profiles. Their Shenzhen RnD centre is where
| AirPods were developed, along with many other iPad, and
| iPhone sub-assemblies. Apple's VR goggles project had its
| start in Shenzhen as well.
|
| Amazon had no presence whatsoever in China besides a
| failed Chinese Amazon.com launch. They left China, and
| then returned to move the whole of their Kindle, and Echo
| device development to Shenzhen. Now they are working on
| something rather cryptic there. Some suggest VR goggles
| of their own design.
|
| Facebook... absolutely bizarrely opened their RnD centre
| in Shenzhen amid the COVID, just a floor below Google I
| heard.
|
| Dell, Microsoft, Nvidia, Qualcomm, Intel -- all
| conventional hardware makers were here since nineties,
| but I think they really doubled down on China recently as
| well too, to one up the dotcom upstarts in hardware.
| PaywallBuster wrote:
| We're talking about supply chain here
|
| e.g. Foxconn investing in capacity outside of China
| (India) and Apple being part of it (as customer)
| baybal2 wrote:
| Having your essential RnD office shut down, if something
| happens to/in China, would not be any much less ugly, and
| disruptive than having your access to microchips shut
| down.
|
| In other words, the Silicon Valley is still going all in
| on China, despite 4 years of Trump, public scorn, trade
| war, rising costs etc.
|
| In other words, they really gave up on any vision where
| they don't critically depend on China, and can run with
| critical assets in US only.
| ceejayoz wrote:
| The article notes that Toyota avoided "just-in-time"
| supply for chips, and has benefited for a while from
| this. Their stockpile just ran out.
|
| > New cars often include dozens of microchips but Toyota
| benefited from having built a larger stockpile of chips -
| also called semiconductors - as part of a revamp to its
| business continuity plan, developed in the wake of the
| Fukushima earthquake and tsunami a decade ago.
| Causality1 wrote:
| The nightmarish results of agricultural subsidies in the
| US is an excellent reason to _not_ involve the government
| in the chip shortage.
| bumby wrote:
| Can you elaborate on your point?
|
| While I agree there are definitively some downsides to ag
| subsidies, I think the real question is if the
| interventionist downsides are worse than the non-
| subsidized downsides. As bad as they are, I'm not sure
| that incentivizing unhealthy food is actual worse than
| famine.
| Causality1 wrote:
| Cratering agricultural prices so margins are so thin
| small farmers are driven out of business in favor of huge
| conglomerates, mind-boggling levels of food wastage on
| the order of billions of pounds sitting in warehouses
| until they rot.
|
| https://reason.com/2019/03/02/thanks-to-decades-of-
| governmen...
| bumby wrote:
| I agree, those are all blowback of subsidies. But they
| are also side effects of food abundance. The downsides of
| food shortage seems much worse.
|
| Maybe there's an argument that we've moved passed the era
| of food scarcity when those policies were enacted and
| they should be modified. But I think a blanket claim that
| food subsidies are an inherent bad policy misses their
| point.
| Causality1 wrote:
| That blanket claim was never made. The made claim was
| that the ineptitude and mishandling of agricultural
| subsidies is reason to reconsider calling for government
| involvement in the chip shortage.
| bumby wrote:
| This is a bit of a confusing take if you're using ag
| subsidies as evidence to keep the govt out of chip
| manufacturing but now denying that the subsidies aren't
| bad.
|
| > _The nightmarish results of agricultural subsidies in
| the US is an excellent reason to not involve the
| government_
|
| This sure sounds like you think it's a claim of subsidies
| being bad policy.
|
| > _The made claim was that the ineptitude and mishandling
| of agricultural subsidies is reason to reconsider_
|
| How do you combine the view that "ag subsidies aren't
| bad" with "the government shouldn't be in the business of
| managing subsidies" when the definition of subsidy
| involves the government? At first take, this comes across
| as back-peddling to avoid dogmatic cognitive dissonance.
|
| But I'll be generous and assume you did not mean that ag
| subsidies are bad in and of themselves, but the way they
| are handled is poor. So what do think is a more proper
| way to handle them? Should the focus be on different
| products? If so, which ones?
|
| The point has already been made that ag subsidies are
| operating as intended and the downsides you refer to are
| downsides of abundance. I have a feeling that most people
| who have actually lived with food scarcity would find
| them preferable to the actual "nightmarish results" of
| too little food.
| rrrrrrrrrrrryan wrote:
| But agricultural studies are working as intended?
|
| The U.S. government has decided that it's in our national
| security interest to remain a net exporter of crops.
|
| If World War III broke out and all the borders shut down,
| America would still be able to feed herself. The U.K.
| wouldn't. There would be mass starvation in much of the
| first world, and people would say "the government
| should've done something."
|
| All the diabetes is a pretty rough unintended
| consequence, I'll give you that, but shifting some chip
| fabs to our shores as a matter of national security
| doesn't sound like too bad of an idea.
| only_as_i_fall wrote:
| Sure, but pontificating on government inefficiencies
| doesn't actually improve supply chain weakness either.
| wuliwong wrote:
| The comment was a response to a suggestion that the
| solution to the chip shortage was government
| intervention. I don't consider giving a evidence to the
| contrary of an argument as pontificating.
| only_as_i_fall wrote:
| Ok but point to the part of that comment which was
| evidence?
|
| Claiming that the results of ag subsidies have been
| "nightmarish" with no further elaboration or citation
| does nothing to advance the conversation, it's simply a
| strongly worded opinion.
| guerrilla wrote:
| That's one way to look at it. Another is that those are
| side effects of having stable and affordable food prices.
| The solution being talked about in this thread of simply
| raising prices would literally starve people to death if
| applied to that case.
| adventured wrote:
| > Then what's the solution?
|
| Time and capital investment. It's like this generation of
| people have never heard of production and supply
| disruptions, and were oblivious to such things being
| possible. Frankly, this doesn't matter very much, it's
| not a critical situation.
|
| The auto market malfunctioning short-term due to a
| pandemic doesn't present a strong argument for government
| intervention. Tesla can't make batteries fast enough,
| there isn't enough supply, its restraining their auto
| production, the government must step in and fix the
| problem! It's nonsense. The government should not step in
| every time there is a short-term problem in a market.
|
| Toyota won't sell as many vehicles. So what.
|
| I know, I know, but what if people have to make due with
| a three year old vehicle. What if they have to suffer and
| endure those vehicles being made to last for five or six
| years. Ten years! The horror.
|
| Toyota won't die. Time will pass, during which necessary
| investments and adjustments will be made. Supply will be
| increased. The problem will be fixed. It's as simple as
| some time and capital investment. The companies that
| maneuver the best will come out ahead, gaining an
| advantage on their competitors. And the world keeps on
| spinning.
|
| Toyota has generated something like $90-$100 billion in
| operating income the past five years. They have the
| resources - and then some - to fix the problem. If they
| choose not to or can't that's their own incompetence,
| their competitors will eat their lunch. Never feel bad
| for a corporation earning $20 billion a year. If they
| can't get their production corrected, someone else will
| figure it out and reap the benefits.
|
| It does not matter as much as is being portrayed. This is
| not an important problem and does not warrant the
| government burning its time and resources to step in and
| fix (assuming they can help at all). Governments have a
| lot of other far more important things to be focused on.
| only_as_i_fall wrote:
| Good thing we don't use semiconductors in anything more
| important then.
| JKCalhoun wrote:
| > Toyota won't sell as many vehicles. So what.
|
| Thousands of employees lose their livelihoods as
| factories shut down?
| freewilly1040 wrote:
| Permanent layoffs are an unlikely response to a temporary
| supply disruption, and unemployment aid covers any short
| term furlough
| [deleted]
| ortusdux wrote:
| Toyota pioneered the "Toyota Way", which is now known as
| Lean or JIT manufacturing. JIT is famously susceptible to
| disruption from natural disasters. Over the short term,
| between disruptions, JIT tends to be more profitable than
| the alternatives. Over the long term, the market rewards
| companies that can handle disruptions. Basically, to
| answer your question, the market is punishing JIT MFG and
| rewarding resilience. Companies are watching it happen
| and learning from it. One indication of this is the
| current increase in inflation. Companies are switching
| from 1 month of inventory to 6-12, which is making
| suppliers scramble and driving up prices.
|
| I am by no means against government intervention.
| Companies have short memories, and market forces will
| force eventually pressure a return to JIT. But now is the
| exact wrong time to intervene.
| jimbokun wrote:
| This assumes an efficient global market, without
| interference from other state actors.
|
| If other countries are implementing protectionist policies,
| like keeping semiconductors for themselves or supplying
| other nations first to curry favors or improved
| relationships, for example, it might be in another nations
| interest to increase fab capacity with its borders to avoid
| being vulnerable to those political and diplomatic factors.
| MagicWishMonkey wrote:
| We're in this mess due to our never ending quest for more
| "efficiency"
|
| The government needs to recognize the fact that
| semiconductors are essential to national security and
| ensure we have the capability to produce our own.
| bumby wrote:
| I think you're right, but it's partly because we weren't
| couching the quest for efficiency in the context of risk.
|
| I might be more time efficient by speeding everywhere,
| but that efficiency gain needs to be understood in terms
| of how much additional risk it incurs.
| hypertele-Xii wrote:
| Moving fast and breaking things isn't national security.
| (I agree with you)
| [deleted]
| Slartie wrote:
| That sounds nice, but a singular entity within a
| government, entrusted with the necessary power to regulate
| the relevant parts of the market without too much
| coordination overhead with other government entities, is
| actually much more efficient at resolving market
| inefficiencies than the free market. Case in point:
| production of vaccines.
|
| That's also obvious: the inefficiency in governments
| originates largely from coordination overhead between many
| competing entities with overlapping responsibilities. Self-
| regulating systems like markets do not eliminate that
| overhead, they just use other means of coordination that
| trade some of the complexity overhead for a time overhead -
| instead of having to coordinate a complex set of rules, you
| now have to give the system enough time to "find" its
| stable state. But when time is of the essence, an
| intelligent, singular entity without the need for
| coordination with anyone besides the entities to be
| regulated can always outcompete the self-regulating system
| when it comes to short-term stabilization (though not
| necessarily with regard to long-term stabilization, but
| that's not the issue here).
| freewilly1040 wrote:
| The government did very little in managing vaccine
| production other than act as purchaser, how is this an
| example of them managing a market?
| lostdog wrote:
| The US government subsidized the vaccines, effectively
| pre-purchasing enough so that manufacturing could be
| ramped up faster than normal.
|
| https://en.wikipedia.org/wiki/Operation_Warp_Speed
| Slartie wrote:
| The US government regulated critical parts of the supply
| chain of raw materials and preproducts in order to ensure
| that US manufacturers have no sourcing problems. It then
| compelled the manufacturers into exclusively servicing
| the US purchase contracts first before fulfilling
| competing contracts from other global buyers with any of
| the finished product produced on US territory.
|
| I'd call that quite a lot of "market management". But as
| everyone could see it resulted in the fastest vaccination
| ramp-up worldwide (excluding Israel, which was a bit
| faster, but is also much smaller than the US and which
| had its own way to get "preferred" access to vaccine
| produced in the EU).
| will4274 wrote:
| Why? Is the government better at inventory and/or supply
| chain management than the current players in the market? My
| experience with COVID tests says no.
| bumby wrote:
| No, but the government can shoulder a larger risk than what
| the private sector may tolerate.
|
| There's all kinds of examples, but aerospace is a classic
| one. There would be no airline industry or commercial space
| industry if the government wasn't willing to bear a
| disproportionate amount of the risk when these industries
| were nascent. There just wasn't enough market demand to
| incentivize the private sector to do so on their own. So
| the govt sets up an incentive structure that brings the
| risk to a level where the private sector is willing to
| partake. The government is also generally more tolerant of
| longer-term scenarios than the private sector.
| jbay808 wrote:
| I think that your experience with COVID tests would depend
| strongly on which country are you in, and which government
| you are talking about.
| MagicWishMonkey wrote:
| No one is saying the government should start producing
| chips, but they can offer financial incentives to encourage
| chip manufacturers to build fabs here instead of overseas.
| baybal2 wrote:
| > A negative feedback loop in semiconductor supply seems like
| a situation where a government should just step in manage the
| market a bit.
|
| Unfortunately, no Western government can do it even if its
| life depends on it.
|
| German trade officials for example went and completely
| prostrated themselves in front of Taiwanese govt, and TSMC,
| offering anything short of switching the recognition of China
| to Taiwan.
|
| It bounced off without any effect.
|
| It was only a blank cheque from USA that made them to even
| scratch, and that is still pending that cheque being
| honoured, and cashed out.
| option wrote:
| absolutely no. government interventions rarely (if ever) are
| helpful in managing supply and demand.
| mathattack wrote:
| Just the opposite. Need to let people raise prices to
| encourage slack in the system. Let's prices settle where chip
| makers can produce new chips.
|
| There are market failures where the government needs to step
| in, but this isn't one. Even with climate change (where they
| should step in) the government can't get to the point of
| saying it's ok for gas prices to be high.
|
| We don't want the government to pick winners and losers when
| it doesn't need to.
| jollybean wrote:
| "Just the opposite. Need to let people raise prices to
| encourage slack in the system."
|
| "We don't want the government to pick winners and losers
| when it doesn't need to. "
|
| Markets are not even remotely close to as efficient as
| you're implying.
|
| In a clinch, people are making all sorts of crazy guesses
| at what the future will bring, making everything very
| inefficient. Remember that efficient markets depend on
| rational acting based on good information. We often don't
| have very good information at the unit level, and, we often
| act irrationally.
|
| Some company flush with cash, decides to buy things at
| crazy high prices thereby denying the 'critical sources'
| (those that support production) access.
|
| Right now there is a lot of parts hoarding - speculators
| buying up parts to sell them at higher prices. They're
| adding no net value to the system and causing all sorts of
| other problems.
|
| The clearing of those prices may happen over time, but not
| without terrible damage being done.
|
| Supply chains are not like stock markets with clear prices
| and instant transactions.
|
| You may not need the government stepping in, but you
| definitely want non-market actions. For example, chip
| makers may want to work with their supply chains to ensure
| a kind of absolutism or preferential customer tranches.
|
| FYI this already happens, all the time. Price is not King
| for parts, like it is on the stock market. Vendors of
| 'everything' are aware of the long term growth of their
| business, and will generally want to work with consistent
| buyers.
|
| So in this FUBAR panic, supply chains have to think not
| about one thing, about many.
|
| I believe that root causes was already a fait-accompli at
| the start of the pandemic when a bunch of parts of the
| supply chain shut down - we're still paying the price of
| trying to get things going.
| throwawaygh wrote:
| 1. Your comment doesn't even provide a prime facie argument
| against some forms of government intervention. E.g., we
| could let the market determine prices but mandate that fab
| equipment suppliers go to the front of the line.
|
| 2. Price is probably a red herring anyways. I'm willing to
| bet that fab equipment suppliers are losing out not on
| price negotiations, but on _volume_ negotiations. I.e.,
| they might even be willing to pay more -- even much more --
| than other users, but can 't buy in massive quantities so
| don't go to the front of the line.
|
| 3. Is there any (legal) mechanism at the moment that
| prevents chip makers from increasing prices?
|
| 4. Fab equipment producers are small consumers of chips but
| have such a disproportionately high impact on the rate of
| future supply. In the midst of a global shortage, we could
| straight up socialize 0.00...01% of chips produced every
| year and hand them out for free to fab equipment
| manufacturers _without even effecting the short-term price
| dynamics_. I 'm not actually advocating this, but the
| assertion that earmarking a small number of chips for a
| particular high-value use fundamentally skew the market in
| the short-term is probably false.
|
| 5. Even if markets can eventually work in this case -- and
| for the record I'm convinced that this is a perfect example
| of contract negotiators being extremely myopic -- market
| dynamics have non-O(1) time complexity and the chip
| shortage is wrecking havoc on the real economy.
|
| My comment wasn't suggesting price controls or socializing
| chip fabrication. It was suggesting that we very
| temporarily give special treatment to a very small consumer
| of chips that has an outsized impact on production rate, in
| the midst of a global chip shortage.
| s1artibartfast wrote:
| >It was suggesting that we very temporarily give special
| treatment to a very small consumer of chips that has an
| outsized impact on production rate, in the midst of a
| global chip shortage.
|
| Why would we do that if the fabs themselves don't think
| it is worth paying their equipment manufacturers enough
| to afford their own chips?
|
| Giving "special treatment" is a price control. It is
| forcing a transaction that otherwise wouldn't settle at
| that price.
| throwawaygh wrote:
| _> Why would we do that if the fabs themselves don 't
| think it is worth paying their equipment manufacturers
| enough to afford their own chips?_
|
| Because there is a global chip shortage that is making
| life substantially worse for the vast majority of
| Americans. And because markets are tools used by man, not
| the other way around.
| s1artibartfast wrote:
| >Because there is a global chip shortage that is making
| life substantially worse for the vast majority of
| Americans.
|
| Is it really? I don't know anyone who has had substantial
| impacts. Some prices have gone up, but I don't see the
| urgency.
| mindslight wrote:
| > _Need to let people raise prices to encourage slack in
| the system_
|
| You're assuming that increased profit margins will
| automatically increase supply chain buffers. But rather,
| the same incentive to hire too many financialists that
| "save the company money" will exist, and the extra profit
| margin will just go to increased dividends.
|
| And increasing the supply chain buffers won't help much
| right now either, it has to be done during good times. In
| fact I'd say most of the shortage is from companies
| deciding to increase their buffers, in the same way as what
| happened to toilet paper. "Hoarders" and "speculators" are
| easy illustrations to point to, but the real demand comes
| from regular consumers silently buying twice as much as
| they usually do.
| verdverm wrote:
| > You're assuming that increased profit margins will
| automatically increase supply chain buffers.
|
| I read GP's comment as increase prices to decrease
| hoarding, which in theory could provide the slack in the
| system. Problem might be that certain products may not be
| viable if prices get too high. Only those with sufficient
| margins prior.
| mindslight wrote:
| I don't see that raising prices would make consuming
| companies want to stock up less. A company that requires
| an input to manufacturing is going to have a pretty steep
| price-demand curve for every individual component. Even
| if prices for one of their scarce inputs doubles, they're
| still going to buy as much as they can rather than risk
| shutting down their entire production if they run out.
| Since their competitors are feeling the same pressure,
| they'll just raise their own prices to compensate.
|
| It's like foodstuffs during the early pandemic - when you
| finally found something that they had been out of, you
| didn't particularly care about the price, and you
| generally bought extra so you wouldn't run out if it went
| missing again.
| jbay808 wrote:
| > they'll just raise their own prices to compensate.
|
| That's how it works in econ 101, but not necessarily in
| practice. Prices on many goods are less flexible than
| commodities like oil and lumber, for many reasons.
| Manufacturers may be locked into fixed-price contracts or
| distribution agreements, for example. Or a scarce
| component might be shared across "budget" and "premium"
| product lines, but the budget line is too price sensitive
| to change so the premium product goes up 10x instead. Or
| the company just borrows money and eats the loss...
| mindslight wrote:
| Sure, but the alternative is for a company to shut down
| its production line rather than pay extra for parts it
| needs. None of your examples would seem to include that
| happening.
| jbay808 wrote:
| I agree they'd probably pay extra for the parts, but that
| might not just get passed on in their system price. It
| can manifest in all sorts of other ways (debt,
| discontinuing a different product line, cutting back on
| research, etc).
|
| In today's environment debt is cheap, so companies that
| might otherwise shut off a production line can afford to
| borrow and bid up the price of parts.
| s1artibartfast wrote:
| The entire point of a floating price is that it increases
| until possible consumers drop off and some products are
| no longer viable.
|
| It kicks low value products out of the market and
| prioritizes the high value products.
| duncanawoods wrote:
| It's a puzzle to me why companies like nvidia didn't just
| raise prices and instead left both customers and profit to
| the dirty world of scalpers.
|
| I guess it's "brand damage" but I feel there would be
| something more fair and honest if in times of tight supply
| they ran their own ebay-like store and auctioned them off.
| It wouldn't feel like a price hike and prices could
| automatically settle as supply/demand reaches parity.
| zsmi wrote:
| > It's a puzzle to me why companies like nvidia didn't
| just raise prices
|
| They did. There have been at least three major prices
| increases which rocked entire industries.
|
| There have been reports of people paying 30x the usual
| price.
|
| https://www.scmp.com/tech/tech-
| trends/article/3133901/europe...
| duncanawoods wrote:
| Understandable but it didn't seem to happen like this in
| commercial GPU sales.
| freemint wrote:
| Because there is no run for commercial grade GPUs from
| miners or gamers stuck indoor.
| cinntaile wrote:
| They probably did, the only cards they produce under the
| Nvidia brand are the Founders Edition cards and those are
| sold for MSRP. Everything else is made by their partners
| and those cards increased in price.
| duncanawoods wrote:
| Yes, soon after posting I realised I was referring to
| Asus/MSI/Palit etc. rather than Nvidia. It means either
| two levels of auction or the Nvidia chip sale is a % of
| the end unit sale.
| cptskippy wrote:
| > Palit
|
| I've never heard of this brand, are they big in regions
| outside North America? Or do they function as an ODM for
| other brands?
| duncanawoods wrote:
| It's a Taiwanese company around since the 90s. They may
| be more Europe focused with a German office. I've never
| heard a US reviewer mention them but in the UK, they
| offer cards cheaper than the other brands. Beyond that, I
| don't know much about them. I've bought a couple of their
| cards and never had an issue so they get a thumbs up from
| me for N=2.
| cronix wrote:
| Some, like this MSI subsidary, were actually selling on
| ebay at scalper prices.
|
| > MSI has admitted that one of its subsidiaries has been
| selling RTX 3080 graphics cards on eBay at almost double
| the MSRP.
|
| > The controversy first appeared on Reddit, where users
| accused MSI of scalping its own RTX 3080 graphics cards
| on eBay under the name Starlit Partner. Since, it's been
| confirmed in a Justia Trademarks listing that Starlit
| Partner operates under MSI Computer Corp and was first
| set up in 2016.
|
| https://www.techradar.com/uk/news/msi-subsidiary-gets-
| caught...
| duncanawoods wrote:
| That feels a like a partner dipping into the scalper
| world whereas you want the top level companies to set out
| something more transparent.
| [deleted]
| solatic wrote:
| To over simplify, let's say that you have 100 people in
| the market: 90 people who can afford $100 per card and 10
| people who can afford $200 per card. In typical times,
| you charge $100 per card and sell 100 cards, earning
| $10,000 in revenue.
|
| Now you have a chip shortage, and you can only produce 50
| cards. If you charge $200/card, you only sell 10 cards,
| earning $2,000 in revenue. If you charge $100/card,
| you'll sell all 50 cards, and earn $5,000 in revenue. So
| it can still make sense to keep the price lower if it
| makes you more revenue overall.
| varispeed wrote:
| > Need to let people raise prices to encourage slack in the
| system.
|
| The scalpers can absorb the rising prices until the
| desperate companies no longer can afford the increase. That
| will cause the market crash, which is not good for anyone.
| I think government should regulate that space so that
| businesses engaged in scalping could no longer purchase nor
| sell the chips.
| freewilly1040 wrote:
| A "crash" in chip prices would be good for those buying
| chips
| s1artibartfast wrote:
| >The scalpers can absorb the rising prices until the
| desperate companies no longer can afford the increase
|
| The whole point is for manufacturers to raise the price
| until desperate companies/consumers can no longer afford
| it and don't buy them. Im not sure where scalpers come
| in. If prices are set high enough, scalpers can't make a
| profit.
| nicoburns wrote:
| What makes you think the most critical uses have the most
| money to pay for chips? I'd imagine there's a lot of crappy
| (or in any case not critical) consumer products that have
| much higher margins.
| HPsquared wrote:
| Critical uses have the potential to support much higher
| prices.
| s1artibartfast wrote:
| IF the use is critical, then the user should be willing
| to pay more. If they can't, I would want to look into why
| and question how critical they are.
| imtringued wrote:
| There is more money in consumer markets because there are
| more customers, not because each customer can pay more.
| It's usually businesses that spend big on individual
| purchases.
| vmception wrote:
| Exactly, its so weird that price sensitive recluses never
| just considered that GPUs were undervalued?
|
| "Omg these [new market entrants] are messing up my ability
| to take screenshots of my framerate and never enjoy myself"
|
| Well now its back to business use cases!
| 2OEH8eoCRo0 wrote:
| What are the barriers here? As sophisticated as automobiles have
| become I don't see them needing bleeding edge 5nm fabs.
|
| My bigger question is: Why is there not a thriving "small
| business" chip fab industry?
| pjc50 wrote:
| The minimum cost of entry is in the hundreds of millions to
| billions, it's not especially environmentally friendly, and
| you're competing against what would normally be fully-paid-off
| old production lines from the incumbents.
|
| There's a thriving small business _design_ industry, but the
| manufacturing is a classical capital-intensive manufacturing
| business that also requires very specialist staff.
| snarf21 wrote:
| My guess it that it is like a refinery, building the factory
| takes too long with a large capital outlay. For instance, it
| may take a year or two to build and cost (let's guess) $500M.
| Now in that time, let's say all the existing players ramp back
| up (or expand!!) and there is no shortage. You now are
| producing chips that are cheaper elsewhere and it is hard to
| recoup your investment. Also, you may be limited on where you
| can find people with expertise in this area.
| bob33212 wrote:
| In theory you could wire up an old pentium or 386 and program
| it to do the same thing some of these chips do but you have the
| same problem there. No on has a 5M supply of 386s just sitting
| around in good condition.
| dhbradshaw wrote:
| As a chip supplier, I'd be feeling a lot of pressure right now.
| In the short term you can squeeze and the tail can wag the dog
| for a bit. But longer term this opens the door wide open for new
| competitors in the market and / or vertical integration.
| selykg wrote:
| I don't think chip suppliers are playing games here, are they?
|
| I think in general all chip manufacturers are at capacity and
| it comes down to getting in line. And I'm sure many chip
| manufacturers are trying to expand their capacity. I can't
| imagine they're sitting there thinking this will last forever.
| dhbradshaw wrote:
| I'm not sure the reasons for the shortage matter. If you have
| a dependency that's causing you major problems, you try to
| become less dependent on it.
| arglebarglegar wrote:
| they'll play it to benefit themselves any way they can, why
| wouldn't they
| twarge wrote:
| I've noticed that the shortage of chips is also strongly driven
| by speculators simply buying up everything in sight and trying
| to resell at multiples of the cost.
| Nasrudith wrote:
| That is a whole different level - consumer retail as added
| middlemen. Manufacturers who include multiple in one project
| don't buy just retail which is oriented at one-at-a-time.
| swarnie_ wrote:
| You think people are buying up Chips designed to go in to
| Toyota cars?
|
| Surely they're beyond worthless to anyone but the
| manufacturer and Toyota themselves?
| detaro wrote:
| Parent was speaking of the chip shortage in general, which
| goes way past cars. Car manufacturers will do what they can
| to isolate themselves from the open market (and buy the
| numbers and have the political backing to do so), but
| demand for non-car parts affects allocation of production
| capacity to their demands too.
|
| > _designed to go in to Toyota cars?_
|
| Chips rarely are designed for a specific car, and a car
| will also contain quite a few that are not strictly
| specific to automotive.
| pjc50 wrote:
| I'm sure someone's trying to spin up a fab right now, but
| that's inherently not a quick process.
| baybal2 wrote:
| There are tons of n-th tier fabs who seen the shortage coming
| 4-5 years ago, and trying to move the ladder in the legacy
| processes.
|
| Rushing to compete with them when they had a 4-5 years
| headstart is not a wise decision.
| willis936 wrote:
| Or cheap. Trying to game a short-term downtick in supply by
| spending 100 Bn USD only to come out the other side as not
| competitive when you're up-to-speed and your competitors have
| an abundance of supply and can undercut you by 20%.
|
| It's not a winning strategy.
| bottled_poe wrote:
| Maybe? It seems to me the overheads of establishing a fab
| process anywhere near the incumbents are astronomical. I would
| guess that even this bottleneck in supply would represent a
| minuscule fraction of that overhead. What are the actual
| numbers?
| phkahler wrote:
| >> Maybe? It seems to me the overheads of establishing a fab
| process anywhere near the incumbents are astronomical.
|
| It depends which parts are in short supply. A lot of
| automotive parts are still on 20+ year old nodes. 90nm to 130
| or even 180nm. I would guess those are not the parts
| experiencing shortages though. So that leaves the fancy
| stuff. Bummer if a car can't be built because the
| infotainment SoC can't be obtained because it's competing for
| production with crypto mining GPUs.
| riskable wrote:
| > the overheads of establishing a fab process anywhere near
| the incumbents are astronomical.
|
| That's a big opportunity in itself.
| mschuster91 wrote:
| > But longer term this opens the door wide open for new
| competitors in the market and / or vertical integration.
|
| Not really. Chip fabrication requires _enormous_ upstart cost -
| IIRC, TSMC plans with something like 10-20 billion $ - and a
| lot of time, to the tune of three years at least
| (https://pr.tsmc.com/english/news/2033). There are not many
| companies in the world who have that amount of cash lying
| around, and even the ones who do like Apple still resort to
| using TSMC.
|
| Not to mention it's not just the machines from ASML and a host
| of other vendors plus the cost of building factory-sized ultra
| clean rooms, but you also need the expert staff trained to
| operate the entire setup _and_ a lot of fine tuning of
| parameters which are closely guarded secrets...
| dingaling wrote:
| > There are not many companies in the world who have that
| amount of cash lying around
|
| Which is why establishing a chip fab to me seems like an
| obvious national goal. It's a booming market with costs of
| entry that few private companies can afford, why not make it
| a national capability? Resilience and profitability in one
| package.
| mschuster91 wrote:
| Even for a nation, that is a _lot_ of money - Germany 's
| budget is about 500B EUR, a 10-20 B EUR investment would be
| a 2-4% of that.
| bluGill wrote:
| IT doesn't have to be. You can be producing chips in a month
| if you are willing to pay. A clean room can be created, and
| the process of making of making chips one at a time in labor
| intensive processes is known. Just that nobody is willing to
| pay $50k each for their chips, and you need to get that price
| to pay for all the skilled labor to make a chip one at a time
| in a lab.
|
| It takes years to setup a fab, but in the end it is a lot
| more cost effective, which is nobody is bothering to do the
| manual process even though we know it will work.
| Neil44 wrote:
| I was speaking to a car dealer client the other week and heard
| some funny stories, like selling off cheap batches of vans with
| various non-essential electronics missing - just holes in the
| dash - and the promise that units would be available to fit
| later.
| m23khan wrote:
| Here in Toronto, Canada:
|
| One fallout of this is the rise in prices of old / used cars. To
| give you an idea, a 2018 Toyota/Honda minivan is Canadian dollars
| 10,000 higher than pre-covid times.
|
| It's ok for folks who have a newish car and want to buy another
| used car as their current car prices would have increased. But if
| you are like me, who drives a 15+ year rusty old car and is
| desperate to buy a 3-4 year old car, then good luck. Not only are
| the prices much higher (and your car's value is junk) but at the
| same time, inventory (even for used cars) is super low.
|
| I would have loved to live in a City / Country where car is not
| necessary but this city I live is built for cars...
|
| Purely as a joke:
|
| Maybe car manufacturers should revive the production lines to
| produce 1980s Toyota Cressidas, Camrys and Chevy Impalas.
| Scoundreller wrote:
| Many countries have a funny concept of strategic industries.
|
| In mine, dairy is a strategic industry that is coddled by
| government so that we can have a local source. But every country
| thinks that so there's foes and allies that can supply us UHT or
| powder milk on a moment's notice. And if our milk supply
| disappeared tomorrow, everyone over 1y could substitute with
| 10000000 different things for nutrition.
|
| Cars are another. Every country props up its auto industry, so
| why worry about a domestic supply?
|
| Meanwhile, there are critical components, pharma ingredients or
| other inputs built in 1 factory in a country we could likely end
| up in a big dispute with.
|
| Just goes to show that industry protection has nothing to do with
| risk/dependence on that product, and everything to do with
| picking and choosing which industries are important voting bases.
| quadcore wrote:
| On that matter, I think (just a not-so-well-informed opinion
| but still plausible) most countries should urgently protect
| their software development industry and dramatically reduce
| taxes on those companies. Because the day US/China automated-
| production AIs will get to its prime, nothing produced in your
| county will have any value whatsoever beside land. Ferrari and
| Rayban? Near-zero market value tomorrow.
| fsloth wrote:
| "Because the day US/China automated-production AIs will get
| to its prime"
|
| I think this time is quite a bit far off. But eventually will
| have sourcing price of just the raw materials. That said and
| regarding your next point -
|
| "Ferrari and Rayban? Near-zero market value tomorrow."
|
| On this I disagree strongly. Current trend is that IP becomes
| constantly more important. So that while manufacturing costs
| for said items may tumble, IP laws likely protect the sale of
| items branded as such. And the price difference does not
| likely result in cheaper prices, but in a bigger revenues.
| [deleted]
| quadcore wrote:
| That's interesting thanks. I guess there is a limit to the
| price of IP. Say if the glasses cost $0.50, can you sell
| that $400 really?
| [deleted]
| eloff wrote:
| Are you in Canada by chance? I have fond childhood memories of
| smuggling cheese across the border from the US because the
| dairy protectionism has resulted in prices that are 3x higher.
| We used to do that with electronics too, but Canada has no
| electronics industry so it's weird why it was so much more
| expensive. The gap has decreased in recent years.
| cutemonster wrote:
| > picking and choosing which industries are important voting
| bases.
|
| And on a bribes and corruption basis, to some extent, too?
|
| For example, I never thought about what are the strategic
| industries, when voting.
| mywittyname wrote:
| Most voters aren't as rational as you are. Though, I suspect
| that you would not vote against your livelihood if it became
| a political topic.
|
| West Virginia has "Friends of Coal" license plates. Indiana
| has IUOE license plates. etc.
| unityByFreedom wrote:
| Indeed. The goal is to _not_ have the government pick
| industries. Politicizing who gets aid to any greater degree
| would only serve to further subdue innovation.
| throwawaygh wrote:
| _> For example, I never thought about what are the strategic
| industries, when voting._
|
| You're clearly not a dairy producer in Wisconsin, a military
| contractor in Virginia/Maryland, or a property owner in
| Southern Pines, NC.
| diveandfight wrote:
| Is there something uniquely strategic about property owners
| in Southern Pines?? If anything, based on my knowledge,
| military contractors would be the strategic play down there
| (just as in VA/MD).
| throwawaygh wrote:
| Camp Mackall, Fort Bragg, the complex around those two,
| and an officer corps/civilian contractor base that enjoys
| golf.
|
| I was just giving it as an example of how whole tertiary
| industries that aren't directly part of the military-
| industrial complex will none-the-less vote (R) like their
| lifestyle depends on it, and for the same reason as
| contractors.
| sandyarmstrong wrote:
| Yup! In 2008 I was in my first job, working for a defense
| contractor, and my boss seriously could not wrap his head
| around the idea of me voting for Obama. In his mind that
| should have gone completely against my own self-interest.
|
| But he also saw the job as a lifetime career, which is
| partly generational and partly just a different mindset
| because a lot (most?) of the engineers there were former
| military.
|
| I will say, though, that his mindset generally made for a
| very friendly and nurturing team experience.
| unethical_ban wrote:
| Indeed, there seems to be a difference worth noting between
| "industries that currently employ a large number of the
| population with little transfer of utility to other industry"
| and "objectively basic needs for a society".
|
| I figure there are also different definitions of strategic
| depending on the size and capability of an economy. The US is
| large and geographically fortunate enough that it theoretically
| "could" be almost entirely self-sustaining if it set its mind
| to it. Fuel, semiconductors, transport, lumber, food, guns.
| guerrilla wrote:
| > Indeed, there seems to be a difference worth noting between
| "industries that currently employ a large number of the
| population with little transfer of utility to other industry"
| and "objectively basic needs for a society".
|
| Did you consider that it's because people need an income to
| survive? Employment is objectively a basic need for anyone
| who doesn't own sufficient capital being that they have
| nothing else to sell but their labor.
| unethical_ban wrote:
| I didn't say that keeping people employed was a bad thing.
| I was making a distinction in definition, not in value.
| jollybean wrote:
| It's definitely worth keeping a skeptical eye on non-market
| interventions, but there are a ton of good reasons for it.
|
| For auto - companies do not exist in isolation. They're a huge
| pillar for other things, especially the local economy.
|
| If you were the CEO of a 'region' that actually owned all of
| the businesses, this would show up in your balance sheet: it
| would be perfectly acceptable to lose money in your auto-making
| 'division' if it meant that the 'education division',
| 'healthcare division', 'civic division' were made profitable.
|
| Japan also makes a ton of money exporting it's cars so it's
| valuable.
|
| Finance, telecoms, farming and entertainment all have different
| reasons for being supported but the impetus in most cases is
| rational.
|
| If anything we probably need more high end fabs and this whole
| 'single source with 24/7 operations' is maybe not worth it, we
| might just have to be paying a little more for our chips.
| nickff wrote:
| Highly visible industries tend to get a disproportionate number
| of subsidies, because the population can relate to them, and
| politicians aren't that clever either. Film and television are
| good examples, and fishing tends to get a lot of attention too.
| namelessoracle wrote:
| Pretty much everyone understands that computer chips are
| needed for everything these days though.
|
| The population can relate just fine. It's just there's no one
| rich and powerful who wants to make the investment that is
| making it an issue.
| Johnny555 wrote:
| I'm not sure that the population _can_ relate to building a
| semiconductor ecosystem in the USA -- when a state gives
| incentives to bring movie production there, people think
| "Well look at all of those jobs and movies give our state
| great exposure", but when the government wants to spend
| billions helping to build a next-gen fab plant here, then
| it's like "wait, I paid thousands of dollars for my phone
| and computer, why are we paying them to build plants here,
| don't we pay them enough!?"
|
| You may say "But semiconductors are used in far more
| devices than phones and computers", but I'm not sure the
| average person realizes that. Well maybe they are now when
| they can't buy the car they want because it's delayed due
| to semiconductor availability.
| l33t2328 wrote:
| I'm pretty sure the average person knows computer chips
| are important.
|
| > wait, I paid thousands of dollars for my phone and
| computer, why are we paying them to build plants here,
| don't we pay them enough
|
| This line of reasoning isn't generally extended to any
| other area of production, so I don't see why it would
| apply here.
| Johnny555 wrote:
| Yet there's plenty of people that speak out specifically
| against semiconductor subsidies:
|
| https://foundersbroadsheet.com/does-the-semiconductor-
| indust...
|
| _Supply and demand shocks will work themselves out
| fairly quickly if just left to market forces without
| government involvement. But a large section of the US
| population is under the delusion that if there's a
| problem, only government can fix it._
|
| https://thehill.com/opinion/international/560338-governme
| nt-...
|
| _One part of the legislation, the CHIPS Act, allocates
| $52 billion to subsidize the construction of new chip
| factories in the United States. Officials believe it
| could result in seven to 10 new U.S. factories. Although
| a national security case can be made for it, too much
| subsidy can do more harm than good._
| namelessoracle wrote:
| People understand just fine. They understand that pretty
| much everything they own these days has a computer chip
| inside it.
|
| Using a simple example people understand they can't get
| consumer electronics like Xboxs, Playstations, and
| Switches because of the electronics shortage. People
| understand there is a car part shortage due to
| electronics. These aren't high information people talking
| to me about this. It's understood there's a chip shortage
| right now by the general population.
|
| People are fine with and nobody really argues that
| America should support a steel industry. Frame the
| argument the same way and most people would be ok with
| supporting a technology infrastructure local to America.
|
| The other issue that hasn't been touched on is that a
| chip subsidy will probably only benefit 1 or 2 states,
| where as agriculture and other commodity level subsidies
| get spread out so there's less political will to make it
| happen. (along with a zero sum attitude in politics that
| if X state is getting money it means my state is not
| getting that money)
|
| It's actually a pretty critical geopolitical issue, sense
| there's a real chance that China makes a move on Taiwan
| soon (soon being within the next 10 years), which will
| result in either the destruction of alot of the chip
| infrastructure or China with global control over chip
| infrastructure.
|
| I'm kinda surprised countries like Japan and Korea aren't
| making moves to address this by starting their own fabs.
| (Maybe there are?)
| bradknowles wrote:
| Note that Samsung is frequently considered to be the
| second best chip fabrication company in the world, behind
| TSMC. That's part of why Samsung is the single biggest
| supplier of technology to Apple.
|
| Canon is the other major vendor of chip lithography
| equipment, but I don't know where their EUV processes
| are, or what the major chip manufacturing companies are
| in Japan that they would be sourcing for.
| jvanderbot wrote:
| How much would it cost to set up TSMC inside US borders? One
| president cycle? 4 F-35s? One SLS? A nuclear submarine?
|
| According to this page, sorting by cost,
| https://en.wikipedia.org/wiki/List_of_semiconductor_fabricat...
|
| the most expensive fab is 33 Giga$. TSMC is 17G$. pennies on
| the dollar in our 1-3Trillion infrastructure bill.
|
| Make america fab again.
|
| EDIT: it appears this is in the 2T infrastructure bill.
| https://www.eetimes.com/biden-ups-ante-to-50-billion-for-chi...
| blueblisters wrote:
| Building it is one thing. Making it operational without
| importing talent and running it profitably is another. Taiwan
| has some of the best fab engineers who work at US minimum
| wage salaries. Of course you can pull them away with higher
| pay like China is doing, but that means profitability will
| likely go for a toss.
| cogman10 wrote:
| The US has a bunch of fab engineers as well. The problem
| isn't having the engineers, it's having the actual higher
| tech fabs.
| bradknowles wrote:
| With respect, we don't have that many fab engineers any
| more. At least, not of that quality. And most of the ones
| we do have are already locked up by other employers, like
| Intel, IBM, and the other companies that still have some
| fabs here in the US.
|
| Sure, we can do small scale cutting edge prototype fabs,
| but the few production fabs we have here are not TSMC
| quality (go ask Intel), and they are already fully
| allocated. Many of those might not exist here in the
| country at all, if it weren't for the requirements from
| the US military and certain other classified customers to
| have certain types of chips made here domestically.
|
| We used to have a lot more fab engineers here in the US,
| but we outsourced those jobs and sent them overseas. And
| the people who used to do that work have moved on to
| other careers, or retired.
|
| And the reason why Silicon Valley has so many EPA
| disaster area cleanup sites is because of the fabs(and
| related businesses) that used to be endemic in that part
| of the country. Fabs aren't clean businesses to run.
| You're going to have to find a place where you can run
| those dirty kinds of businesses, and that's either going
| to be extraordinarily expensive, or even impossible, due
| to legal restrictions on the use of toxic chemicals,
| etc....
|
| There's a reason why those fabs are overseas. And all
| those reasons are why it's going to be extraordinarily
| hard for us to pull that work back. There's a reason why
| Steve Jobs and Tim Cook have both said "those jobs aren't
| coming back".
| neither_color wrote:
| We pay junior engineers who work at social media companies
| six figures so why cant we pay taiwanese fab engineers
| enough?
| fragmede wrote:
| The risk model is different. The cost of setting up an
| gorgeous tech company office in pre-Covid San Francisco
| is _trivial_ compared to setting up even poor-quality
| fab. Not that we (the US) should shy away from doing it -
| the Silicon Valley is called that because semiconductors
| are made out of silicon, but SV is also full of Superfund
| sites (for many reasons, but IC manufacturing isn 't a
| light industrial process, and is ridiculously capital
| intensive. A few million dollars, and a few months, and
| that social media company will have an MVP and started
| proving traction in their chosen niche. (It'll take
| closer to a decade to _actually_ get somewhere with it eg
| tiktok, but MVP can be demoed to investors far sooner.) A
| few years, and closer to a billion dollars, and you might
| have broken ground on the fab.
| 1270018080 wrote:
| We do pay them "enough." They do the job for that price.
| Why are they not payed more? Consumers care more about
| price, and capitalism cares more about the bottom line,
| than the ethical treatment of workers.
| blueprint wrote:
| dont worry - we print USD locally
| jonny_eh wrote:
| So few people realize the untapped, and unique, power
| this provides the US.
| [deleted]
| robocat wrote:
| Surely that depends on the staffing costs versus the
| overall costs (interest/financing cost I would be the
| largest cost?).
|
| If staffing costs are 5% of of marginal costs, then making
| them 10% is fine if your residual income/profit is high
| enough.
|
| I suspect you put a fab in Asia because you get higher
| profitability, not necessarily because you wouldn't make a
| profit at all in the US.
|
| Can anyone comment on what percentage of costs for say TSMC
| go on staffing?
| jvanderbot wrote:
| I agree with your points, but poaching talent is just fine
| in my book. And profitability should be considered, but not
| required. Most national defense programs are ``profitable''
| in that they are paid by us. Chips are a cheap strategic
| win in the scope of things. TSMC's entire operating budget
| is a miniscule line item next to the cost of threatening
| supply chain to downstream industries, or strategic loss
| from TSMC being nationalized by China (or ... going to war
| to defend against that)
| twobitshifter wrote:
| Do you have a source for the best Taiwan engineers working
| for minimum wage?
| nostrademons wrote:
| Monthly salary for a TSMC fab engineer is about
| NTD$48,000/month [1]; I saw another source on the web
| that listed NTD$612K/year, which is consistent. The
| exchange rate is 1 USD ~= 28 NTD, so that about
| USD$1700/month or about USD$10.50/hour, which is pretty
| close to what McDonald's pays these days.
|
| Prices in many foreign countries are wonky though,
| because of different cultural & economic systems. You can
| have a good lunch out (the equivalent of fast-casual;
| most eateries are like that) in Taiwan for about USD$2-4,
| and because the expectation is that you live with your
| parents until you get married, housing expenses are
| minimal. There's also a big oversupply of 20-30something
| labor, because the older engineers who built the company
| (and get paid significantly more) aren't retiring and so
| those skilled jobs aren't opening up. That's behind both
| the low prices for food (many young Taiwanese open small
| restaurants) and for entry-level fab engineer jobs.
|
| [1] https://www.glassdoor.com/Monthly-Pay/TSMC-Process-
| Engineer-...
| gruez wrote:
| > Prices in many foreign countries are wonky though,
| because of different cultural & economic systems.
|
| You should just adjust for PPP. The world bank estimates
| taiwan's GDP (nominal) to be 759M, but adjusted for PPP
| it's 1,403B. If we do the same adjustment for wages, we
| get $3165 per month, or $18.19/hr.
| nostrademons wrote:
| Even adjusting for PPP is complex though, because
| different goods have different cost adjustments. Actually
| _buying_ a condo in Taiwan isn 't cheap - I think my in-
| laws said it was around USD$500K for a 3BR/2BA in one of
| the Taipei exurbs, and can go up past $1M for luxury
| condos near a city center. That's close to Bay Area
| prices on McDonalds wages. A lot of Taiwanese youth are
| pretty much priced out of many markers of adulthood (not
| unlike many American Millennials), and can't do much
| other than eat, work, and play videogames. To have a
| house of their own and a job with the potential for
| career advancement, they basically need to wait for their
| parents to die. That's not really captured in PPP
| numbers, the same way that rampant asset inflation hasn't
| been captured in the American CPI.
| ericjang wrote:
| +1 to these Taipei real estate price estimates. Note that
| TSMC is headquartered in Hsinchu County, and I think real
| estate is much cheaper there (please fact check me on
| this though).
|
| source: Parents are from Taiwan, and I have relatives in
| Taiwan who tell me similar price estimates.
| throwawayboise wrote:
| McDonald's is paying $15 where I am now, and begging for
| applications.
| gentleman11 wrote:
| McDonald's is also forcing noncompetes on new hires.
| Nobody should work for them
|
| Edit: my source (potus) was mistaken apparently. A better
| source is below and involves non poaching and different
| restaurants (not McDonald's as far as I can tell)
|
| > About 80 percent of fast-food workers are constricted
| by no-poaching clauses, according to Healey's office. The
| other fast-food chains targeted by the states'
| investigation are Arby's, Five Guys, Little Caesars and
| Popeyes Louisiana Kitchen.
|
| https://www.washingtonpost.com/news/wonk/wp/2018/07/09/11
| -st...
| falcrist wrote:
| That was a bogus claim made by Biden. Looks like hourly
| employees don't sign non-competes.
|
| See:
|
| https://www.factcheck.org/2020/07/bidens-false-claim-
| about-m...
|
| https://www.politifact.com/factchecks/2020/jul/28/joe-
| biden/...
| zsmi wrote:
| Not minimum wage certainly, but less. Not sure how
| significant an expense salary is for the TSMC though as a
| fab is very capital intensive.
|
| https://focustaiwan.tw/business/202106300017
|
| "The median employee salary at Taiwan Semiconductor
| Manufacturing Co. (TSMC), the world's largest contract
| chipmaker, reached NT$1.81 million (US$64,874) in 2020,
| up from NT$1.63 million a year earlier."
|
| https://www.glassdoor.com/Salary/TSMC-Salaries-E4130.htm
|
| Process engineer is like $73K/yr
|
| So these, very skilled, employees probably get like ~15%
| less in Taiwan. No idea what Taiwan's employer tax
| situation looks like.
| Kye wrote:
| Isn't TSMC working on expanding into the US?
| cronix wrote:
| Yes, but from what I understand, it won't be the most
| advanced plant making the smallest feature sizes, so it's
| not like Apple is going to be utilizing that plant (maybe
| for ancillary chips, but not main processor).
| Understandably, TSMC keeps a tight reign on their top-tier
| production methods, which is their reason for being #1.
|
| It's also 3 years away from opening in AZ (2024). Then they
| have to fine tune the equipment and processes over x runs.
| New plants tend to have low yields until those processes
| are smoothed out and perfected. You don't just set up a
| plant and start churning out chips with 98% success rate at
| 5nm once the factory is built. It probably takes 5-6 years
| from construction start to churning out quality chips in
| numbers that are actually profitable.
| bradknowles wrote:
| And the machines they're going to be running take years
| to build. And they have to be built custom for each site.
| Not just for each site, but also each location within the
| site. Just moving a machine a couple of feet can cause
| massive delays as they have to effectively rebuild the
| machine for the new location.
|
| ASML has engineers who go out and spend months or a year
| or more, just taking various measurements of the location
| inside the building at the site where the machine will be
| operating. Then those engineers go back to Eindhoven to
| oversee the building of that machine from the ground up,
| and run through proving cycles. Then the whole thing has
| to be taken apart and shipped and then rebuilt at the
| site. And then there are months afterwards as the team
| does further work and testing before they can finally use
| that machine for production purposes.
|
| The Saturn V rocket was much easier to build and move.
| Nothing the rocket industry has can compare to the
| difficulty of building and moving these machines.
|
| Disclaimer: I worked as a consultant at ASML for several
| months, helping them to rebuild their Unix infrastructure
| systems that they used to support the engineers who did
| all that design and build work.
| nebula8804 wrote:
| Seems like long term the human race is going to lose this
| ability if something serious is not done to reduce the
| complexity of building these things. This pandemic has
| shown that everything is super fragile and with Climate
| Change on the horizon I cannot believe they decided to
| build this damn thing in Arizona of all places. Maybe the
| collapse people were right and we should be working on
| CollapseOS
|
| [1]: https://collapseos.org/
| datameta wrote:
| They are indeed, in Arizona. First they are going to have
| employees train on-site in Taiwan (will get housing for
| themselves and their families for duration).
| api wrote:
| This makes it easier for the US to spin up more, since we
| gain more trained workers who understand these processes.
| datameta wrote:
| I thought similarly - this is true if we can have
| lossless knowledge transfer. I imagine we would have to
| put what is learned into practice before translating it
| into distributed knowledge for a US fab workforce.
| zsmi wrote:
| The US does produce ~10% of the global chip supply today,
| and much of the equipment used in the world's factories,
| and a very significant portion of the software needed, is
| made in the U.S.A. This is an economic issue. Not a
| knowledge gap.
| baybal2 wrote:
| > it easier for the US to spin up more, since we gain
| more trained workers who understand these processes.
|
| Given that they will return
| phreeza wrote:
| I assume that is if you already have the know-how. Starting
| from (almost) scratch would require more upfront work, right?
| jvanderbot wrote:
| The US isn't starting from scratch. And presumably the
| total cost includes all the R&D cycles. TSMC was started by
| a Texas Instruments employee.
|
| But, if we assume they were, just double the cost as a
| sign-on bonus for all the engineers and poach away.
|
| This is problem that can be solved with money, and not a
| lot of it in the grand scheme of things.
| jasonwatkinspdx wrote:
| You vastly underestimate the institutional knowledge
| necessary to operate state of the art fabs. Intel has
| been at the forefront of the field for decades, and even
| they are stumbling vs the current challenges. TSMC was
| founded over 3 decades ago. That it was founded by a TI
| employee says nothing about the situation today.
|
| The US is subsidizing a TSMC plant here, which should
| help the situation, as it'll give us access to their
| engineers and cross pollination. But it's still tiny
| compared to the need if we want to move the majority of
| our chip imports to domestic.
| jvanderbot wrote:
| I agree that I'm underestimating the startup cost. That's
| inevitable, I think. I can only counter by saying that I
| think we're also underestimating the benefits of being
| self-sustaining at the scale of TSMC, especially with the
| changing political landscape re: China.
| dan_quixote wrote:
| This is a huge hurdle. There is actually some chip/silicon
| fab sites that never left (only scaled down considerably
| from their peak). A family member has worked at one for
| many years as an engineer/manager. When he tells me stories
| about the insane complexity of their process engineering it
| really hits home. Impurities at the nanometer scale can
| ruin 10 million dollar batches of silicon. Nasty chemicals
| are piped everywhere at the plant - the kind that explode
| if touching oxygen in the atmosphere or acids that dissolve
| bone before they noticeably affect your skin.
|
| Running such a production is difficult.
| alfalfasprout wrote:
| We're doing it but obviously Taiwan isn't going to give up
| their smallest die processes (only older processes) since it
| keeps the US at least unofficially allied with them.
| eurokc98 wrote:
| Reuters previously reported that TSMC plans to build as many
| as six factories at the Arizona site over a 10- to 15-year
| span. https://www.reuters.com/technology/tsmc-says-
| construction-ha...
| dave_sullivan wrote:
| Government can't make a website, let alone a chip fab. Talk
| to Intel and ask them why we've fallen behind. Do any VCs
| want to fund a direct Intel competitor? I doubt it.
|
| Making chips seems to be quite a bit more complicated than
| making and launching rockets, I don't think even Elon Musk
| could do it.
| jvanderbot wrote:
| Just subsidize it. I'm not asking for the Fab Czar, I'm
| asking for the NSF, DARPA, and national subsidies for it.
| Accelerated permitting, tax breaks, tarif support, state vs
| national investments, accelerated green cards for key
| personnel, and price breaks for a "buy US Chips" initiative
| for the first 5 years until things get serious and exports
| ramp up. I'm spitballing over morning coffee, but come on,
| this seems obvious.
|
| Exports won't offset operating costs here in the USA, but
| perhaps we could apply some ingenuity to that through
| national research investments and the ensuing startup
| ecology. The ancillary benefits of funding research and
| small business infrastructure around the big fabs would be
| huge.
|
| Sandia national labs has a ~3.5 annual Giga$ budget! That's
| _entirely_ publicly funded and represents about half of
| TSMC's operating budget (https://investor.tsmc.com/english/
| encrypt/files/encrypt_file... , looking at 50% profit
| yielding ~12 G$)
| pertymcpert wrote:
| Why do you keep using Giga $ instead of $3.5bn?
| cma wrote:
| EUV LLC was already heavily funded by DARPA in the 90s
| and is why we are able to have export restrictions on
| ASML machines used by TSMC for the latest EUV nodes etc.
| bradknowles wrote:
| And people seem to be forgetting that ASML is a Dutch
| company. It's the worlds leading producer of the chip
| lithography equipment, and the other quality companies in
| this space are in Japan.
| zsmi wrote:
| Will this do? https://www.eetimes.com/biden-ups-ante-
| to-50-billion-for-chi...
| nebula8804 wrote:
| We are lucky to have a Dem in office so we at least get
| _something_ vs just spinning our wheels. Who knows, the
| next republican might just tank this strategy in the long
| run anyway.
| jvanderbot wrote:
| Yes. That's precisely what I'm asking for.
| Retric wrote:
| The US government manufactures a lot of classified chips in
| house. It's unclear what their exact capabilities are, but
| looking at funding they could in theory be ahead of the
| industry.
| thedougd wrote:
| The 18F group is more than capable: https://github.com/18F
| nebula8804 wrote:
| They are probably referring to the Obamacare initial
| rollout which predates 18F right?
| gregors wrote:
| The UK Gov seems to be doing an ok job -
| https://github.com/alphagov
| bumby wrote:
| > _Government can 't make a website, let alone a chip fab._
|
| Tbf, many (most?) government websites are built and
| maintained by private companies. Remember the ACA website
| debacle a few years back? The government was mad at the
| contractor for building a shoddy product. They claimed they
| would take action against them but I'm not sure anything
| happened. If the government should be held to task on
| anything it should be an inability to write good contracts
| or hold companies feet to the fire. I've heard civil
| servants are unwilling to to the latter because they don't
| want to hurt businesses or are afraid of legal protests.
| wincy wrote:
| Anecdotal, I know, but the saddest interview I've ever
| done was a state government web developer. I was writing
| a js on the whiteboard, setting up a problem that started
| something like
|
| var a = 1; a = 2;
|
| Before I got any further they blurted out "that's false!
| The second line is false" and this was someone who had
| been writing production code for the government for the
| last five years.
|
| I honestly just felt really bad for them, more than
| anything.
| SavantIdiot wrote:
| Part of the reason fabs are spread out is capitalism: if you
| manufacture the part in the country, you don't pay import
| taxes (e.g., Intel's Ireland fab debacle).
|
| Another part is lax environmental laws. Hillsboro Oregon is
| embroiled in a suit with Intel where Intel dumped 100x the
| fluorine into the air that they claimed when D1X was first
| pitched. Don't need to worry about that stuff in Asia (for
| now).
|
| Also, lead time. The x-ray litho machines take years to build
| and test. There are only two companies that make Intel's
| testers, and the lead time is years. So a "quick fix" isn't
| possible.
|
| Speaking opinion: in the long term, it is mostly rich people
| trying to get richer that caused this. If greedy CEOs and
| shareholders would just be humans for once and think about
| the future we wouldn't have this trainwreck. That ain't ever
| gonna happen.
| CamperBob2 wrote:
| _Speaking opinion: in the long term, it is mostly rich
| people trying to get richer that caused this_
|
| And the chips in question exist in the first place
| because...?
| SavantIdiot wrote:
| Because Gordon Moore, Andy Grove and Robert Noyce wanted
| to improve integrated circuits to do amazing things with
| technology. Not rape the planet to become trillionaires.
| You realize there are other motivations in the world for
| doing things, other than just money, right? Perhaps you
| don't based on your reply.
| vondur wrote:
| Heck, didn't Apple finance expansion of TSMC so Apple could
| ensure that they received priority when ordering chips?
| ed_balls wrote:
| in a few years there will be 10x number of factories. Covid
| just sped things up. It's too critical for army and other
| industries. Food and army cannot be outsourced.
| dheera wrote:
| Cost isn't the issue, it's that we have incompetent buffoons
| as presidents these days.
|
| https://www.youtube.com/watch?v=TuW4oGKzVKc
|
| That's what a _president_ sounds like.
| mhh__ wrote:
| Nerva and Orion were both cancelled, it's not like they
| just delivered everything. If Joe Biden said _tomorrow_
| "I'm going to wave a magic wand and we will have non-intel
| x nm fabs tomorrow" then loads of people would be moaning
| about big gov. or the cost etc.
| theandrewbailey wrote:
| It's not just incompetent presidents, it's incompetent
| politicians at every level.
| shakezula wrote:
| That's not a bug, it's a feature.
|
| Politicians like MTG and Boebert are part of the system
| just to cheapen it. The crazier they are, the more off-
| tilt they are, the better the strategy works, the more it
| weakens the average Americans faith in the system. This
| strategy started with Trump, but it's started permeating
| every level of politics. The more wild they act, the more
| they can insist that the other side is being just as
| crazy.
| nebula8804 wrote:
| It started with Reagan. People just didn't realize that
| it was the boiling frog scenario. It won't end with MTG
| and Boebert.
| NotSammyHagar wrote:
| I agree that a president speaking to goals like that would
| be incredible. But he didn't have almost half the country
| supporting complete fantastical claims and a decent
| fraction trying to overturn elections.
|
| But look what he did against racism vs Johnson (not that
| much compared to J.), and they both still pushed the
| Vietnam war. Kennedy had to work around the edges on
| entrenched racism to maintain his Democratic majority with
| southern votes. At least the parties are more honest about
| their proclivities today.
| rootsudo wrote:
| Well, to be frank, there's precedent for why presidents
| won't be like Kennedy.
| freemint wrote:
| > Make america fab again.
|
| America does fab. However not newest nodes at high capacity.
| It just doesn't take building an identical factory and hiring
| away engineers. There is a complete supply chain of
| specialist companies which produce or fix the part the part
| that goes into a machine that that ... . Not mentioning that
| those construction costs are at economies of scale of
| building factories.
|
| Such a thing can't be build in the US as every state needs a
| piece of the pie. An US run copy will be more expensive even
| when you ignore wages. Extra spare capacity for emergencies
| is not sound either.
| inglor_cz wrote:
| Yeah, people underestimate the complexity of chip
| production. It is not one fab that you need to build, it is
| an entire ecosystem around it.
|
| EU has lately been thinking about localizing chip
| production here, but they seem to be stuck in the same
| fallacy: _we need a huge, gleaming fab on our soil_. No,
| that is just the tip of the iceberg, unfortunately.
| shadowgovt wrote:
| > Every country props up its auto industry, so why worry about
| a domestic supply?
|
| War. In the event a war breaks out, a running auto plant can be
| re-tooled relatively rapidly into a light and heavy armor
| plant. It's not even a question of whether allies could supply
| tanks and troop transports; it's about having domestic capacity
| to make them because enemies could execute blockades and
| disrupt allied resource supply.
| namelessoracle wrote:
| I am skeptical that a modern automobile factory could be
| converted to make tanks or airplanes at any kind of scale
| using current designs.
|
| The stuff is so specialized and automated now that even the
| workers probably wouldn't have much translatable knowledge as
| WW2 days. You would i guess have a supply of welders to lean
| on at least that would ramp up faster than someone fresh.
|
| But I doubt a factory that makes modern cars can handle
| making M1 Abrams without so much additional tooling and extra
| equipment that you are halfway to making a new factory
| anyways. (they could probably handle making light vehicles
| like cars and bikes at least)
|
| Maybe if we had mass production style designs that were built
| purpose first to get cranked out. But we don't, and there
| isn't profit in that for the Military Industrial Complex.
| starfallg wrote:
| That's the same reason why food security is so high up on
| domestic priorities also. If a country is dependant on other
| nations for food, then in case of war you just need to target
| their logistics chain to starve them into submission. All
| those subsidies make sense, if you view the nation-state as
| primarily concerned with its own survival.
| Scoundreller wrote:
| This is Canada. We ain't going to run out of food.
|
| The funny thing about a centrally-planned dairy system is
| that it takes very little disruption to destabilize it.
| starfallg wrote:
| As a fellow Canadian (living in the UK currently), we may
| like to think of ourselves as an independent and
| sovereign nation, but we are very much tied to the hip
| with the US in terms of defence. Our food security
| strategy hence is also aligned as such.
| flavius29663 wrote:
| this. If you look at all the strategic industry subsidies,
| you will see this common denominator. Corn in the US is
| stupidly subsidized, so much corn that it ends up in car
| tanks. But guess who will not have a famine even if the worst
| war + disasters strike?
|
| Car factories might not make good tanks, but the mechanical
| engineers and tooling knowledge is invaluable and can't be
| scaled up overnight.
|
| Same with solar panels, there's a reason both Obama and Trump
| imposed protective tariffs. One of the few areas both parties
| agree to. PV panels are the future of energy, so you need to
| have domestic factories no matter the cost.
| hypertele-Xii wrote:
| > guess who will not have a famine even if the worst war +
| disasters strike?
|
| _Worst?_ Really? You think corn fields survive nuclear
| war? An asteroid the size of you know what?
| jbay808 wrote:
| > PV panels are the future of energy, so you need to have
| domestic factories no matter the cost.
|
| Another benefit of domestic factories is domestic
| innovation. It's much harder for an engineer coming out of
| university and going through their career working at an
| office computer terminal to ever make a breakthrough
| innovation, if they can't step inside the factory to see
| how things are really done.
|
| If that factory is down the street, it's much easier to do
| an apprenticeship, get a tour, or chat with the manager
| about their pain points. If it's in another country, you'll
| have to schedule a formal visit and you'll probably need to
| be a very important customer for that to happen.
|
| Grad students coming out of a research lab would tend to
| focus on getting an extra 0.2% cell efficiency, but it's
| more likely that the innovation that makes PV competitive
| is something like reducing the scrap rate, or figuring out
| how to run cells through the QC machines more quickly.
| Scoundreller wrote:
| > Corn in the US is stupidly subsidized, so much corn that
| it ends up in car tanks
|
| What would the land be doing without subsidies?
| freemint wrote:
| Serve nature? Keep bio diversity and be a buffer for
| nature.
| NotSammyHagar wrote:
| Except for getting subcomponents and today ics are the
| crucial thing. What do you bomb first, the ic manufacturing
| of the other side? Or take it away by force (like Taiwan's).
| sonthonax wrote:
| Is that still true now?
| hypertele-Xii wrote:
| Armored vehicles are a little over 100 years old invention.
| That's only a few human generations.
| shadowgovt wrote:
| Great question. It's still doctrinally true (i.e.
| governments believe it is true; it was one of the reasons
| cited for the US federal government buying key stake in
| domestic auto manufacturers instead of letting them go
| bankrupt during the real estate market crash), but whether
| light and heavy armor is _actually_ of military worth in an
| era of drones and air power is a question I don 't have the
| military training or knowledge to answer.
| starfallg wrote:
| Yes, because heavy industry produces light and heavy
| armour, and heavy industry is also required to produce
| military drones and other weapons.
| bumby wrote:
| Yes, I remember an article on HN a while back that
| referenced a DoD report stating a dwindling manufacturing
| base as a major national security risk. Related, they track
| a "manufacturing readiness" metric
| mywittyname wrote:
| Yes.
|
| One scary fact that I learned is that, in war games between
| China and the USA, China almost always wins due to superior
| production capacity. Those $100B American battle carriers
| and $40MM advanced fighter jets can be taken out by $50,000
| rockets/missiles produced at a rate of hundreds or
| thousands per day.
| onepointsixC wrote:
| This is just wrong.
|
| The US loses many war-games against China in the _short_
| term as China has local numerical superiority of weapons.
| US armed forces are spread all around the world while
| almost all of the PLA is near mainland China. In the
| opening salvos of a Taiwan conflict China would flatten
| US bases in the region which would be devastating.
|
| But long term China is effectively an Island. Its
| geography means that it imports nearly everything it
| needs by Sea. It imports 10 Million barrels of oil a day.
| It is not food secure. It imports nearly all of the raw
| materials it needs. While the PLAN could dominate their
| near shore, they cannot escort super tankers from the
| Middle East all the way back to China. The USN has had a
| carrier strike group in the Persian Gulf for decades.
|
| The missile argument is also just nonsense.
| hypertele-Xii wrote:
| Explain how a war between _nuclear superpowers_ ends with
| anyone _winning?_
| baybal2 wrote:
| You have 1 superpower, and 2 upcoming challengers.
|
| US has enough nuclear munitions to outright defeat 1
| equal superpower in a first strike scenario.
| vkou wrote:
| > US has enough nuclear munitions to outright defeat 1
| equal superpower in a first strike scenario.
|
| I wouldn't call half the population of the US dying in 30
| minutes, and most of the other half over the next 30 days
| to be much of a 'victory', and I don't want the DoD to
| even consider employing anyone who would.
| huge87 wrote:
| This is in line with my intuitions; do you have any
| sources so I can read more?
| mywittyname wrote:
| Sure!
|
| https://www.stripes.com/theaters/us/2021-07-27/US-China-
| mili...
| onepointsixC wrote:
| That doesn't support your core thesis that the US will
| lose a protracted war and that mass producing missiles is
| going to actually led to planes being destroyed. _That 's
| not how that works._
| NotSammyHagar wrote:
| Notice this resembles somewhat (in reverse) the WW2
| situation with high quality German tanks and Japanese
| Zeros etc and the us making many more tanks and planes
| compared to the Germans and Japanese. But we are on the
| other side of that now.
| dylan604 wrote:
| How many tomahawks does it take to destory these
| factories?
| mywittyname wrote:
| So, apparently the best opening salvo is to take out USA
| comms satellites and that essentially cripples American
| offensive capabilities. Modern tomahawks are heavily
| reliant on comms networks to hit long-range ground
| targets.
|
| Plus, any destroyer launching these at targets deep in
| Chinese territory will be within range of Chinese
| missiles. And, as we saw in Syria, Russian air defense
| systems are pretty effective against Tomahawks, and we
| should expect Chinese systems to be at least as
| effective.
| onepointsixC wrote:
| >So, apparently the best opening salvo is to take out USA
| comms satellites and that essentially cripples American
| offensive capabilities. Modern tomahawks are heavily
| reliant on comms networks to hit long-range ground
| targets.
|
| No they aren't. They were designed with the assumption
| that GPS wouldn't be available and instead will rely on
| terrain tracking.
|
| >Plus, any destroyer launching these at targets deep in
| Chinese territory will be within range of Chinese
| missiles. And, as we saw in Syria, Russian air defense
| systems are pretty effective against Tomahawks, and we
| should expect Chinese systems to be at least as
| effective.
|
| What are you talking about? We had satellite imagery with
| holes in the ground that disproved the Russian claims
| that they shot down most of it.
|
| Nothing you said is factual.
| dylan604 wrote:
| I can't decide if some of these scaremongering stories
| are from the military industrial complex to convince more
| funding into new things, or just anti-propaganda to give
| pause to rushing into new conflicts.
| onepointsixC wrote:
| It's neither. The US is in an incredibly bad position
| right now because of three decades of under investment.
| After closing too many public yards after the cold war
| now the USN is barely able to keep up with regular
| maintenance during peace time of it's vessel's, let alone
| during a war. The average age of most American vessels is
| greater than that of their sailors. All while they're
| asked to face down the PLAN which now outnumbers them and
| is newer.
| zsmi wrote:
| Probably not too many. But I wonder, are there more
| Chinese factories or Tomahawk missiles? I'm not totally
| sure. China is a very large country.
| dylan604 wrote:
| I'm sure the manufacture of tomahawks is pretty much on
| stand-by for the order to increase production. Civic
| pride and what not. Totally has nothing to do with the
| stock price.
| NotSammyHagar wrote:
| How many subcomponents do they have on hand, especially
| cpus? I bet not many.
| dylan604 wrote:
| So the opening move would be to invade a non-hostile
| country to ensure you have all of the chips! Then once
| that is secure, you can then target the country you
| actually want to have hostilities with. I can see no
| flaws with this plan. Execute!
| alisonkisk wrote:
| Isn't the reverse also true?
| lallysingh wrote:
| Yup, but that leaves you at a draw for existing assets
| and you depend on production capacity after that.
| jollybean wrote:
| It's definitely not true today in 2010 because auto
| plants in 2021 cannot be 're-tooled' to make tanks.
|
| Also, US China conflict depends on entirely 'where' and
| 'over what' and what each nation is holding up it's
| sleeve.
|
| China does not have $50K rockets that it can use to down
| 'reasonably stealthy fighters' and as we have seen
| before, tactics combined with good tech gives
| overwhelming odds. For example, if (big 'if' but entirely
| plausible) the US can maintain air superiority in a
| particular region ... then it will basically maul
| whatever is before it. As just one example.
|
| China is building 100 subs that are a pretty big threat
| to any navy ... but we also don't know about advanced US
| tech that may render them completely moot.
|
| If there is no huge leverage by one side, it happens on
| land, and over a long time ... the then 'home team' will
| win.
| starfallg wrote:
| The issue is that China needs energy and other natural
| resources to sustain production which the US and allies
| can effectively blockade. It always puzzles me why China
| is so antagonistic with its neighbours. Indochina is very
| difficult to invade, and the whole South China Seas
| situation means that China has no blue ocean access into
| the Pacific. In a global war, the only reliable lifeline
| into China is through Russia.
| onepointsixC wrote:
| That's why the Chinese are so keen on taking over Taiwan
| as it will give them that access. The core theory that
| the PLA repeats is that they could overwhelm US assets in
| the region and quickly crush Taiwan in hopes of forcing
| the US to agree to a cease fire and peace deal.
| ak217 wrote:
| How does Taiwan block mainland blue water access - any
| more so than Okinawa?
| starfallg wrote:
| China has a plausible pretense to invade Taiwan. Okinawa?
| Not so much.
| baybal2 wrote:
| > It always puzzles me why China is so antagonistic with
| its neighbours.
|
| > The issue is that China needs energy and other natural
| resources to sustain production which the US and allies
| can effectively blockade.
|
| You just answered your own question.
|
| They are so hostile, and aggressive exactly because of
| that immense insecurity, and fear.
|
| It's the mental model you pickup growing in any red
| country: you never acknowledge your weaknesses, lest you
| want them being instantaneously exploited.
|
| On other hand, you feign a polar opposite. It's
| everywhere in China:
|
| -- Far from rich people in small towns buying fake
| Ferraris
|
| -- Dumb companies hiring fake "big name foreign
| executives" to mumbo jumbo their plans to investors
|
| -- "Advance to retreat" tactic
|
| -- Chinese businessmen hiring a service of "fake thugs"
| and tatooing themselves to appear "tough mafia men" to
| scare off actual mafias
| inglor_cz wrote:
| Interestingly, fear of Western blockade and interruption
| of import of vital resources was what motivated the
| Japanese to go to war in 1941.
| humaniania wrote:
| Nuclear armed countries going to war is supposed to be an
| extinction level event. That's the whole point. It's
| supposed to be unthinkable.
| https://en.wikipedia.org/wiki/Mutual_assured_destruction
| baybal2 wrote:
| How the essential farma became nearly 100% reliant on foreign
| manufacturers is I think the most exemplary case of this
| nonsense.
|
| I read some year ago that there were laws in US which at least
| somehow discouraged the pharma from shipping manufacturing
| abroad, and it was the big pharma itself which lobbied these
| laws out.
|
| This is how China held US at gunpoint in the early days of
| COVID -- "Stay put, or we pull 90%+ of your antibiotics supply"
| NotSammyHagar wrote:
| I don't think china did that, any supporting news articles?
| kevin_nisbet wrote:
| Yea this is very interesting. I suspect another side to this
| though is I don't know that one country can easily or safely
| not participate in this chosen industry support.
|
| Especially in capital intensive industries, say cars, all of
| the competing countries are propping up or bailing out their
| auto industries. So even if companies should theoretically die
| and get replaced, there is a structural disadvantage as the
| competition in other countries has an insurance policy against
| companies failing (bailout / subsidy / tariffs / strategic
| protection / etc).
| imaginariet wrote:
| As Taleb likes to say, an efficient system is the opposite of a
| robust system, kind of by definition.
|
| We are now witnessing the effects of our modern hyper-efficient
| just-in-time global manufacturing system.
| akg_67 wrote:
| Actually, Toyota moved away from JIT after 2011 earthquake when
| several of it's factories had to stop production due to lack of
| parts from other factories impacted by earthquake. One of the
| change was increased inventory levels of components.
|
| Toyota is one of the last automaker to reduce production due to
| the current chip shortage, because they had enough chips for
| 18-24 months of production.
|
| Edit: It seems some of Toyota factories in Southeast Asia have
| shutdown due to Covid spread in those countries resulting in
| shortage of parts supplied to factories in Japan. Reported to
| be 40% reduction in production.
| patentatt wrote:
| And it's the same with our healthcare system and hospitals.
| Because they are run as businesses, hospitals are finely tuned
| to be mostly full most of the time. When COVID fills up 30% of
| your beds, it quickly overwhelms the system and it crumbles.
| This is why healthcare needs to be publicly owned, because
| robustness is necessarily inefficient, and inefficient is
| incompatible with capitalism.
| imaginariet wrote:
| In UK, where NHS is publicly owned, it was actually policy to
| have 90% occupancy of ICU beds. If it was less than that, the
| "extra" beds would be removed.
| iamgopal wrote:
| Why ? What's the rationale ? How they arrived at 90 percent
| figure ?
| KuiN wrote:
| Do you have a source for that quite extraordinary claim?
| monocasa wrote:
| Not the parent, and not a backup for the specific claim,
| but I know that Tory governments since Thatcher have been
| taking the strategy of misapplying business efficiency
| tactics to NHS, then when they don't make sense and cause
| worse outcomes claim that it's because government was
| involved at all and call for privatization.
| infamouscow wrote:
| From a public health standpoint it makes more sense to have
| two hospitals with 100 beds at 90% capacity than one
| hospital with 300 beds at 60% capacity. It's leads to
| better patient outcomes to have the hospital staff work
| overtime compared to rapidly hiring and training new staff
| whilst the hospital is being overrun.
| HideousKojima wrote:
| Robustness isn't incompatible with capitalism, it's
| incompatible with any system where the government is willing
| to swoop in and bail out companies that fail. Companies that
| plan around failures/shortages/disruptions lose the ability
| to profit from their planning, while those that didn't plan
| ahead get showered with free money or cheap loans.
| whall6 wrote:
| I don't understand why this is getting downvoted
| considering this is almost verbatim what Taleb preaches.
| WillPostForFood wrote:
| he forgot the trigger warning: this post does not blame
| capitalism for all modern ills.
| peytn wrote:
| No, the government restricts facility size. Look up
| "Certificate of Need laws" if you'd like more information.
| monocasa wrote:
| Those exist because the hospitals are privately owned. An
| area doesn't want hospital companies getting into a pricing
| war and then both going under leaving the area without
| hospital service at all.
|
| There'd be no reason for it with a public health care
| system.
| monocularvision wrote:
| The government tries to keep medical care expensive to
| avoid competition that might result in some instability
| so the cure is ... government running health care.
| [deleted]
| boramalper wrote:
| Relevant: _The Security Value of Inefficiency_ by Bruce
| Schneier
|
| > This drive for efficiency leads to brittle systems that
| function properly when everything is normal but break under
| stress. And when they break, everyone suffers. The less
| fortunate suffer and die. The more fortunate are merely hurt,
| and perhaps lose their freedoms or their future. But even the
| extremely fortunate suffer -- maybe not in the short term, but
| in the long term from the constriction of the rest of society.
|
| https://www.schneier.com/blog/archives/2020/07/the_security_...
| monkeynotes wrote:
| Actually Toyota's manufacturing process was changed after
| Fukushima and was one of the only companies that plans for
| situations like this:
| https://www.autoblog.com/2021/03/09/toyota-how-it-avoided-se...
|
| Edit, what the other poster said.
| AzzieElbab wrote:
| yeah, but about everyone else?
| sumtechguy wrote:
| They now learn the lesson Toyota learned in 2011.
| wiz21c wrote:
| You should be upvoted 100 points. That's the elephant in the
| room. Basically selfish behavior lead to global problem. So no,
| we can't let big corps rule the world alone.
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