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A shortage of chips turned into car production.
The time of dreams
Taiwan Semiconductor Manufacturing, one of the companies best positioned to know the prospects for the lack of chips affecting the auto industry, had good news and bad news this week.
In a conference call Thursday to discuss Taiwan Semi’s quarterly results (scorer: TSM), CC CC CEO Wei said the shortage was exacerbated by the snowstorm and freezing temperatures that hit Texas in February and the “fabulous outage.” of production in Japan ”, an apparent reference to a fire that hit a major chip factory there last month. Chips of many kinds could remain generally scarce until 2022, he said.
The good news, however, is that Taiwan Semi sees the situation for car chips, especially resolving by the end of the third quarter. “Along with improving our productivity, we expect the shortage of automotive semiconductor components to be greatly reduced for TSMC customers by next quarter,” said the CEO.
Both
Ford Motor
(F) and General Motors (GM), along with many other carmakers, stopped production at some factories while waiting for parts. Both Ford and GM have already said that the lack of chips would be a billion dollars in the wind for 2021 profits.
A cessation of the chip deficit in the third quarter would be better than correcting by 2022, but it could still mean that car companies change their financial forecasts, for the worse, when they report their earnings in the first quarter in the coming weeks. . Many investors expected the deficit to be resolved in the first half of the year.
And the language Wei used in April was worse than it said in January, when the company reported fourth-quarter figures. “We see, right now, there is a lack of cars for the supply of mature technology,” Wei said at the time. “And we work with customers to mitigate the impact of shortages.”
Mature technologies are essentially less sophisticated semiconductors. The pandemic, the resurgence of car sales due to the pandemic, the difficulty of increasing the production of new semiconductor technologies throughout the industry and the strong demand for things like 5G phones and high-performance computers, have contributed to the current situation of cars.
In the long run, Taiwan Semi plans a large increase in capital spending to meet growing demand and ensure that the shortfall does not recur.
Car investors do not seem to be deeply concerned. Ford and GM stock fell about 2% this week, while
S&P 500
and the Dow Jones Industrial Average both gained just over 1%.
However, Ford and GM stocks have grown by about 40% so far. The lack of semiconductors remains a secondary problem for investors at this time.
Write to Al Root at [email protected]