Elon Musk says chip shortage is a “short-term” problem

Tesla Motors CEO Elon Musk speaks to the media next to the Model S.

Nora Tam | South China Morning Post | Getty Images

Tesla CEO Elon Musk said Friday that the ongoing semiconductor crisis would end by next year.

Technology billionaires said chip shortages are considered a “short-term” problem rather than a long-term problem.

“There are a lot of chip manufacturing plants under construction and I think we have enough capacity by next year,” Musk said at an Italian technology event streamed online on Friday.

Musk did not identify the chip plant he is referring to.

Chip tycoons Intel and TSMC have announced plans to build a new factory in the United States, but haven’t been online for a few years yet.

Glenn O’Donnell, vice president and research director of advisory firm Forrester, believes the shortage could continue into 2023.

“We expect this shortage to continue from 2022 to 2023, as demand remains high and supply remains restrained,” he said in a blog post in April.

The global chip shortage has had a major impact on a wide range of industries, but the automotive sector has been particularly hit. Industry celebrities such as Ford, Volkswagen and Daimler have all been forced to shut down production at various points and reduce manufacturing targets as a result of a shortage of chips.

Impact on Tesla

In the company’s first-quarter earnings, Musk said Tesla had some supply chain issues before mentioning the chip shortage.

“This quarter, and in the second and third quarters, we had some of the most difficult supply chain challenges we’ve ever experienced in Tesla’s life, and we continue to experience the same problems in our supply chains. I see. Parts — across the whole range of parts. Obviously, people have heard about chip shortages. This is a big problem. “

Consulting firm AlixPartners predicted this week that a chip shortage would bring $ 210 billion in revenue to the automotive industry this year alone.

“Of course, everyone wanted the chip crisis to be more mitigated so far, but unfortunate events such as the blockade of COVID-19 in Malaysia and ongoing problems elsewhere made things worse. “” Said Mark Wakefield, Global Co-Leader of Automotive. In the statement, industrial practices at AlixPartners.

Automakers use semiconductors for everything from power steering and brake sensors to entertainment systems and parking cameras. Smarter cars use more chips.

In 2019, Tesla began producing cars with custom AI chips that help onboard software make decisions in response to what’s happening on the road.

In July, Musk said production of Tesla’s Powerwall products, a household backup power source, was “lagging” as a result of a chip shortage.

Elon Musk says chip shortage is a “short-term” problem

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