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The shortage of chips has been reduced in car production.
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Taiwan Semiconductor Manufacturing, one of the best-positioned companies to know the prospects of the chip shortage affecting the auto industry, has had good and bad news this week.
At a conference call Thursday to discuss Taiwan Semi’s quarterly results (ticker: TSM), CEO CC Wei said the shortage has worsened due to the snowstorm and freezing temperatures that affected Texas in the February and “the fabulous interruption of manufacturing in Japan.” apparent reference to a fire that affected a major chip factory there last month. Generally, chips of many types could remain scarce until 2022, he said.
The good news, however, is that Taiwan Semi sees the car chip situation largely resolved by the end of the third quarter. “Along with our improved productivity, we expect the shortage of semiconductor automotive components to be significantly reduced for TSMC customers next quarter,” the CEO said.
Both of us
Ford engine
(F) and General Motors (GM), along with many other automakers, have left production idle at some plants while waiting for parts. Both Ford and GM have already said chip shortages would be $ 1 billion for 2021 profits.
The end of the shortage of chips in the third quarter would be better than dragging it down until 2022, but it could still mean that car companies change their financial forecasts, even worse, when they report their first quarter earnings in the coming weeks. . Many investors have expected the shortage to be resolved during the first half of the year.
And the language Wei used in April was more terrible than it said in January, when the company reported fourth-quarter numbers. “We see, right now, the car is a bit lacking in the supply of mature technology,” Wei said at the time. “And we’re working with the customer to mitigate the impact of the shortage.”
Mature technologies are essentially less sophisticated semiconductors. The pandemic, the rise in car sales since the pandemic, the difficulty of increasing 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 the automobile.
In the long run, Taiwan Semi plans a large increase in capital spending to meet growing demand and ensure that the shortage does not recur.
Car investors don’t seem to be deeply concerned. Shares of Ford and GM fell about 2% this week, while that of
S&P 500
and Dow Jones Industrial Average gained just over 1%.
Still, shares of Ford and GM have risen about 40% so far. The lack of semiconductors remains a secondary problem for investors at this time.
Write to Al Root at [email protected]