Elon Musk says the chip shortage is a ‘short-term’ problem

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Elon Musk, the CEO of Tesla, stated on Friday that the current semiconductor situation will be resolved by next year.

The tech entrepreneur believes the chip scarcity is a “short-term” rather than a “long-term” issue.

“A lot of chip fabrication plants are being built, and I believe we will have good capacity by next year,” Musk said at an Italian tech event that was aired live online on Friday.

Musk didn’t say which chip plants he was talking about.

Intel and TSMC, two of the world’s largest chipmakers, have announced plans to build new operations in the United States, but they won’t be operational for several years.

According to Glenn O’Donnell, vice president and research director at Forrester, the scarcity might endure until 2023.

“We expect this shortfall to endure through 2022 and into 2023 since demand will remain high and supply will remain constrained,” he wrote in an April blog post.

The global chip shortage has wreaked havoc on a variety of businesses, but the automotive industry has been particularly hard struck. Due to a scarcity of semiconductors, major manufacturers such as Ford, Volkswagen, and Daimler have to suspend production and lower their manufacturing objectives at various periods.

Tesla’s Reaction

Musk mentioned supply chain concerns during Tesla’s first-quarter earnings call, before going on to mention the chip shortfall.

“We had some of the most significant supply chain challenges we’ve ever had in the life of Tesla this quarter, and I think we’ll see it a little bit in Q2 and Q3, and same difficulties with supply chain, with parts — over the entire range of parts. Obviously, the chip scarcity has been publicized. This is a major issue.”

The chip shortfall, according to consulting firm AlixPartners, will cost the automobile industry $210 billion in revenue this year alone.

In a statement, Mark Wakefield, global co-leader of AlixPartners’ automotive and industrial practice, said, Of course, everyone had anticipated that the chip situation would have subsided by now, but regrettable occurrences like the COVID-19 lockdowns in Malaysia and ongoing issues elsewhere have aggravated matters.

Everything from power steering and brake sensors to entertainment systems and parking cameras uses semiconductors. The more sophisticated cars become, the more chips they employ.

Tesla began developing cars with special AI chips in 2019, which aid on-board software in making judgments in reaction to what’s going on on the road.

Because of the chip shortfall, Musk claimed in July that production of Tesla’s Powerwall product, a home backup battery, was “lagging.”

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