The Global Chip Shortage Is A ‘Short-Term’ Issue, Says Tesla’s Elon Musk

according to Elon Musk, CEO of the United States based electric vehicle maker Tesla, stated on Friday that the continuing semiconductor shortage problem being faced throughout the world will be resolved by next year.

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

“There’s a lot of chip fabrication plants that are being built and I think we will have good capacity by next year,” Musk said at an Italian tech event that was streamed online Friday.

There was no specification from Musk of the chip plants he was referring to.

Intel and TSMC have already talked about their plans of building additional facilities in the United States, although they will not be operational for several years.

According to Glenn O’Donnell, vice president and research director at the consulting firm Forrester, the shortfall might persist until 2023.

“Because demand will remain high and supply will remain constrained, we expect this shortage to last through 2022 and into 2023,” he wrote in a blogpost in April.

The worldwide chip scarcity has had a massive effect on many sectors, but the automobile industry has been especially hard impacted. Due to a shortage of chips, industry heavyweights like as Ford, Volkswagen, and Daimler have all been forced to stop manufacturing at various times and reduce their production objectives.

Musk mentioned supply chain difficulties before mentioning the chip shortfall, during the first-quarter results call of Tesla. 

“This quarter, and I think we’ll continue to see that a little bit in Q2 and Q3, had some of the most difficult supply chain challenges that we’ve ever experienced in the life of Tesla and same difficulties with supply chain, with parts — over the whole range of parts. Obviously, people have heard about the chip shortage. This is a huge problem.”

The chip shortfall, according to consulting company AlixPartners, would lose the car sector $210 billion in sales this year alone.

“Of course, everyone had hoped that the chip crisis would have abated more by now, but unfortunate events such as the COVID-19 lockdowns in Malaysia and continued problems elsewhere have exacerbated things,” said Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners, in a statement.

Semiconductors are used in a variety of automotive applications by auto companies, including for power steering and brake sensors, as well as entertainment systems and parking cameras. The more chips automobiles consume, the smarter they get.

Tesla began producing vehicles with bespoke AI processors in 2019, which assist on-board software in making judgments in reaction to what is occurring on the road.

Musk stated in July that manufacturing of Tesla’s Powerwall, a backup battery for the house, was “lagging” due to a chip shortage.

(Adapted from Electrek.co)

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