YouSaid · the spoken record

Mark Liu

lines on the record: 77
first: 2021-08-31
most recent: 2021-08-31
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Well, yes. You know, one of the things that I find really comical about this is, you know, if you hear some of the product makers, it's like, oh, yeah, we think laptop sales are going to continue, right? They're forgetting that these things last more than a year. And they actually have an upgrade cycle, which had been typically three years going on five. And you have to believe during the pandemic, a lot of those upgrades were pulled forward. So my advice to people, if you can wait, you'll get a good deal in not too long”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“We ask a lot of CEOs when do you think the chip shortage will be over? It's always farther out than I want, and it's never certain. It seems like it's going to persist for a long time. When do you think it will be over? And do you think it will be over?”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Well, I see people talking about it. I try to articulate that. But the challenge is this is a very complicated picture. And you have to understand all the moving parts and you have to understand kind of the long time horizons in some of these solutions. And it's a challenge because a lot of people haven't been inside these fabs, haven't looked at this, don't understand the basic technology. As an educator, one of my goals is to try to teach people as much as they can about this stuff.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Cambridge, Massachusetts to be in the heart of it. And all these other global pharma companies have done the same thing. They've moved to the US, they've moved to the Massachusetts Bay Area because I got to be close to where the leading edge research is. That is what we should be doing.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Research at Moderna half a decade ago, right? But then BARTA could put $10 billion into let me speed up your manufacturing, let me speed up your clinical trials, and we see what the result of that was. Now, if we invested in that leading-edge semiconductor technology, then companies like TSMC and Samsung would say, you know, I got to put more factories closer to where this innovation is because that research establishment in the universities or wherever the research is being done is training people. And that's what I need to run all these places. I told one person in Washington, I said, if you look at the investments in genomics and biotech back in the early 2000s, Novartis, the Swiss pharmaceutical giant, moved their R&D headquarters from Basel, Switzerland.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Because mRNA vaccines were first proposed in 1990, Moderna, for example, had been working on it for a decade with a billion dollars of private capital invested. But what really happened was in the late 80s and in the 1990s, the U.S. government invested huge amounts in genomics, the human genome program, biotechnology, molecular biology, life sciences, health sciences in general. And we had this wave of innovation and discovery, which laid the foundation for companies like Moderna, technologies like mRNA vaccines. So when the pandemic hit, we were able to pivot and then BARTA, the biomedical advanced research development agency, could look at this. And by the way, DARPA had funded pandemic preparedness.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“I agree with you. You want to know what I would do? I would invest in the basic science. And let me give you a parallel example. When we look at these mRNA vaccines for COVID-19, a lot of people look at that and say, A spectacular accomplishment. All these U.S. companies, Pfizer, Moderna, they did it in 18 months. Well, actually, that's not exactly true.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Just a part of this where it seems like we are in the United States trying to create more supply in the future. And there's many challenges along that road. In the meantime, you're looking at TSMC and a handful of other companies elsewhere in the world who can meet the booming demand. The demand may or may not abate. People aren't going to stop buying stuff. It might change, but we're going to add a bunch of supply after the problem is solved as these new facilities in the United States come online. Like, it doesn't seem like these things are aligned at all to me.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“By the way, that was a lesson that goes back 25 plus years ago because Intel has a fab in New Mexico on the Rio Grande, just on the north side of Albuquerque. And I was at a company. We had a factory just downstream from that fab. And they had come to us asking for more of our water allocation. It's like, guys, this is the desert.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. I had somebody call me from Arizona asking me, what can we do to get the Samsung fab located in Arizona? And I said, get more water. And they said, we have plenty of water. I said, but the Colorado River Compact is coming up for renegotiation. And you guys are in a historic drought for the last 20 years. You need a lot of water for chip manufacturing. Taiwan is having a drought because normally their reservoirs are filled by the typhoons over there and they had a very dry year. In Taiwan, they were trucking water to the fabs. So all those resource constraints are important. And I don't know why we like to build fabs in deserts.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“When we look at the plants being proposed in the United States, there's the Samsung factory in Texas. There's a couple big fabs being proposed in Arizona. Are places that are being hit by climate change, right? The Samsung Feb had to go down. Arizona's in a desert. Is that something that plays into this whole conversation? Where we put these things, how much power they need, how much water they need is actually more important than a tax subsidy package from a lesser regulated state.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“220 some pages. I read the whole thing. And my response to that was, okay, after you're done with those four supply chains, I'll give you another four where we're dependent on various parts of the world for all those different pieces. And when we're done with those four, I'll give you another four. And when you're done with those four, I'll give you another four. And how long would you like to play this game? So I do think it's important for us to be able to manufacture the most advanced semiconductor technology in the US because, as I said, that's important for innovation. But if you think you're going to be an island not dependent on the rest of the world for anything else, then all you're doing is echoing Xi Jinping's dual circulation strategy, which is I want the world to be dependent on me, but I don't want to be dependent on anybody else. I don't think it's going to happen.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“It's not that sophisticated. That's one of the reasons I try to educate as many people as I can about how complex this is. So for example, the Biden administration produced that 100-day report on critical supply chains. They sent it to me the morning it came out, and I read the whole thing, which was a long report.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“manufacturing goes with innovation. If you want to advance the process technology, you need to know the manufacturing, right, so to say that we're not going to do the manufacturing means we're going to preclude ourselves from participating in a lot of innovation. That part, in my mind, is without question, is very important. Is it important to diversify our supply chains in this new geopolitical world? I think it would be helpful, but we should not be naive about how interdependent the world is. So, for example, if we make the chips in the US, are we still going to send them to Southeast Asia or China for packaging? So then how much geopolitical risk have you really taken out, right?”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Well, I'm not a big fan of subsidies as a way of, quote, leveling the playing field, right? You hear all the lobbyists and everybody talking about how it costs less to do things in Taiwan or Asia because of subsidies and so on. There are tax abatements and other things. But I look at some of the reports that people send me on the level of subsidies in Taiwan. And then I go to my friends in Taiwan. It's like, I want to know what your electricity rate here is because, you know, one of the reports I saw is like, electricity is cheaper in Taiwan. Then I go to Taiwan and the Taiwanese tell me, actually, electricity is more expensive in Taiwan than it is in the US. Of course, it depends where in the US. So I look at this whole, how do we get more chip manufacturing in the US? What's important about that is...”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“When you think about a company like Intel telling the American government, hey, we cannot allow every chip in the world to be made in Asia in that region, which has instability because of China, especially the China-Taiwan relationship implies some instability. We need to spend the money to build the stuff here. And you see TSMC in Arizona, other places. How do you think that plays out from the perspective of, I don't know, American foreign policy affecting consumer supply chains?”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“People in the US looked at it and said, well, they're willing to do this. It's not a very profitable business and they can do it better than me. So why should I do it? Now, what actually happened in that process is they learned and they got very good at it and they got scale and they were able to aggregate scale across multiple customers. And in the semiconductor business scale is very important because how you get yield, how you get process improvement is by making chips, selling them to people, and learning how to do it more efficiently. So they were able to aggregate scale across multiple different customers, something that a lot of the American fabulous companies and policymakers didn't think was going to be possible, but they did it, right? And they have invested doggedly when global”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“They should look at TSMC as somebody who is doggedly persistent. TSMC was spun off from ITRI, the Industrial Technology Research Institute in Taiwan in the 1980s, pursuing this foundry model. They really created the foundry model, which was send me your design, I will manufacture it for you, which in those days was work that most chip manufacturers didn't want to do because it was capital and it was hard work. And TSMC throughout the 80s and the 90s and the early 2000s just doggedly worked on improving their product offerings and became a very service-oriented company. In other words, my role is to serve the needs of my customers. Now, a lot of”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“And so they may not be as adventuresome as they need to, although I think Intel seems to be showing signs of being willing to take some risk right now. One could argue, for example, that Intel was the leader for so many years, but then they were conservative on extreme UV. Held back and didn't invest in a lot of manufacturing capacity when TSMC did. And that's one of those examples of not taking enough risk, being kind of more risk adverse. TSMC bet right, Intel didn't bet right on that and hence they're a little behind. That doesn't mean that they couldn't catch up by taking some risk by throwing a lot of investment into the basic R&D.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“I think Intel under their new CEO, Pat Gelsinger, is going to spend the money. They've already committed 20 plus billion to two new fabs in Arizona and New Mexico. Gelsinger has been in the news visiting in France and in Europe around, hey, if you want to contribute in the form of a subsidy, maybe we'll build more FABs in Europe. Intel already has a large FAB in Ireland, and they have a large and very important fab in Israel as well, right? So Intel does have a global footprint. I think Intel is out to try to climb back to the top of the ladder, right? Intel does have a lot of capabilities. I think the challenge facing all of the big guys, Intel TSMC, as well as Samsung, is that the risk of making a wrong technology choice is really extreme these days.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“When he got back up, he said, what did you say? And I said, well, I don't know. I said, you know, 10 times that. You know, maybe it's not $150 billion. Maybe it's $130 or $140 billion. But you have to realize that TSMC has been spending, they're going to spend over $30 billion this year. And that's one company. And they spent $20 plus billion last year, and they've been spending $10 to $20 billion a year for the last decade. And before that, they've been spending like $5 to $10 billion a year for the decade before that. So they've been pouring money into this for 35 years. So $52 billion. And by the way, all the lobbyists are in there trying to make sure their company gets their share of it. By the time it gets peanut buttered around, The worry will be. Much difference is it actually going to make”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“I would say it's not bad for a don payment. I have somebody from deep within Washington call me up and ask me how much money would it take to catch up with TSMC? And I had just been to the Global Foundries Fab in Malta, New York. They had spent $15 billion to get 30,000 wafer starts per month at 14 nanometers. So it's not even leading edge. But it's a nice fab. They've done a good job there. TSMC FAB 12 has the capacity of 250,000 wafer starts per month. TSMC Fab 14 has about 250,000. TSMC Fab 15 has about 250,000. TSMC Fab 18, they're targeting the same capacity. So I told this person, I don't know, you'd probably have to spend 10 times what GF spend up in Malton, New York. I could hear him fall out of his chair.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“It can help if what we do is get the permitting to go a little faster than it typically does. Global Foundries built that fab in Malta, New York in relatively good speed. They had a lot of subsidies from the state of New York. I forget exactly how long it took to get all the permits and get the construction going. But it's slower. There is more sense of urgency these days, but we still don't have the mentality not to be critical. The administration talks about good union construction jobs so that costs more. So you just got to fold that into the cost and eventually you have to recover that in your cash flow.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Really efficient scale will probably cost you closer to 20 billion. If you think about how much depreciation that is generating, in Asia, the mentality is like every day, every hour this thing isn't running costs me tens of thousands, hundreds of thousands, sometimes millions of dollars. I've been in Asia on Christmas Day and there are people out there with jackhammers and pouring concrete because it's like, man, every minute this thing gets done sooner, we can start generating cash. We do not have that mentality in the West.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“So first you have to build a building, and then you have to move all the equipment in, and then you have to get a clean and qualified and up and running. In Asia, they'll build these things in a year. They'll do equipment move-in in the second year, get a qualified running by the end of the year. In the US or in the West, it takes a lot longer, because we don't have the same mentality they have in Asia, right? We're going to do all the permitting all the hearings and all that stuff. So it wouldn't surprise me if it took 50% longer to twice as long. Now let me tell you why that's a problem, because to your second question, a modern fab these days, one of the closer to leading edge will cost you 10 billion plus for the smallest efficient scale.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Or three different parts so that I could substitute them when they come in. What we did see with Tesla during the shortage is they were out redesigning parts to use different chips because they couldn't get some. Historically, the automakers haven't done that because it costs more. What they want to do is they want to qualify one fab to make one part. So if you're somebody like a TSMC before an automaker will use those parts The fab has to be qualified and then chip has to be qualified then you're going to use it for the whole model run. Right. So I'm not really convinced that it's going to change that much because in some sense they were already locked in.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“First, less diversification is not necessarily good from an innovation standpoint, because what you really want is innovative new ideas and innovative new designs coming to the fore. So consolidating down to a couple of suppliers, I'm not sure how that is going to play out. We see that chip consolidation certainly going on. A lot of that is driven by kind of the capital and scale requirements to be a manufacturer these days. If you're an automaker, when you design a chip in and you qualify it, you plan to use that chip for the whole model run. So it's not like you can switch out in the middle unless when you design it, you say, I am going to be able to accommodate two different parts.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Me ask you this like you can describe it as punitive, but it's also competitive, right? They have multiple suppliers. Those suppliers compete. They can fire suppliers if they don't do well or they have higher prices. One of the themes of the tech industry right now is consolidation. Chip foundries are largely consolidated. There's only a handful of them in the world. TSMC seems to be kind of at the center of a lot of these conversations. Is that consolidation good? Is it getting split out? Is there a sense that maybe the fate of the world shouldn't be in the hand of three foundry companies?”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“We will see. I went to an event where one of the big foundries was announcing expansion and they had guests from the automakers who articulated exactly that. We have to be a strategic partner with the chip manufacturers. That's to say, I am going to go from what has historically been a very transactional and punitive relationship with my suppliers to a strategic and a partnership relationship with my suppliers. What I will observe about that is Toyota has always had that approach and they have fared much better in the pandemic.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“One of the things that I have seen play out, we talk to a lot of car companies, CEOs, Indecoder, the CF Ford was on a show. He said, look, I used to just place orders to my tier one suppliers. Now Ford is in the business of buying chips directly because I don't want to be in the situation again. That feels like a reordering of the supply chain, right? When the final assembler is saying, I'm going to start buying components directly in a way that I haven't before. Is that having a spillover effect into how the entire chip supply chain is working or is that kind of a moment in time?”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Our auto industry because I have all these people who are out of work because we can't assemble cars. And TSMC did ramp up the number of chips that they're sending to the auto industry. Okay, so then the question is who else got shorted?”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“That are called fab light. In other words, they have some of their manufacturing, but they're more advanced manufacturing. They outsource to the foundries. I think what happened is people didn't realize that when I get all the way down through that stack, I may share a foundry with somebody in another industry that I didn't realize. Okay, so then it becomes a question if you're a TSMC or one of the other foundries, how do I allocate my capacity? And I don't know if this is what's happening, but I do know that the U.S. administration, the Germans, a lot of other countries got on the phone to TSMC and said, you have to allocate more capacity.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“You would have to look at the individual product bill of materials and the specifics. So I can't speak with authority on the specifics. But what I do observe is you have this tearing in the supply chain. So for example, if I'm an automaker, what I'll do is historically I would buy key subsystems from my tier one suppliers, Bosch or Continental or somebody like that who might buy a circuit board from somebody else who will then use a chip that was made by say NXP or maybe Infineon or Texas Instruments who may have made the chip themselves or they may have gone to somebody like TSMC to make the chip. Now what happens is you have a group of companies.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Quarter extra chips. So everybody is very conscious of if I have chips, I gain market share. If I don't have chips, I lose market share, I'm going to make sure I have extra chips. So when you have people who are ordering extra in a supply crunch, what happens? It makes it worse.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“and he had bleeding edge chip consumers and chip fabs and automakers and it's like wait a minute guys you know you have two very different markets represented in this meeting Do you understand what you're talking about here? And I'm not sure that they did. The other thing that is going on in the supply chains is a lot of double ordering or hoarding or I'm going to just build a little more safety stock inventory. Now, nobody wants to admit that they're doing that because it's kind of antisocial to do that right now. Let's think about this problem. Let's say you're making notebook computers and you have plenty of chips and your competitor doesn't. So what that means is you're going to gain market share on them. So if your competitor, they're saying, there's no way I want to lose market share to those clowns.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Phone, it'll be a little bit different, but your TV set will use display driver chips. Or there's a category of chips which have been around for as long as integrated circus have been around called timer counter chips. I tried to buy some for a design exercise we do with a Harvard Business School this past year. I buy them every year. I never had trouble getting them until this year. A lot of those old chips are older technology and they are commodities. They're cheap. Sometimes they're as little as 50 cents for a chip or a dollar and they're a commodity they're not very profitable. But it also highlights a couple of issues, right? For one, as you say, a lot of people don't distinguish between those two. I wrote a piece about the president held a meeting at the white.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“I think you highlight a very important point. There are really two different worlds. There is the leading edge, as you described, and that is mostly chips that go into smartphones, computers, data center stuff, and high performance chips. A large part of the world, they use older process technologies. Sometimes there are five or six generations older than what you find in your Apple iPhone. And so those chips are much cheaper to make because the technology is less demanding and the equipment is already fully depreciated. It's already paid for. So those are much more commodity chips. Now, even in your iPhone, you will have commodity chips, like a power management chip or a display driver chip.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“And so, maybe the past five years, there's been new laptops with new Intel chips, and then Intel kind of fitted its paws. But we are constantly seeing new chips. I think there's a belief in sort of the consumer tech world. Every new product has new chip technology in it. And kind of what I'm getting from this conversation is there's a lot of chips that have just been static that are just commodities, right? Like General Motors is not searching for the next great process node for power window controllers. They've settled on what they've got from their supplier and they're going for it. How do you think about that market? How much of the chip market is? Here's a bunch of stuff that's good enough that's worked, that's proven. We're just going to make it and what we don't have is inventory. And here's the new stuff.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“One of the things that I think about a lot in terms of consumer tech coverage is we are somewhat spoiled in that every year Apple puts out a new iPhone with a new chip and maybe it's just a different name but it's”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Relatively unusual. Now the Renesis fab was the same one that suffered a massive disruption during the 2011 Tohoku, East Japan earthquake, and tsunami. I actually visited that fab a couple months after that disruption because when that one went down back in 2011, it took down Toyota and Nissan and Honda, a couple of General Motors lines, I think a PSA line in Europe, and they marshalled tens of thousands of people to get that FAB back online. But then companies like Toyota said, oh, we're going to learn a lesson from this, and they had much more inventory of chips, right? So Toyota until recently hasn't suffered the same fate as some of the American manufacturers have been. But generally speaking, those types of innocents are relatively rare.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“How often do fires happen? I feel like because of the ship shortage, we heard about every disruption to the supply chain constantly, right? Like there's a chip shortage. Oh, no, this thing happened. It got worse. But in sort of a normal year, how many disruptions like that happen”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“In Austin and the Samsung factory in Austin. And when you take away the electricity and shut down a fab like that, they consume a lot of power. It's not like you can keep them going on generators. When you shut down something like that to restart takes a couple of months, so then we had that. And then in March of this year, Renesis in Japan had a fire in their fab, which makes 40% of the microcontrollers for automobiles. So on top of all these supply demand shifts, you actually took out a lot of capacity in a couple of small players. But again, if you don't have those particular chips, then you're in trouble.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“A threat of a deadline or a threat of sanctions. So they were very worried about that because you shut down the supply and they can't build any products. So there was this boom in demand from China. There was boom in demand from other companies making other products. Then the third thing that happened, we had a number of real disruptions back in October 2020. There's a Japanese semiconductor company called Asai Kesai Microsystems, AKM. They had a factory fire. Now they were a specialist chip maker that made like analog to digital converters and stuff like that, which are used in many, many products. So we had a fire there. We had the cold weather shutdown in Texas, which shut down the NXP.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Dynamic that was going on at the time was the US had sanctioned a number of Chinese companies like Huawei. So Chinese companies, this was the summer of 2020, put these massive orders on these factories because they wanted to stockpile chips, not knowing when they were going to get cut off. Chinese companies were very dependent on U.S. chips at the time. What they did is they started stockpiling massive numbers of chips because that's what allowed them to stay in business.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“I haven't been able to keep a freezer in stock for months, and that's because those used chips as well. So what happened is the automakers canceled orders or didn't order because they said, we're not going to need all these chips. If you go back to May 2020 in Boston Consulting Group put out this forecast of overall 2020 global vehicle sales would drop 14 to 22 percent in kind of their most likely case. their most optimistic forecast was a 12% drop. Then what happens is we see this boom starting in the summer as the world starts to open up, especially the U.S. starts to open up again. And by the time the auto manufacturers realized, oh wow, we need to order more chips. A lot of that capacity for those chips was already taken up by other players. So that's one dynamic.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Right, because they're trying to conserve cash. They don't want to go bankrupt. Not illogical. But at the same time, with work from home, we saw this huge spike in consumption notebook, computers, gaming systems, flat panel TVs, exercise equipment, home appliances. I tried to buy a freezer back then in my dealer said, who are you kidding me? Haven't you been paying attention? It's like.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“In 2019, they dropped 8%. 2018 was not so great. Going into 2020, the Chinese Association of Auto Manufacturers going into January 2020 was predicting a 2% drop in vehicle sales, and that was before the pandemic hit. Then the pandemic hit, and vehicle sales dropped 82% in February and 46% in March. We had a delayed reaction in Europe and in the U.S. In Europe, vehicle sales fell 46% in March and 80% in April of 2020. In the U.S., they fell 39% in March and 52% in April. Now, we have to think back to those times and remember what the news reports were. The automakers, especially the big three and Detroit, Like, we don't want to go bankrupt. Vehicle sales are down. They're trying to conserve cash, so they're laying off workers, shuttering plants. It's like, hey, purchasing, stop all that incoming material”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“Well, when COVID hit, a couple things happened. Let's start with the auto industry, because I think that has gotten a lot of attention because the chip shortage there has cut into production. So let's look at the auto industry first because I think it tells you a broader story. When we think about the auto industry, we should remember that China is the world's largest auto market. typically produces and sells around vehicles a year, whereas the US production is typically around 11.5 or so, and the US imports a lot of vehicles. So the China market is much larger than the US. I'm telling you this because in January 2020, the Chinese auto market was coming off two years of declining sales.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“You're describing is an extraordinarily complicated system with a lot of extraordinarily complicated technology embedded into it. I talk to a lot of consumer product CEOs on the show. I talk to a lot of software people. We tend to forget that there's these enormously complicated manufacturing techniques in the background enabling all of the internet, all of the digital world to exist. And then it kind of gets flattened too. the chip shortage Going to take a quick break, but we'll be back with a lot more from Willie Sheep. Back We talk about the chip shortage. COVID hits is it just the factories stopped producing and making them ramp again took a long time”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT
“They make those mirrors. The surface of the mirror is smooth to the level of one atom. So as I'm looking at these mirrors, the guys who are making them said, yeah, you know, if we pointed this system at the moon, when that beam of light got to the moon, it'd be like, I forget the exact number, 20 centimeters wide or something like that.”
2021-08-31 · Decoder with Nilay Patel · Everything you need to know about the global chip shortage · IDENTIFIED FROM THE TRANSCRIPT