Shortage of Semiconductors and Demand in Used Cars

Semiconductors are substances with properties somewhere between a conductor and an insulator; conductors conduct electricity and insulators do not conduct electricity. Integrated circuits (ICs), diodes, transistors and other electronic discrete components are made of semiconductors, whereas the materials of semiconductors are gallium arsenide,indium antimonide,germanium and mainly silicon. Silicon forms most of ICs. (1)

 

Metals, semiconductors and insulators are distinguished from each others by their band structures. Their band structures are shown in the figure below.

In metals, the conduction band and the valence band are very closer to each other. In semiconductors and insulators, the valance band and conduction band are separated by a forbidden energy gap（Eg）of sufficient width. In semiconductors at room temperature, the band gap is small, electrons jump the gap fairly easily, given the semiconductor limited conductivity. Semiconductor crystal used for ICs is high purity single crystal silicon, but impurities are often added to modify the electrical properties. Depending on the added impurities, there are n-type and p-type semiconductors. For details, please review Reference 1. 

 A semiconductor chip is an electric circuit with many transistors and wiring formed on a semiconductor wafer. An IC comprises numerous these components. A semiconductor is made by two steps: wafer processing and front-end process and back-end process. Wafer processing is further divided into deposition, photoresist coating, and etching. For details, please review Reference 1. These steps are tedious process, requiring precision and skills. Semiconductors are in short supply because of big demand for electronics and effects from former President Donald Trump’s trade war. (2) 

Later, because of COVID-19, supply chains are disturbed. This worsens the situation. In the year 2021, semiconductor chip shortage costs the global automotive industry maybe up to USD200 billion or more in revenue. These shortages have slowed down several original equipment manufacturers (OEMs) in production; thus, further extending the waiting period of certain vehicle models. As a result (one of the results), used car sellers across markets, including India, are enjoying a boom in demand. (3) 

 Reference: (1) https://www.hitachi-hightech.com/global/products/device/semiconductor/about.html. (2) https://www.cnbc.com/2021/02/10/whats-causing-the-chip-shortage-affecting-ps5-cars-and-more.html#:~:text=Semiconductors%20are%20in%20short%20supply%20because%20of%20big,coming%20months%20as%20demand%20remains%20higher%20than%20ever. (3) https://home.kpmg/in/en/blogs/home/posts/2022/01/semiconductor-chip-shortage-manufacturers-suppliers-mantra.html

Who make semiconductors for Tesla, Ford and GM?

Who makes semiconductors for Tesla? I would guess, it is Taiwan Semiconductor Manufacturing Co. (TSM), because it is the largest manufacturer in the world. Nope, my guess is wrong. According to the reference that I am reading, it is Samsung Electronics Co. Samsung will manufacture Tesla Inc.’s next-generation hardware 4 (HW 4.0) chip for its fully autonomous driving technology. (1) 

 What semiconductor company does Ford use? I would guess, it is TSM. My guess is wrong again. According to Reference 1, it is going to be GlobalFoundries Inc. 

 Who make semiconductors for GM? I am not going to guess this time, Reference 1 says Qualcomm Inc., STMicroelectronics NV, Taiwan Semiconductor Manufacturing Co., Renasas Electronics Corp., ON Semiconductor Corp., NXP Semiconductors NV and Infineon Technologies AG are the chips supplier for GM. 

 Let's go back to talk about Ford: 

Due to significant consumer demand, Ford has announced it will make 150k of the trucks a year by 2023 at a Michigan plant (~4x its initial output estimate). (2) Ford Motor’s 2021 sales fell 6.8% from the year-earlier period but ends with strong fourth quarter. Ford had a wonderful fourth quarter, selling 508,451 vehicles, a 27% increase over the previous quarter. Overall, the U.S. automotive industry sold 15.1 million vehicles in 2021, Ford sold 1.9 million vehicles. Ford is at the third-place U.S. sales position behind General Motors (GM) and Toyota Motor. (3) 

Ford Moter Company CEO is James “Jim” D. Farley, Jr., effective October 1, 2020. In his previous role as Chief Operating Officer, Farley worked to strengthen Ford’s automotive operations, Farley also represents Ford on the U.S. China Business Council Board of Directors and has been appointed co-chair of the Future of Mobility Commission. He earned a bachelor’s degree in economics, UCLA, he graduated from the Anderson School of Management with a degree in management. (4)

How Ford CEO Jim Farley Plans to Transform an American Icon | Leading Through Change | Salesforce (Note: This interview was done about a year ago.)

 

Reference: 

(1) https://erinbethea.com/who-makes-semiconductors/ 

(2) https://thehustle.co/01142022-ford-ev/ 

(3) https://www.cnbc.com/2022/01/05/fords-2021-sales-down-6point8percent-but-finishes-year-with-strong-fourth-quarter.html 

(4) https://media.ford.com/content/fordmedia/fna/us/en/people/james-d--farley--jr-.html

Tesla's Batteries

What is the most expensive part in an electric vehicle? Semiconductors, since we are in shortage of semiconductors. Probably not, I heard it is the battery. A Finnish man bought his Tesla in 2013, and now, mechanics said he’d need the “whole battery cell” replaced, at a price of 20,000 euros, or about $23,900. (1) 

 Tesla has signed an agreement last month with Australia's Syrah Resources, which operates one of the world’s largest graphite mines in the southern African country. It's a unique partnership between an electric vehicle manufacturer and a producer of the mineral that is critical for lithium-ion batteries, according to the news that I read. Tesla will buy the material processed from its plant in Vidalia, Louisiana, and it sources graphite from its mine in Balama, Mozambique. Tesla plans to buy up 80% of what the plant produces about 8,000 tons of graphite annually — starting in 2025. Syrah must prove the material based on Tesla’s standards. (2) 

 According to other sources, Tesla is changing the battery cell chemistry that it uses in its standard range vehicles. As mentioned above, the new batteries will use a lithium-iron-phosphate (LFP) chemistry rather than nickel-cobalt-aluminum which Tesla will continue to use in its longer-range vehicles. The move is likely a way for Tesla to increase profit margins on its cars, while not necessarily having to raise prices. In fact, Tesla is already making vehicles with LFP chemistry at its factory in Shanghai, and the top producers of these types of battery cells are CATL and BYD. Tesla is already procuring batteries from CATL, Tesla sells those cars in China, the Asia-Pacific region, and Europe. (3) 

New 4680 Battery has a much longer driving range:

 1. https://nypost.com/2021/12/24/tesla-explodes-after-mechanics-charge-man-23k-for-new-battery/ 2. https://www.msn.com/en-us/news/world/tesla-inks-deal-to-get-key-battery-component-outside-china/ar-AASPwKE?ocid=BingNewsSearch 3. https://www.cnbc.com/2021/10/20/tesla-switching-to-lfp-batteries-in-all-standard-range-cars.html