Elon Musk says chip shortages are a “short-term” problem

Texas News Today

Tesla Motors CEO Elon Musk speaks to the media next to the Model S.

Nora Tam | South China Morning Post | Getty Images

Tesla CEO Elon Musk said on Friday that the current semiconductor crisis will be over by next year.

The technology billionaire said chip shortages are considered a “short-term” problem rather than a long-term problem.

“Many chip manufacturing plants are under construction and I think we have enough capacity until next year,” Musk said in an Italian technology event broadcast online on Friday.

Musk did not identify the chip plant he was referring to.

Chip tycoons Intel and TSMC have announced plans to build a new factory in the United States, but have yet to go online for a few years.

Glenn O’Donnell, vice president and research director at advisory firm Forrester, believes this shortfall could continue into 2023.

“We expect this shortfall to continue from 2022 to 2023, as demand remains high and supply is constrained,” he said in a blog post in April.

The global chip shortage has had a major impact on a wide range of industries, but the automotive sector has been particularly affected. Industry figures such as Ford, Volkswagen and Daimler have been forced to stop production at various points and lower manufacturing targets as a result of the chip shortage.

impact on tesla

In the company’s first-quarter earnings release, Musk said Tesla had some supply chain issues before mentioning the chip shortage.

“This quarter, and in the second and third quarters, we had some of the toughest supply chain challenges we’ve ever had in Tesla’s life, and we continue to experience similar problems across our supply chains. Well that’s it. Parts — across the full range of parts. Obviously, people have heard about chip shortages. It’s a huge problem.”

Consulting firm AlixPartners predicted this week that chip shortages would cost the automotive industry $210 billion in revenue this year alone.

“Of course everyone wanted the chip crisis to be further mitigated by now, but unfortunate events such as the COVID-19 blockade in Malaysia and ongoing problems elsewhere only made things worse. Mark Wakefield, Global Co-Leader of Automotive, said. In the statement, industrial practice on AlixPartners.

Automakers use semiconductors for everything from power steering and brake sensors to entertainment systems and parking cameras. Smarter cars use more chips.

In 2019, Tesla began producing cars with custom AI chips that help onboard software make decisions in response to what’s happening on the road.

In July, Musk said production of Tesla’s Powerwall products, a domestic backup power source, was “backward” as a result of chip shortages.

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