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

Tesla Motors CEO Elon Musk speaks to the media subsequent to its Design S.

Nora Tam | South China Morning Article | Getty Images

Tesla CEO Elon Musk said Friday that the ongoing semiconductor disaster will be over by next yr.

The tech billionaire stated he thinks chip scarcity is a “brief-expression” problem as opposed to a extensive-expression a person. 

“You can find a good deal of chip fabrication plants that are staying created and I assume we will have excellent potential by upcoming 12 months,” Musk explained at an Italian tech party that was streamed on-line Friday.

Musk did not specify which chip vegetation he was referring to.

Chip heavyweights Intel and TSMC have introduced ideas to develop new plants in the U.S. but they will not likely occur on the net for various a long time nevertheless.

Glenn O’Donnell, a vice president study director at advisory agency Forrester, believes the scarcity could past till 2023.

“Since demand from customers will continue to be large and supply will remain constrained, we assume this shortage to previous by means of 2022 and into 2023,” he wrote in a blogpost in April.

The world-wide chip lack has experienced a main impact on a broad array of industries, but the automotive sector has been particularly badly hit. Large names in the sector this kind of as Ford, Volkswagen and Daimler have all been forced to suspend output at a variety of points and slice their producing targets as a result of a deficiency of chips.

Impression on Tesla

Through the company’s initial-quarter earnings, Musk stated that Tesla had some provide chain difficulties, in advance of going on to reference the chip scarcity. 

“This quarter, and I imagine we are going to proceed to see that a small bit in Q2 and Q3, experienced some of the most tricky provide chain issues that we have ever professional in the existence of Tesla and exact difficulties with provide chain, with elements — above the whole assortment of components. Definitely, men and women have read about the chip shortage. This is a enormous challenge.”

Consulting company AlixPartners predicted this 7 days that the chip lack will charge the automotive marketplace $210 billion in income this calendar year by yourself. 

“Of training course, everybody experienced hoped that the chip crisis would have abated a lot more by now, but regrettable gatherings these as the COVID-19 lockdowns in Malaysia and continued troubles elsewhere have exacerbated matters,” explained Mark Wakefield, world-wide co-leader of the automotive and industrial observe at AlixPartners, in a statement.

Carmakers use semiconductors in anything from ability steering and brake sensors, to amusement systems and parking cameras. The smarter autos get, the more chips they use.

In 2019, Tesla started generating automobiles with custom made AI chips that enable on-board software make decisions in response to what is going on on the street.

Musk claimed in July that output of Tesla’s Powerwall merchandise, a backup battery for the house, was “lagging” as a final result of the chip lack.