why can't car makers get chips

[FernandoRose]

Car makers can't get chips primarily due to a perfect storm of surging demand and constrained supply. The global semiconductor shortage began with pandemic-related factory shutdowns and was severely exacerbated by a massive, unexpected spike in demand for consumer electronics. Automotive chips, or MCUs (Microcontroller Units), are often lower-margin, legacy chips, so production was deprioritized by chip foundries in favor of high-demand processors for laptops and servers. This created a massive supply gap just as car sales rebounded faster than anticipated. Additionally, the automotive industry's "just-in-time" manufacturing model, which minimizes inventory, left it extremely vulnerable to such disruptions.

Key Factor Contributing to the Shortage	Impact on Automotive Chip Supply
Pandemic-Induced Demand Shift	25-30% increase in demand for electronics (laptops, cloud servers) diverted foundry capacity away from automotive chips.
Automotive Chip Specificity	A single vehicle can require over 1,000 specialized chips from various suppliers, creating a complex, fragile supply chain.
Limited Foundry Capacity	Building a new semiconductor fabrication plant ("fab") costs $10-$20 billion and takes 2-3 years, preventing quick supply expansion.
Just-in-Time Inventory Model	Automakers carry minimal chip inventory (often less than a 30-day supply), leaving no buffer for supply chain shocks.
Geopolitical & Trade Issues	Trade tensions and droughts in key chip-manufacturing regions like Taiwan further constrained production output.

The situation is improving but remains fragile. Automakers are now signing long-term agreements directly with chipmakers like TSMC and Intel, moving away from pure just-in-time models. They are also redesigning vehicles to use fewer types of more readily available chips. However, the structural dependency on a limited number of global suppliers means the industry is still susceptible to future disruptions.

[LilaDella]

It’s a classic case of being in the wrong line at the wrong time. When the pandemic hit, car companies canceled their chip orders, expecting a sales crash. But everyone staying home went on a buying spree for new laptops, game consoles, and TVs. Chip factories, which take years to build, shifted to make those high-profit chips. When car sales snapped back unexpectedly fast, automakers showed up to re-order, but they were at the back of a very long line. They’re still waiting for their turn.

[OAsher]

From an industry insider's view, the problem is two-fold: complexity and priority. We don't use the same generic chips as a smartphone. Our ECUs (Engine Control Units) and sensor modules require specialized, ruggedized semiconductors certified to withstand extreme temperatures and vibrations. These aren't as profitable for foundries to produce. When capacity became scarce, we were outmaneuvered by tech giants who order in larger volumes and pay premium prices. Our supply chain, designed for efficiency, lacked the flexibility to adapt to this shock. It's a harsh lesson in supply chain resilience.

[OMartin]

Think of it like a restaurant kitchen during a surprise rush. The kitchen (the chip factory) has a set number of stoves. Car makers ordered a simple burger (a basic chip), but then a huge party came in and ordered expensive steaks (high-margin server chips). The kitchen focuses on the big-ticket orders. The car maker shows up later, hungry for their burger, but has to wait because the kitchen is overwhelmed. The pandemic was that surprise rush, and automakers are still waiting for their burgers to be cooked, slowing down the entire assembly line.