Elon Musk says chip shortage is “short-term” problem

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

The tech billionaire said he believed the chip shortage was a “short-term” problem as opposed to a long-term problem.

“There are a lot of chip making factories under construction and I think we’ll have good capacity by next year,” Musk said at an Italian tech event that aired online Friday.

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

Chip heavyweights Intel and TSMC have announced plans to build new factories in the United States, but they won’t be online for several years.

Glenn O’Donnell, senior vice president of research at consulting firm Forrester, estimates the shortage could last until 2023.

“Because demand will remain high and supply will remain limited, we expect this shortage to last until 2022 and 2023,” he wrote 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 hit particularly hard. Big names in the industry such as Ford, Volkswagen and Daimler have all been forced to halt production at various times and cut manufacturing targets due to a lack of chips.

During the company’s first quarter results, Musk said Tesla had supply chain issues, before referring to the chip shortage.

“This quarter, and I think we’ll continue to see it a bit in Q2 and Q3, has seen some of the toughest supply chain challenges we’ve ever faced in Tesla’s life and the same struggles with the supply chain, with parts – across the whole range of parts. Obviously people have heard about the chip shortage. It’s a huge problem. ”

Consulting firm AlixPartners predicted this week that the chip shortage will cost the auto industry $ 210 billion in revenue this year alone.

“Of course, everyone had hoped the chip crisis would have eased further now, but unfortunate events such as the COVID-19 lockdowns in Malaysia and lingering problems elsewhere have exacerbated things,” said Mark Wakefield, global automotive co-leader. and industrial practice at AlixPartners, in a press release.

Automakers use semiconductors in everything from power steering and brake sensors to entertainment systems and parking cameras. The smarter the cars, the more chips they use.

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

Musk said in July that production of Tesla’s Powerwall product, a home backup battery, was “lagging behind” due to the chip shortage.