• Market Crumbs

Semiconductor Shortage Hits Automakers

Image via Carlos Aranda on Unsplash

Nvidia has become one of the hottest stocks in recent years as it builds out its offerings for automakers as they rush to develop self-driving vehicles.

Nvidia announced over the weekend a deal with Chinese automobile manufacturer NIO that will see NIO use the NVIDIA DRIVE Orin system-on-a-chip (SoC) for its new generation of electric vehicles. The ET7 sedan, which is expected to offer advanced automated driving capabilities using NIO's supercomputer "Adam," will ship in China beginning in 2022.

"Autonomy and electrification are the key forces transforming the automotive industry," NVIDIA founder and CEO Jensen Huang said. "We are delighted to partner with NIO, a leader in the new energy vehicle revolution — leveraging the power of AI to create the software-defined EV fleets of the future."

As automakers build vehicles that resemble more of a computer, they're facing a shortage of semiconductors that is now beginning to affect vehicle production. Both Ford Motor and Nissan Motor said they froze production at plants in the U.S and Japan, respectively, as they work with suppliers to resolve the situation and monitor additional impacts.

News of the shortage made the rounds last year when automakers saw sales increase quicker than expected amid the pandemic as factories remained closed. Volkswagen adjusted production last month in China, North America and Europe as a result of the shortage, according to Reuters.

"The chip supply for certain automotive electronic components has been affected due to uncertainties caused by the pandemic," a Volkswagen representative told Reuters. "This has led to a potential interruption in automotive production, with the situation getting more critical as demand has risen due to the full-speed recovery of the Chinese market."

Not surprisingly, the shortage is affecting auto suppliers in addition to automakers. German auto supplier Bosch said it is seeing the semiconductor shortage affect its supply chain.

"No supplier can elude this market development," Bosch said. "We are in close contact with our suppliers and customers to maintain the supply chains as much as possible despite the tense market situation."

Chipmakers have responded by increasing production but Continental warns the shortage could persist well into this year as it could take up to nine months for production to meet demand.

"Although semiconductor manufacturers have already responded to the unexpected demand with capacity expansions, the required additional volumes will only be available in six to nine months," Continental said. "Therefore, the potential delivery bottlenecks may last into 2021."

With demand for vehicles picking up and semiconductors continuing to be in short supply, the affect on automakers looks unlikely to be resolved any time soon.

Leftover Crumbs

  • UK regulator warns of cryptos. The U.K.’s Financial Conduct Authority has warned cryptocurrency investors that they risk losing all of their money as cryptocurrencies continued their surge to all-time highs before falling in recent days. "The FCA is aware that some firms are offering investments in cryptoassets, or lending or investments linked to cryptoassets, that promise high returns," the FCA said. "If consumers invest in these types of product, they should be prepared to lose all their money."

  • Staples takes another shot at Office Depot. Private equity owned Staples has made a $2.1 billion offer to acquire rival Office Depot. The $40 per share cash offer comes four years after a federal judge blocked Staples' attempt to acquire Office Depot, which was worth more than $6 billion at the time, arguing the deal would reduce competition. Staples said it would raise the offer if Office Depot sells assets, such as CompuCom.

  • Krispy Kreme debuts mini doughnuts. Krispy Kreme announced a new limited-edition Mini Dessert Doughnut Collection is now available at locations across the U.S. The collection features Lemon Bar, Strawberry Cheesecake, Chocolate Chip Cookie Dough and Birthday Cake mini doughnuts. "Coming off 2020, celebrating any and all wins – including small ones – is a way we can keep each other's spirits up," Krispy Kreme Chief Marketing Officer Dave Skena said. "Our Mini Dessert Doughnut Collection is a great way to celebrate the little wins to bring out the big smiles that keep us going."

  • $200 billion in market cap gone. Just a few days after cryptocurrencies topped a $1 trillion market capitalization for the first time, more than $200 billion has since been wiped out as a result of the recent pullback which has seen bitcoin fall more than 25% from its record high. "It's to be determined whether this is the start of a larger correction, but we have now seen this parabola break so it might just be," crypto exchange Luno head of business development Vijay Ayyar said.

  • Ben & Jerry's debuts Doggie Desserts. Ben & Jerry's new ice cream for dogs, Doggie Desserts, went on sale yesterday as the Unilever-owned company tries to capitalize on the pet boom. The Doggie Desserts are made with a small amount of dairy, making them safe for dogs. "While Doggie Desserts frozen dog treats were developed specifically for pups and are not labeled for human enjoyment, they do use the same ingredients that you'd find in our flavors made for humans," Ben & Jerry's said. "So they are perfectly safe for you to taste, as long as you like pumpkin and pretzels!"