Auto File - Supply chain déjà vu  

About this update from Foxconn Technology Co., Ltd.

Greetings from London! Happy almost-Thanksgiving to those on the other side of the pond, especially those in my former home, Detroit. Hopefully, you will have time to digest this before you tuck into your turkeys.Sometimes, small parts of stories grab your attention. Like this one about plans by Taiwan’s Foxconn to spend up to $3 billion annually on AI. What interested me was Chairman Young Liu’s comments about China’s EV sector, where he expects a shakeout “soon.” Depending on who you ask, China’s crowded market has north of 150 automakers, all fighting for survival amid a brutal price war that has been running for three years. As Liu says: "They're not making money," adding that China’s car industry will be “much more stable” after a period of consolidation. There’s probably a turkey-and-stuffing metaphor there somewhere. Which brings us to today’s Auto File… More of the same supply chain problems Musk’s old pay package comes at a cost Magna’s European EV gig Carmakers' familiar supply snags After a semiconductor chip shortage slammed global car production during the coronavirus pandemic – further aggravated by a Japanese factory fire - the auto sector said, “that’s it, this time we’re really, really going to strengthen our supply chains so this doesn’t happen again”. I am paraphrasing, of course. But going all the way back to the earthquake in Japan in 2011 that threatened global output, carmakers have promised every time there is a supply chain snafu that this time will be different. But guess what? The crisis that engulfed Dutch chipmaker Nexperia's plant in Dongguan last month has exposed a blind spot. The sector never foresaw low-tech chips would become a lever for China against the West. You can read more about it here. From that Dongguan factory, Nexperia ships semiconductors used in everything from car brakes to electric windows. They sell for fractions of a penny each, yet the shortage forced Nissan and Honda to cut production and drove German supplier Bosch to curtail working hours. The lesson for automakers is that China's dominance reaches beyond cutting-edge technology and rare earths to mundane-yet-critical components and how Beijing wields that power. But as one consultant told Reuters, the auto industry will talk a lot about supply chain diversification and then “realize how expensive it is”. Recommended reading: Europe’s car sales up, T...

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