Home >Auto News >'Like the toilet paper shortage': Elon Musk on panic-buying of chips

Tesla CEO, Elon Musk expressed his views on the ongoing shortage of chips plaguing various sectors. Musk claimed that chip shortage is creating havoc in Tesla's supply chain.

Musk likened the crisis to the toilet paper shortage that had affected many American states during the early outbreak of Covid-19 in the United States. He is of the opinion that manufacturers are ordering more microcontrollers than what they actually need.

On Wednesday, Tesla CEO said, “Our biggest challenge is supply chain, especially microcontroller chips. Never seen anything like it. Fear of running out is causing every company to overorder – like the toilet paper shortage, but at epic scale."Musk claimed that the chip problem is one of the biggest issues the company had ever experienced. AlixPartners, a consulting firm had announced that automakers will face the major brunt of the chip shortage. The firm estimates that the industry will lose about $110 billion of sales this year, due to the shortage of chipsets.

Intel CEO Pat Gelsinger claimed that the work and study-from-home trends during the Covid-19 pandemic have led to a "cycle of explosive growth in semiconductors" that has placed huge strain on global supply chains around the world.

"We have been working diligently with our partners... to address constraints and increase output to meet demand, and we are acting to help ensure capacity to meet the world's needs for this new era... But, while the industry has taken steps to address near-term constraints, it could still take a couple of years for the ecosystem to address shortages of foundry capacity, substrates and components," he said at a virtual session at the Computex event.

One of the biggest semiconductor manufacturers, Taiwan Semiconductor Manufacturing Co. has assured that it will increase the production capacity of microcontroller units by 60%, which will will ease some backlog with car manufacturers.

Tesla, as well as car manufacturers in India have been raising prices due to increasing input costs. The second wave of Covid-19 has also adversely affected the sales in the auto sector.

Apart from auto manufacturers, technology companies have also been complaining of semiconductor shortages.

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