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VW, Ford, Daimler concern chip scarcity may persist for a while

Technicians work in the assembly line of the ID electric car. 3 car in Dresden, Germany, 8 June 2021.

Matthias Rietschel | Reuters

Automakers like Ford, Volkswagen, and Daimler are still grappling with the impact of global chip scarcity, with executives warning each of the companies that a silicon shortage is likely to remain a problem.

Volkswagen CEO Herbert Diess, Daimler CEO Ola Kallenius and Ford Europe CEO Gunnar Herrmann told CNBC’s Annette Weisbach on Monday at the Munich Motor Show that it is difficult to say when the complex problem will be solved.

Germany’s Volkswagen, Europe’s largest car manufacturer, has lost market share in China due to the chip shortage, said Diess.

“We are relatively weak because of semiconductor shortages,” he said. “In China we are more affected than the rest of the world. That is why we are losing market share.”

Diess said his colleagues in China had pushed for more semiconductors and called the shortage of chips a “really big concern”.

The Wolfsburg-based company expected an improvement in the semiconductor situation after the summer vacation, but that was not the case. Malaysia, where many of Volkswagen’s suppliers are based, has been hit hard by the coronavirus in recent weeks, which has led to several plant closings.

Diess said he believes chip scarcity issues will gradually resolve as countries reduce Covid-19 transmission, but he anticipates there will be a generalized semiconductor shortage for some time. “We will face a general shortage of semiconductors because the Internet of Things is growing so fast that there will be constraints that we are trying to address,” he said.

Commodity crisis

Ford Europe’s Herrmann, meanwhile, estimates the chip shortage could last until 2024, adding that it’s difficult to say exactly when it will end.

The shortage is said to have been exacerbated by the switch to electric vehicles. For example, a Ford Focus typically uses around 300 chips, while one of Ford’s new electric vehicles can have up to 3,000 chips.

Aside from chips, there are now other bottlenecks to contend with. Ford is facing a “new raw material crisis,” said Herrmann.

“It’s not just semiconductors,” he said, adding that lithium, plastics, and steel are relatively scarce. “You find bottlenecks or restrictions everywhere.”

Car prices will rise with rising raw material prices, said Herrmann.

Despite the imbalances, Herrmann said the order intake from Ford Europe was “fantastic” and “the demand is indeed extremely strong”.

No longer functional

Kallenius from Daimler hopes that the third quarter will be the “low point” of the disruptions. “That seems to be the quarter that will be hardest hit,” he said.

“We hope to get promoted again in the fourth quarter,” said Kallenius. “But there is a certain uncertainty that we have to deal with in our production system. It has to remain flexible.”

The chip shortage has affected the automotive industry like no other. Assembly lines have been shut down and some cars are now shipped without functions based on semiconductors.

In the UK, auto production hit a new low in July, marking the worst July performance for the industry since 1956.

The German technology and mechanical engineering group Bosch, the world’s largest automotive supplier, considers semiconductor supply chains in the automotive industry to be out of date.

Harald Kroeger, member of the Bosch board of directors, told CNBC last month that supply chains collapsed last year as the demand for chips in cars, PlayStation 5s and electric toothbrushes increased worldwide.

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Nio shakes off chip scarcity with greater than 8,000 deliveries in June

Nio plans to begin deliveries of its ET7 electric sedan in 2022.

Evelyn Cheng | CNBC

BEIJING — Chinese electric car start-up Nio said Thursday it delivered more than 8,000 cars in one month for the first time.

The company delivered 8,083 vehicles in June, bringing the second-quarter total to 21,896 cars, according to a release. That quarterly figure came in on the high end of Nio’s forecast for deliveries of between 21,000 and 22,000 vehicles in the three months ended June.

Nio’s U.S.-listed shares are up 9% so far this year. The company has typically delivered more electric cars a month than two other U.S.-listed electric car start-ups, Xpeng and Li Auto. Their shares are up about 3.7% and 21%, respectively, so far this year.

The strong second-quarter performance came despite a decline in monthly deliveries in May from April — which the company had attributed to the global semiconductor shortage.

Nio’s June figures also brought deliveries for the first half of the year to more than 41,900, close to surpassing the total for all of last year of 43,728 cars.

However, the start-up’s deliveries still fall far short of industry giant Tesla, which delivered 184,800 vehicles worldwide in the first quarter alone.

Tesla’s shares are down more than 3.5% for the year so far.

Read more about electric vehicles from CNBC Pro

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Health

There’s a ‘Extreme Blood Scarcity’ within the U.S., Purple Cross Says

As many Americans return to prepandemic lifestyles, hospitals are facing a new issue: a desperate need for blood.

Over the past few months, hospitals have seen a rise in trauma cases, organ transplants and elective surgeries, prompting a national blood shortage, the American Red Cross said last week.

The lack of blood is so great that some hospitals are pumping the brakes on the pace of elective surgeries and “delaying crucial patient care,” until blood supply levels rebound, Chris Hrouda, president of Red Cross Biomedical Services, said in a statement.

“The Red Cross is currently experiencing a severe blood shortage,” Mr. Hrouda said, adding that the organization was working to distribute more blood than expected over the past three months. “But we can’t do it without donors. Every two seconds, someone in the U.S. needs blood.”

The demand for blood is not new. There was also a shortage last year when blood donation centers were forced to close because of the coronavirus pandemic.

But in some ways, it seems more dire than before. During last year’s shortage, for example, Brian Gannon, chief executive of the Gulf Coast Regional Blood Center in Texas, said his organization had one or two days’ worth of Type O red blood cells, down from a normal supply of three to four days’ worth.

In recent weeks, Type O blood supply has been down to half a day’s worth, according to the Red Cross, which said there was also an “emergency need” for the donation of platelets, half of which go to patients undergoing cancer treatments.

Dr. Merlyn Sayers, president and chief executive of Carter BloodCare, based in Texas, called the need for blood a “national crisis.”

“Carter BloodCare dreads reaching the point, with blood inventories so jeopardized, that patients needing transfusion cannot be confident that the blood is there for them,” Dr. Sayers said.

The blood shortage is a result of two challenges caused by the pandemic — closing and reopening, Dr. Sayers said.

“In the first place, the pandemic, for more than a year, imposed conditions, such as social distancing, that were inimical to blood donation,” Dr. Sayers said, adding that many businesses that typically supported blood donation campaigns at workplaces had closed. “And now, with the gradual emergence from restrictions, hospital demands for blood have increased dramatically as patients who understandably avoided hospitalization for fear of Covid are presenting for treatment.”

The Red Cross said patients who did not seek care during the height of the pandemic in the United States were showing up in hospitals with “more advanced disease progression,” which in some cases requires more blood transfusions.

In addition to patients who delayed seeking treatment for fear of the virus, another possible reason for the increased demand for blood is that as cities reopen, more people are exposed to potential dangers leaving their homes.

The Red Cross said hospitals across the country had been responding to an “atypically high” rise in trauma cases and emergency room visits. The organization said it had seen demand from hospitals with trauma centers increase by 10 percent this year, compared with 2019.

“Where there’s more people on the road, there’s probably more accidents. We did quarantine for a long time,” said Cameron Palmer, a community development coordinator with the Gulf Coast Regional Blood Center in Houston. “Having more people on the road can cause more accidents, which can cause people to need more transfusions.”

The Gulf Coast Regional Blood Center is still making its collection calls, but hospitals have had a greater need for blood, Mr. Palmer said.

“It’s not really a shortage. It’s more of a usage,” he said. “It’s just that our hospitals are now asking for more than expected.”

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Health

How a Nursing Scarcity Impacts Households With Disabled Kids

Many had placed their hopes on the Biden government’s infrastructure plan, which would allocate $ 400 billion to improve home and community care. But with the President and Republicans arguing over the scope and scope of the proposal, it is unclear whether that part will survive.

Parents, meanwhile, are increasingly carrying an inexorable burden alone.

A nurse who cares for a medically weak child at home has the same duties as in a hospital, but no emergency medical assistance. It’s a tightrope, and experts say prevailing wages don’t reflect the difficulty.

Federal guidelines allow state Medicaid programs to cover home care for eligible children regardless of their families’ income, as the price of 24/7 care would ruin almost anyone. But states generally pay nursing staff at much lower rates than they would for equivalent care in a hospital or other medical center.

“They’re effectively setting a benchmark for employee compensation that puts this area at a competitive disadvantage,” said Roger Noyes, a spokesman for the New York State Home Care Association. In return, government-approved home health insurers that provide nursing families with nurses pay meager salaries and rarely offer health insurance or other benefits to the nurses they employ.

Although home care is better suited to medically ill children, hospitals get about half of Medicaid spending on these cases, compared with 2 percent on home care, studies show.

And Covid-19 created competing demands on care that further reduced the number of home care workers. In light of the pandemic, the state’s largest healthcare provider, Northwell Health, hired 40 percent more nurses in 2020 than the previous year, and hired 1,000 additional temporary nurses once the local hiring pool ran out.

Robert Pacella, the executive director of Caring Hands Home Care, the agency that oversees Henry’s case, noticed the change in January as nurses began reducing shift opportunities and decreasing new applicants.

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World News

TSMC, SMIC, UMC see gross sales enhance as chip scarcity rages

Memory chips are seen on a Samsung Electronics memory module in this arranged photograph in Seoul, South Korea, on Thursday, July 26, 2018.

SeongJoon Cho | Bloomberg | Getty Images

The world’s 10 biggest chip manufacturing companies saw their revenues surge to a record high in the first quarter of 2021, according to market research firm TrendForce.

The combined quarterly total revenue of the chipmakers, known as foundries, rose to a record high of $22.75 billion in the first quarter, according to a TrendForce blog published Monday.

Chips are used in everything from cars and games consoles, to washing machines and toothbrushes. They form part of the life blood of the global economy and are vital to many of the world’s biggest industries. But they’re also in short supply —  and the shortage could last until 2023.

“Owing to soaring demands for various end devices, manufacturers have been ramping up their component procurement activities, and foundry capacities, as a result, have been in shortage since 2020, with various foundries raising their wafer prices and adjusting their product mixes to ensure profitability,” TrendForce analyst Joanne Chiao wrote.

Around 57% of the world’s chip foundry revenues in the last quarter were generated by one Taiwanese chipmaker: TSMC, or the Taiwan Semiconductor Manufacturing Corporation.

The Taipei-headquartered firm saw its revenue climb to $12.9 billion in the first quarter, up 2% on the first quarter of 2021, according to TrendForce, which analyzed how well each of the company’s various chips sold.

The U.S. and the European Union have said they want to be more self-reliant when it comes to semiconductors as the vast majority of the world’s chips are made in Asia.

TSMC chips

TSMC’s 7, 12 and 16 nanometer (nm) chips are the company’s main revenue drivers, according to TrendForce.

“The revenue from the 7nm foundry service has kept climbing at a stable pace thanks to orders from AMD, MediaTek, and Qualcomm,” Chiao said, adding that sales are up 23% on the last quarter.

Meanwhile, revenue for 12nm and 16nm chips has “grown on account of the demand related to MediaTek’s 5G RF (radio frequency) transceivers and Bitmain’s cryptocurrency mining machines,” TrendForce added, highlighting how sales are up almost 10% on the last quarter.

However, sales of TSMC’s smallest and most innovative 5nm chips actually saw a quarterly decrease, Chiao said, adding that the main reason is because Apple (TSMC’s largest 5nm client) “entered the off-season for device production.”

Storm hurts Samsung

Elsewhere, South Korean chip giant Samsung saw its foundry revenue drop 2% on the last quarter to $4.1 billion.

Chiao said that’s partly because a freak winter storm in February in Texas caused power outages in Austin and forced Samsung to temporarily stop producing chips at one of its plants in the state.

Elsewhere, Taiwan’s United Microelectronics Corporation saw its quarterly revenues climb 5% quarter on quarter to $1.6 billion, while China’s SMIC saw its climb 15% to $1.1 billion.

TrendForce expects the chip foundries to see further revenue growth as the prices of the chip wafers they produce continue to rise and demand persists.

It said the quarterly total revenue of the top 10 foundries will “once again reach a historical high” by undergoing a 1-3% increase quarter-on-quarter for the second quarter of 2021.

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Business

How a chip scarcity is battering the automotive trade

A semiconductor shortage is hurting the automotive industry, forcing companies to cut production and leaving dealers with less inventory.

Industry analysts estimate the shortage could cost the entire industry $ 110 billion, almost doubling an earlier estimate of $ 60 billion. These include automakers, suppliers and dealers, among others.

In early 2020, automakers were hit by production slowdowns due to Covid-19 pandemic lockdowns and security measures.

Meanwhile, the semiconductor industry has been inundated with the demand for chips from the consumer electronics industry. Home-bound consumers bought new entertainment systems, video game consoles, and other devices to pass the time.

Then the car factories came back to life. But the semiconductors that automakers need for infotainment systems, engine control systems, and countless other functions weren’t there.

The automakers are now trying hard to get the chips they need. The ordeal also forced them to face a fragile semiconductor supply chain that analysts say has been a looming threat for years.

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Business

Why Covid vaccine producer India faces main scarcity of doses

People aged 18 and over waiting to be vaccinated against Covid-19 at a vaccination center on the Radha Soami Satsang site operated by BLK Max Hospital on May 4, 2021 in New Delhi, India.

Hindustan Times | Hindustan Times | Getty Images

With the devastating second wave of the coronavirus pandemic in India, questions are being asked how the country where the world’s largest vaccine maker is based got to this tragic point.

India continues to report massive numbers of new infections. Tuesday passed the grim milestone of having reported over 20 million Covid cases and at least 226,188 people have died from the virus, although the reported death toll is believed to be lower than the real death toll.

Meanwhile, India’s vaccine program is struggling to make an impact and supplies are problematic, despite the country halting vaccine exports in March to focus on domestic vaccination.

The sharp rise in infections in India since February has been attributed to permission for a major religious festival and election campaigns, as well as the spread of a more contagious variant of the virus. Prime Minister Narendra Modi and his ruling Bharatiya Janata party have been criticized for a lack of caution and willingness, and accused of placing politics and campaigning above public safety.

There was also a war of words over the government’s vaccination strategy. The ruling legislature has been criticized for allowing millions of cans to be exported earlier this year.

So far India has administered around 160 million doses of a coronavirus vaccine (the predominant shots used are the AstraZeneca vaccine, made locally as Covishield, as well as a domestic vaccine developed by Bharat Biotech called Covaxin). Russian vaccine Sputnik V was approved for use in April and the first batch of doses arrived in early May, although it has not yet been used.

So far, only 30 million people in India have received full two doses of a Covid vaccine, government data shows. That is a small number (just over 2 %%) of India’s total population of 1.3 billion people – although around a quarter of that population is under the age of 15 and as such cannot yet receive a vaccine.

As of May 1, everyone aged 18 and over has been eligible for a Covid vaccine, although this expansion of the vaccination program has been hampered by dose constraints across the country reported by national media across the country.

People get their Covid-19 vaccines from medical professionals at a vaccination center set up in the classroom of a state school in New Delhi, India on May 4, 2021.

Getty Images | Getty Images News | Getty Images

Dr. Chandrakant Lahariya, a New Delhi-based doctor who is also an expert on vaccines, public policy and health systems, told CNBC on Wednesday that India’s large adult population is making vaccination efforts difficult.

“Even if the proposed supply was available, India opened vaccination to a far larger population than any vaccine framework can possibly expect. This is essentially the result of limited supply and a vaccination policy that ignores supply becomes.” No forward planning could have ensured the kind of care that is needed now with the opening of vaccination for 940 million people in India, “he said.

It is “unlikely that vaccine supplies will change drastically,” Lahariya said. “India takes between 200 and 250 million doses per month to reach full capacity of the Covid-19 vaccine engines and it has around 70 to 80 million doses per month. It is clear that there is a long way to go to get these Kind of care to achieve. ” ,” he noticed.

Vaccine wars

The shortcomings in vaccine supply have inevitably led to a diversion of blame with vaccine manufacturers in the line of fire. Questions about vaccine prices, production capacity and the destination of shipments have preoccupied the world’s largest vaccine manufacturer, Serum Institute of India, and Bharat Biotech, the Hyderabad-based pharmaceutical company that makes Covaxin.

Both had criticized their vaccine price structures (i.e. different prices for doses intended for central government, state governments and private hospitals), which prompted the CEO of the SII to lower prices later as part of a public backlash.

Adar Poonawalla, CEO of the SII, which makes the Covid vaccine developed by AstraZeneca and Oxford University, said Sunday the institute had been blamed for a vaccine shortage and scapegoated by politicians, but said it was due to capacity an initial did not increase sooner lack of orders.

“I have been a very unfair and unjustified victim,” he told the Financial Times on Monday, adding that he had not increased capacity earlier because “there were no orders, we didn’t think we were more than 1 billion Doses a year. “

Poonawalla noted that the Indian government ordered 21 million doses of Covishield from the Serum Institute in late February, but did not specify when or if it would buy more, and ordered an additional 110 million doses in March as infections began to rise.

People wearing protective face masks wait to receive a dose of Covishield, a coronavirus vaccine made by the Serum Institute of India, at a vaccination center in New Delhi, India on May 4, 2021.

Anadolu Agency | Anadolu Agency | Getty Images

Poonawalla said Indian authorities did not expect to face a second wave of cases and, as such, were not prepared for the onslaught of new infections in late winter.

He said the shortage of vaccine doses in the country will continue until July, when production is expected to increase from around 60 to 70 million doses per month to 100 million.

For its part, the Indian government insists on ordering more vaccines to meet demand. On Monday the government issued a statement rejecting media reports claiming it had not placed new orders for Covid vaccines since March, stating that “these media reports are completely false and not based on facts” . It said it had provided money to both SII and Bharat Biotech for vaccines, which are due to be delivered in May, June and July.

On Tuesday, Poonawalla issued a statement attempting to calm tensions between the government and SII. He stated that “the production of vaccines is a specialized process and it is therefore not possible to ramp up production overnight”.

“We also need to understand that India’s population is huge and it is not an easy task to produce enough doses for all adults … We have been working with the Indian government since April last year. We have all kinds of support, be it scientific , regulatory and financial, “he said. Poonawalla said the SII has received total orders over 260 million cans without disclosing buyers.

When asked if the government had misunderstood its approach to vaccine sourcing and production, Lahariya noted that the government had become complacent, even though it was difficult to predict the course of the pandemic.

“To be fair, I think there were two surprises. Unlike a year ago when the availability of Covid-19 vaccines was projected around mid-2021, the vaccine became available a little earlier. Second, the lull in Covid-19- Cases in India has ceased complacency at all levels, “he noted. Lahariya added that many months were spent prioritizing the target population for vaccination, then opening the program “too early” to all adults.

“It was an issue of hasty and arguably politically influenced planning, while it was essentially supposed to be a public health decision. So a written plan detailing various aspects, such as the forecast of care, could have made all the difference. “

Modi’s future

How the vaccination strategy will affect Modi’s ratings over the long term remains to be seen. However, there is already evidence that Modi’s ruling BJP will have to pay for the Covid crisis in the elections.

Modi’s party failed to win the key state of West Bengal in a regional election last weekend and failed to win three other state elections in April, despite retaining power in the state of Assam.

Dr. Manali Kumar of the Department of Political Science at the University of St. Gallen in Switzerland noted: “This second wave is a disaster caused by the complacency of the Indian government, which is now preoccupied with controlling the narrative rather than addressing the problem. ” “”

“Perhaps the worst disaster currently unfolding in India could have been avoided if restrictions on public and private gatherings had remained in place,” she noted, adding that “decades of neglect of investment in health infrastructure and an electorate Those who did not do this are also to blame for prioritized public services. “

Prime Minister Modi defended the government’s vaccination strategy, telling ministers in April that “those who are in the habit of politics (playing) allow it … I have received various allegations. We cannot stop those who do this to do.” We really want to serve humanity, which we will continue to do, “he said, the Times of India reported.

He also noted that an earlier peak of infections had been controlled this past September at a time when vaccines were not available and cases and mass tests were being tracked and followed.

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Business

Goodyear CEO says firm has provide to blunt looming rubber scarcity

Rich Kramer, CEO of Goodyear Tire & Rubber, told CNBC on Tuesday that he did not expect an impending rubber shortage that could hurt the tire maker.

Concerns about low supply of rubber from rubber trees, most of which are grown in Southeast Asia, is the most recent problem facing automakers already facing semiconductor shortages.

When asked if the company has enough material to make tires for cars, Kramer said, “The short answer is, we do it.”

“Basically, you see … either speculation or even China [putting] Rubber in stores, “said Kramer in an interview with Jim Cramer about” Mad Money “.

“It’s something that’s always out there, there’s a lot of speculation,” he added. “I can never say anything about anything that could happen to Southeast Asian rubber trees, but that really wasn’t a problem for us and the team did a great job.”

Goodyear’s shares rose 3% on Tuesday before closing at $ 18.28.

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World News

GM cuts time beyond regulation shifts at two U.S. truck vegetation as a result of chip scarcity

Line workers work on the chassis of full-size General Motors pickups at the Flint Assembly facility in Flint, Michigan on June 12, 2019.

JEFF KOWALSKY / AFP / Getty Images

General Motors this weekend is cutting overtime production at two U.S. assembly plants that are producing their highly profitable full-size pickups due to the ongoing shortage of semiconductor chips affecting the global auto industry.

The plants in Flint, Michigan and Fort Wayne, Indiana make a mix of full-size pickups, including the Chevrolet Silverado and GMC Sierra 1500 and their larger siblings.

This is the first time the Detroit automaker has cut production delays on its full-size pickups due to months of chip shortages. GM has significantly reduced production at its auto and crossover plants in North America to give priority to chips for the company’s pickups as well as the company’s full-size SUVs.

This is the latest news. Check for updates again.

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Business

Ford slashes automobile manufacturing at six vegetation in North America as a consequence of chip scarcity

Ford Motor is significantly reducing production at six plants in North America due to the ongoing global shortage of semiconductor chips, including facilities that make highly profitable pick-ups.

Measures vary by plant, but range from overtime cancellations to facilities closed for up to three weeks from April to June. Or a combination of both.

The affected plants are located in Illinois, Ohio, Kentucky, Michigan, Missouri, and Ontario, Canada. They manufacture a wide range of products – from F-150 pickups and vans to Ford Explorer SUVs and Ford Escape Crossovers.

Production of the F-150 in Dearborn, Michigan, will cease in the weeks of April 5th through April 12th, the company said. Ford is also canceling overtime at the factory in the weeks of April 26, May 10, May 31, and June 21. Another facility in Missouri that will manufacture the full-size F-150 will be shut down for a week starting Monday. Overtime at the plant will be suspended for eight weeks through most of June.

Semiconductors are key components that are used, among other things, in the infotainment, power steering and braking systems of new vehicles. With several plants closed due to Covid last year, suppliers turned semiconductors from automakers to other industries, creating a shortage after consumer demand fell more than expected.

Ford previously expected the shortage could cut its profits by $ 1 billion to $ 2.5 billion in 2021. Without releasing any new guidance, the company said it would “provide an update on the financial implications of semiconductor shortages” when it reports its first quarter earnings on April 28th.

This is a developing story. Check back soon for more updates.