However, the car industry got it badly wrong - people, afraid of public transit, started buying more cars rather than less. The car industry, being screwed due to their just-in-time religion of zero stock, was faced with their production lines stopping so they called up all their vendors, and asked for those orders back, and some more on top. The vendors then tried to get their fab slots back, and were told to come back next year. Some of them ended up buying other fabless IC designers out of their slots, causing the problem to spread. Others cancelled their existing orders to other customers, and auctioned off their existing inventory to increasingly desperate car manufacturers at a 6x to 8x premium. Anyone who was not prepared to pay that or didn't act fast enough was screwed. From that point on, a bunch of companies that depend on those lines of microcontrollers had to rapidly redesign their product to use another device, taking even more devices off the market with unplanned demand. The users of those devices then had to move to others, causing even more availability cascades. This is how two nasty moves by the car industry caused global market disruption in a number of industries that depend on electronics. This is not a normal "demand has increased, and industry can't keep up" event, it's elephants dancing and trampling everyone else underneath.
This is further aggravated by the top three automotive semiconductor suppliers (NXP, Renesas, Infineon) having their facilities destroyed in two unrelated disastrous events - a fire at Renesas' wafer processing plant, and Texas freezing over, destroying NXP's and Infineon's fabs through cleanroom contamination and process interruption. Those events took out months' worth of production, and destroyed product that had already been sold before manufacture. This would have been recoverable in a normal market, because distributor stock could hold a couple months, but in this case it was game over for non-automotive customers as all distributor stock was already gone by then.
I see this in my work every day now - customers coming to me for help with redesigning products to use a different microcontroller, or help with sourcing parts from unusual sources because their normal channels are gone. I've been in this industry a long time and never seen anything like this before. This is not a failure of supply chain analysis and projection on the part of the fabless semicon vendors. This is their biggest customers fucking their vendors over not once but twice by lying to them about their own demand.
I own a store that sells parts and tools to attach things to each other (originally we sold nuts and bolts but those are unprofitable without gigantic volumes).
In the last months suddenly we started to get an unusually high amount of orders from factories intending to use our products in manufacturing, while until then all we ever got was orders for replacements parts and maintenance.
Since we are a store, not a manufacturer, our prices aren't lowest as possible... so we are very confused about why Toyota/Honda and others for example, called us wanting parts, instead of calling our supplier, since we know they have their contact anyway (I won't say who it was but for example one time a manufacturer asked us if a product would help them, and asked us to design something for their production line... we did, then they ordered the product from our supplier and never paid us anything for all "free" engineering work we did for them).
So now I can guess what happened: car industry cancelled non-semiconductor orders too, their slots got sold, and now they want it back... so my store that tends to have higher stock than others keep getting new clients willing to pay through the nose to have parts because our own supplier doesn't have them in stock and can't deliver any in short term...
If you have 1000 ICs in a car, and one of them is missing, that's a $100,000 car you can't sell.
Car industry haphazardly buying out last stocks of ICs will not help them work around that "one missing chip" problem, and production lines are potentially stuck for many more months.
The panic was undue, well, or best say of no use. The are screwed, but its of no use for them to hope for some desperate moves improving the situation now if they can't assure 100% availability of all, and every component on their BOM.
I have few buddies who went to work on an ECU for MTU/Siemens. They ran exactly into that when their companies went for a complete redesign of their ECU to run on consumer STM32. They had hopes of that such old 180nm-130nm CMOS chips easily tolerating around 130C°, they did tests, it worked fine, and then they ran into undocumented high temperature protection kicking in on a slightly newer chip revision, but they already bough few millions of them, and other ICs for a new design in inventories.
All of which have been used in custom keyboard builds but are capable of doing other things as well.
It seems like the way to reduce risk would be interchangeable parts from multiple suppliers?
sneaky market segmentation by STM?
You write at the beginning and end of your post that the car industry lied to their vendors, but then you also write they got it badly wrong, which means they were incorrect about their projections of demand. Surely it can't be both, and it sounds like the car industry did not lie, but simply were wrong about their predictions for the future.
Or am I misunderstanding?
Nevertheless, thanks for providing context for the whole situation.
Rather, the only people with intent to deceive might be the chip vendors. They either sold chip capacity that the automakers still had the legal rights to, or they reneged on sales to non automakers to resume supplying to automakers.
Why would you build chips you know you can't sell?
Also, people talk about how big of an impact car manufacturing is to the economy and while that is true, they aren't chip manufacturers biggest customers. Apple spends more per year on semiconductors than the ENTIRE auto industry. To top that off the automotive ICs aren't high margin stuff, so if I was a fab or chip vendor, I would be focused on higher margin stuff.
The blame for this is SOLELY on the auto manufacturers.
Or is this the mass exodus from American cities I keep reading about? They're buying cars because they're moving from NY to Florida, that sort of thing?
My running theory is that manufacturers and retailers continue to underprice their goods,likely because they expect to eventually return to normal. This ends up effectively hiding inflation.
Many buyers have more discretionary cash than usual due to reduced spending from lockdowns. Demand is therefore increased on the things people can and want to buy. Then resellers/scalpers see the margin and buy up inventory to arbitrage. The scarcity compounds.
I'd be interested to learn more about the order cancellation you were saying that fabs were doing to non car manufacturers. Shouldn't contracts prevent that sort of behavior (without proper compensation)? And if they did that, they are burning bridges that would make people less likely to do business with them in the future. Maybe the car chip business is enough money to warrant such moves, but seems potentially sort sighted depending on exactly all what you said happened.
That depends on how big the customer/order is, no? If (as a manufacturer) you could get away with not having it in a contract, why include it?
Similarly, instead of actually cancelling they could also "lie". Say that there are capacity issues, etc. That the capacity issue is mostly because they resold the existing manufacturing capacity, is left out.
> Just in time delivery
The well-known example of this is Toyota. Interestingly, they've started ensuring they do have stocks. See e.g. https://www.reuters.com/article/us-japan-fukushima-anniversa.... I found that rather interesting.
If the assumptions fail, then it's not a failure of the optimization, but an incorrect application of it. Maybe we don't currently live in a world in which elastic semiconductor availability at scale can be assumed.
JIT (aka lean manufacturing) today has now permeated pretty much most of the global supply chain. Human civilisation is far more fragile at the moment than in the last few. hundred years.
It was less fragile when there were famines all the time?
I don't understand how people can repeat this rhetoric when it seems obvious to me that however fragile it is, it's less so than in all of history. Even if things rapidly get much, much worse, it wouldn't change my opinion.
How do you think we would determine which is the correct perspective?
Compared to a self-sufficient small-scale agrarian society (say, 10th century Europe), what would have caused famine in their time would not for us.
At the same time, we allocate our time differently than they did -- few of us actually farm for ourselves.
If we allocated time more similarly + applied current technology, it'd be pretty hard for people to starve (between improved long term food storage, GMO crop yields, and environment mitigation).
Side note: the always educational Bret Devereaux lays out a solid argument for why famines were the result of an underdeveloped monetary and trade system, that led to fragile choices being optimal for individual farmers. 
 see "Risk Control" section https://acoup.blog/2020/07/24/collections-bread-how-did-they...
JIT is useful when the end-product has a high depreciation rate and/or you forsee yourself frequently changing the part out for a newer version.
Another tendril on the issue; modern accounting practices tend to prefer JIT instead of the costs/overhead mechanics of storing inventory.
fabless design house sign wafer agreement with Fab like TSMC. I'm guessing they didn't sign the agreement thus cancel their slot.
I do not fault companies for not planning for a worldwide pandemic.
Allow manufactures to hedge / lock in future value.
In the US people love to keep huge numbers of cars in stock. Apparently most people buy from stock there, and almost nobody does JIT, for some reason. So this isn’t the case everywhere.
4 Forces Changing Automotive Electronics Systems