Toyota Busts The Car Microchip Shortage

Toyota could yet again be the largest automaker in the world, a title its claimed many times in the past. Its forecasting making a total of 9 million cars for the year, which during this time of constrained production is impressive.

If I buy a new small want-a-be truck, If toyota doesn't make a truck with prius powertrain, I wish toyota would make one. Daughter and SIL both have a prius. I'm impressed with the mileage. Impressed with how long they last. Not impressed with getting in and out of a prius.
Toyota

And I'm impressed with my Tundra.

My 2021 Tundra is impressive-great fuel mileage.

It doesn't say what Toyota did different than the other manufacturers, but I can guess. The main thing is that OEMs buy few, if any, microchips directly from the chip makers. Instead, they purchase components made by Tier 1 and Tier 2 suppliers that contain the microelectronic devices. And the chips used by those suppliers are made by a relatively small number of foundries. When OEMs canceled component orders with their suppliers, most didn't understand the ripple effect this would have on the microelectronic manufacturers. The OEMs thought they were just making small cutbacks to with their Tier 1 suppliers, but because all the different component suppliers use microcircuits made by the same chip foundries, those cutbacks cascaded into huge cancellations for the chip foundries.

When the chip foundries saw the huge drop in orders from the automotive suppliers, they naturally looked at other markets. The microcontrollers used in so many automotive devices are not particularly profitable; they're mostly decades-old technology and they're churned out in huge volumes. So the chip foundries retooled to make more profitable devices, such as the CPUs and GPUs used in desktop computers. These devices retail for over a hundred bucks apiece, and were in great demand by folks staying at home and using their computers for work and play. Once demand picked back up for microcontrollers, chip foundries were slow to retool for the less-profitable devices.

I think Toyota must have a better grasp of what is going on with their Tier 1, 2 and 3 suppliers than the other OEMs, and realized the potential for the chip shortage. Most of the OEMs view suppliers as a tap they can turn on or off at will. The OEMs should have learned their lesson back when the tsunami wiped out Japanese component suppliers back in 2011. It seems Toyota did, and their competitors did not.

The article at the link below discusses the 2011 disruption. From the article: [i:654c4848f0]It turns out, says Toyotas Nolasco, 'That there are often cases in which multiple tier ones procure parts or materials from the same tier two supplier. And if that tier two supplier should encounter trouble, the multiple tier one suppliers would all be in the same boat, meaning that the diversification of our direct sources, alone, would not solve anything.'[/i:654c4848f0]
After the tsunami

Mark,
Some place I read Toyota chip maker is owned by Toyota under a different name.

Regardless, I give 2 thumbs up to Toyota getting on their feet faster than their competitors.

What is the MPG?

I wouldn't hesitate to buy a Toyota vehicle we have 2 gas powered Camrys 1 hybrid and my daughter has a hydrogen powered Mirai all are exceptional vehicles very dependable and toyota stands by all of them

> Some place I read Toyota chip maker is owned by Toyota under a different name.

A little googling, George. Toyota holds a 25 percent stake in Denso. Denso has a stake in microcontroller manufacturer Renesas. So I don't know how much of Toyota's microchip needs are met by Renesas, but it is apparently true that Toyota owns a piece of a chip maker.

GM and Ford have both announced plans to partner with chip makers, which is a fairly big departure. Ford and GM both spun off their component manufacturer holdings back in the nineties.

In my part of the country (southern KS) when you describe someone as a "Prius owner" you are describing the kind of person that you would never tolerate as a neighbor. Having said that I have loved the two new Tundras I have owned, but wouldn't have a Prius, or any hybrid, if it was free.

17 & up-not broken in yet.

I know a Methodist preacher who has a
Prius. Very good friend and great
preacher.
Just saying you shouldn't judge a person by the car they drive.

Mark,
Just saying Toyota has done something right.
Everyone should have learned something over the past 2 years.
Don't rely on cheap off shore suppliers.
Get in the business of making essential parts to keep your business operating.
Masks, ventilators, chips.

May biggest concern is our national defense. Who makes the essential parts to keep our military operating? Where does the raw materials come from?.

My daddy said if you want something done right, do it yourself.

That should be a good business model, do
it yourself.

(quoted from post at 22:59:08 11/24/21) In my part of the country (southern KS) when you describe someone as a "Prius owner" you are describing the kind of person that you would never tolerate as a neighbor. Having said that I have loved the two new Tundras I have owned, but wouldn't have a Prius, or any hybrid, if it was free.

Click to expand...

That must be a great place to live with the superior attitude and all.

(quoted from post at 23:06:18 11/24/21) 17 & up-not broken in yet.

Click to expand...

What is that in reference to and what do you mean by it?

US automobile manufacturers were once heavily vertically integrated but unions rendered such strategy non-viable decades ago.

Japanese manufacturers need not deal with militant unions that intentionally damage their employers in Japan.

The same is true of Chinese manufacturers but for different reasons.

Dean

> US automobile manufacturers were once heavily vertically integrated but unions rendered such strategy non-viable decades ago.

Dean, although it's simple and attractive to blame labor unions on the demise of integrated suppliers, that's hardly the only reason GM and Delphi dumped their component divisions. After all, the spun-off companies still retained their high labor costs. Visteon (spun off by Ford) and Delphi (spun off by GM) both quickly went bankrupt, it's true, but that probably wasn't the intention of their parent companies. The stated reason for the spin-offs was for the OEMs to focus on their 'core business' (which of course was whatever the management at that time said it was).

The real problem with the in-house component suppliers is they had no incentive to be competitive. They knew they would always get a certain amount of business from their parent companies, no matter how expensive and shoddy their products were. Kicking the supplier divisions out the door forced them to sink or swim in the cutthroat pool of Tier 1 automotive suppliers. And of course their parent companies got a nice chunk of change when they spun off the component suppliers.

IMHO I believe that Toyota's management as well as its ownership conglomerate believe in building a good reliable product rather than inflating the companies stock price on the big board so they can retire with a golden parachute. I love my '08 Tundra, driven it for 138,000 trouble free miles. Plan to keep it until I'm looking at grass roots. Hopefully my son who's name is also on the title drives it for many more years after I'm done with it. My milage just the other day down I-90 for 240 miles @ 80 w/cruse set was just above 15MPG. Not bad for a 4WD truck w/curb weight of just under 7,500 as mine is currently equipped for off road use, I don't think.

We have had a 21 Sienna hybrid for four months so its way too soon to talk about reliability. The advertised mileage is 36 and in real driving the mileage has been 34 to 36 Calculated at every fill up so they are pretty close. In small town city driving the mileage is better than highway driving because it is on the battery more in slow driving. If you dont want me to be your neighbor because I drive a hybrid thats your problem not mine.

Our old 08 Sienna has 225,000 miles on the clock and is still dependable but its mileage is 22 compared to the new Sienna at 34-36. Will the 12 MPG better mileage pay for the new Sienna? Thats yet to be discovered. We did pay quite a few dollars extra for a lifetime warranty on the new Sienna because I am a little scared of the complexity of the vehicle.

This post was edited by fixerupper on 11/25/2021 at 10:14 am.

Did not say it was the only reason but it was/is certainly the most significant.

Vertical integration was certainly not limited to component divisions though such are text book examples.

I was involved with GMs spin off of the component divisions and sat in some such meetings. FWIW: I was the only one in the room that had ever worked anywhere but GM (no tunnel vision) and the only one with an MBA (perspective). I was also the only one in the room who did not know how things were done at GM. I left voluntarily (for the second time) shortly thereafter because the hand-writing was on the wall though few insiders could see it.

The demise of vertical integration in the US is certainly not limited to automobile manufacturers but it was, for the most part, limited to the US and to unionized manufacturers.

Dean