The authors propose a radical change to existing supply chains of the semiconductors. As again, the focus here is not the actual supply change themselves but a little understanding of how bottlenecks evolve.
The vast majority of semiconductor fabs are located in Taiwan, mainland China, and South Korea. The production lead time for a batch of chips — the time between when the fab begins production and completion — varies from 20 to 60 days, depending on the plant and the complexity of the integrated circuit. These chips are subsequently shipped to assembly and testing facilities, almost all of which are in Asia, to produce various components; these processes can take 30 to 40 days. Finally, components are used in a variety of parts, modules, and systems (e.g., in vehicles’ body control modules, electronic lighting modules, keyless entry systems, inverters, brakes, power steering, and infotainment systems), which are then assembled into finished products. This implies that a shortage beginning at a wafer fab will become transparent to the vehicle manufacturer only after a long delay, when it is notified by suppliers that they cannot ship parts.