Elon Musk has complained that a global chip shortage is disrupting Tesla’s supply chain, saying companies over-ordering microcontrollers is comparable to when people hoarded toilet paper in the early days of the pandemic.
Tweeting on Wednesday, the Tesla CEO complained that he’d “never seen anything like” the current shortage of “microcontroller chips.”
Fear of running out is causing every company to overorder – like the toilet paper shortage, but at epic scale.
Musk voiced his concerns before, calling the chip shortage a “huge problem” in an April earnings call and acknowledging “insane difficulties with supply chain.”
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.
Microcontroller chips are used in all kinds of devices, from cars, telephones and computer keyboards to microwave ovens and washers. The shortage has been blamed on increased demand for electronic goods during the pandemic, with manufacturers now apparently ordering more chips than they need, fearing they will run out.
The car industry has been particularly affected, with prices on goods also rising across other industries. A rise in cloud computing and cryptocurrency mining has also been named as a reason behind the chip shortage.
On Monday, Musk said on Twitter that car prices were increasing due to major supply chain pressure, especially with raw materials.
It was reported last month that the shortage of chips may last until 2023. In his Wednesday tweet, however, Musk suggested the issue is not a long-term one.
The majority of chips are currently produced in Asia but US President Joe Biden said in February that he will seek $37 billion to ramp up domestic chip manufacturing.
The toilet paper shortage was observed in the US in March and April last year when people rushed to buy the bare necessities as the Covid-19 lockdown started. It was reported that nearly half of all grocery stores in the country ran out of toilet paper in mid-April.
The shortage even became a meme during the quarantine, with posts on social media about stockpiling or substituting it going viral.
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