GM Inside News Forum banner

1 - 20 of 27 Posts

·
Premium Member
Joined
·
34,058 Posts
It would seem like it’s time for GM to start getting into computer chip research and manufacturing partnerships and start making its own
 

·
Registered
Joined
·
6,669 Posts
It would seem like it’s time for GM to start getting into computer chip research and manufacturing partnerships and start making its own
Horrible idea. It's a huge, complicated industry that GM couldn't handle. Even the big players require others for help. Somebody does the design, somebody prints the wafers, somebody does the packaging. For a customer of one it's a massive investment. The dedicated players keep the technology advancing, GM alone couldn't do that either and they'd be their same old stagnant self.

Then they'd be forcing their suppliers to use their "chips" to make their modules. GM doesn't want to be in the middle of a supplier's design - that rarely goes well. Supplier keep cost low by having common designs across customers - GM's designs wouldn't be common and costs would go up.

It's a snowball of massive proportions. The right solution is to have better contracts and visibility throughout the entire supply chain to guarantee component deliveries. Pay a small premium to guarantee supply and let the experts keep making their own parts.
 

·
Premium Member
Joined
·
34,058 Posts
Horrible idea. It's a huge, complicated industry that GM couldn't handle. Even the big players require others for help. Somebody does the design, somebody prints the wafers, somebody does the packaging. For a customer of one it's a massive investment. The dedicated players keep the technology advancing, GM alone couldn't do that either and they'd be their same old stagnant self.

Then they'd be forcing their suppliers to use their "chips" to make their modules. GM doesn't want to be in the middle of a supplier's design - that rarely goes well. Supplier keep cost low by having common designs across customers - GM's designs wouldn't be common and costs would go up.

It's a snowball of massive proportions. The right solution is to have better contracts and visibility throughout the entire supply chain to guarantee component deliveries. Pay a small premium to guarantee supply and let the experts keep making their own parts.
Did you notice the part where I said partnership, if a component is 50% of the cost of your product, you have a real interest in having the knowledge on how it’s made, and having control over its manufacturing processes, otherwise you will be a dog being wagged pretty soon, it’s common sense. You also need to optimize it for your uses.
Especially as GM becomes a software code company. Even as a country we have a real vested interest in bringing back the building of chips stateside.
 

·
Registered
Joined
·
4,557 Posts
Horrible idea. It's a huge, complicated industry that GM couldn't handle. Even the big players require others for help. Somebody does the design, somebody prints the wafers, somebody does the packaging. For a customer of one it's a massive investment. The dedicated players keep the technology advancing, GM alone couldn't do that either and they'd be their same old stagnant self.

Then they'd be forcing their suppliers to use their "chips" to make their modules. GM doesn't want to be in the middle of a supplier's design - that rarely goes well. Supplier keep cost low by having common designs across customers - GM's designs wouldn't be common and costs would go up.

It's a snowball of massive proportions. The right solution is to have better contracts and visibility throughout the entire supply chain to guarantee component deliveries. Pay a small premium to guarantee supply and let the experts keep making their own parts.
I've had this CRAZY idea floating around in my brain for a while that maybe the auto industry re-thinks how they handle production, it seems that they do a ton of Building cars for the eff of it. Maybe shrink down to an "on-demand" model where a dealer keeps a floating stock of demo/temp vehicles, and customers then order to their spec, and use a temp vehicle while the vehicle they ordered gets produced/shipped. That way resources are strictly allocated to "sold" units and you no longer have to slap on huge rebates...only on year end demo/temp car sales.
 

·
Registered
Joined
·
44,058 Posts
It would seem like it’s time for GM to start getting into computer chip research and manufacturing partnerships and start making its own
Horrific idea.
GM can barely manage in the auto industry. And you want them to enter a highly competitive, near-zero margin industry, with far larger competitors?
Vertical integration won't work for GM either. Their cost basis is far too high.
 

·
Registered
Joined
·
5,086 Posts
I've had this CRAZY idea floating around in my brain for a while that maybe the auto industry re-thinks how they handle production, it seems that they do a ton of Building cars for the eff of it. Maybe shrink down to an "on-demand" model where a dealer keeps a floating stock of demo/temp vehicles, and customers then order to their spec, and use a temp vehicle while the vehicle they ordered gets produced/shipped. That way resources are strictly allocated to "sold" units and you no longer have to slap on huge rebates...only on year end demo/temp car sales.
Isn't that exactly the Tesla model, right down to quarter end/year end discounts on demo vehicles (sans the temp vehicle while you wait for delivery and without the middle man/dealer)? Or is my irony detector malfunctioning?
 
  • Like
Reactions: mgescuro

·
Premium Member
Joined
·
34,058 Posts
Horrific idea.
GM can barely manage in the auto industry. And you want them to enter a highly competitive, near-zero margin industry, with far larger competitors?
Vertical integration won't work for GM either. Their cost basis is far too high.
Can barely manage? You cannot be serious. Last I checked, they are solidly profitable and are over 100 years old, yes, they have had to go through the chapter, but a lot of business do that over time, or change hands, even Volkswagen, Toyota, etc. have had rough patches in the past. Heck, Toyota and Volkswagen own their existence to the US government lending to their own countries following cessation of hostilities and subsequent opening of US market access to their products, while theirs remain relatively closed to US products.

For the longest time Porsche was the 911 and nothing else. The horrific Idea would be GM going into chip making alone. However, partnering and having a stake in it for its a huge part of its product line is not a horrific idea. Its the correct thing to do, otherwise, they are not 'making' their products.

Tesla has figured that having a hand in design of their chips is a smart thing to do. We in the defense firm I work at partner and participate in design of some of our more specialized chips, and its a skill that is valued...as a core competency. We do not manufacture them, but we do retain a certain expertise inhouse.
 

·
Registered
Joined
·
44,058 Posts
Can barely manage? You cannot be serious. Last I checked, they are solidly profitable and are over 100 years old, yes, they have had to go through the chapter, but a lot of business do that over time, or change hands, even Volkswagen, Toyota, etc. have had rough patches in the past. Heck, Toyota and Volkswagen own their existence to the US government lending to their own countries following cessation of hostilities and subsequent opening of US market access to their products, while theirs remain relatively closed to US products.
Nuh-uh. GM's gains are the result of efficiencies in their own operations, not by any gains in the auto industry. They are a shrinking company. Don't get me wrong, shrinking is what they needed to do. But they have lost power and influence in the industry. And they are still highly dependent on the large trucks for survival. If there is a severe gas shock, GM's margins plummet. Just as its always done. They can't profitably sell small vehicles either, which still means they can't sell at an appropriate volume to overcome structural costs in their operations.

For the longest time Porsche was the 911 and nothing else. The horrific Idea would be GM going into chip making alone. However, partnering and having a stake in it for its a huge part of its product line is not a horrific idea. Its the correct thing to do, otherwise, they are not 'making' their products.
Why bring up the 911 in this discussion?
No. It's a really bad idea. Because GM would still need to hire an entire computer hardware engineering team to design the chips they need. And then partner with a company to manufacture it for them. Unless you want to outsource your entire design and manufacturing? At that point, why even bother? This is higher cost than buying off-the-shelf.
Plus, it takes years to build fabs, with a complicated supply chain to match. This is well out of GM's depth and wouldn't be a core competency.
This part of vertical integration is not what GM needs.

Tesla has figured that having a hand in design of their chips is a smart thing to do. We in the defense firm I work at partner and participate in design of some of our more specialized chips, and its a skill that is valued...as a core competency. We do not manufacture them, but we do retain a certain expertise inhouse.
Tesla was founded as a tech company and operates and acts like a tech company.
Tesla still buys the same chips everyone else does. THE DIFFERENCE is that Tesla was able to pivot to different chip sets AND parallel develop firmware for the new chips that do the same thing. Everything else is handled by OTA updates. So they have largely avoided the semiconductor shortage.
Tesla has designed 1 custom chip that I am aware of, specifically for FSD. But they don't manufacture it. But here's the thing. How fast do you think it takes Tesla to iterate on that chip? Versus NVIDIA? What it does is set Tesla's FSD apart from the competition. It's custom to Tesla and presumably would be better and more specifically tied to Tesla hardware. Tesla is also vertically integrated in large part.

Apple designs its own chips, in large part. But they also spent 10+ years building it up, from an Israeli startup to an operation that is challenging Intel and Qualcomm. But they are a company of hardware engineers. My buddy is head of them all; you'll see him on the hardware keynotes. Apple is vertically integrated in large part.
 

·
Premium Member
Joined
·
34,058 Posts
When we learnt that Toyota Honda loses money on Civic, Suzuki left due to losses on small cars and etc, etc, I don’t believe anyone makes any money on small cars at all.. only if they are riding on old technology.

Money is made on big vehicles, and GM didn’t shrink f the sake of shrinking, they shrunk to invest in a future that others are yet to acknowledge is coming.. like, say, Toyota..

What you say is that somehow, Tesla and Apple have successfully set up Microchip operations, with partnerships, yet GM would fail at it, based on what exactly? Are the Engineers at GM somehow stupid?
 

·
Registered
Joined
·
4,557 Posts
Isn't that exactly the Tesla model, right down to quarter end/year end discounts on demo vehicles (sans the temp vehicle while you wait for delivery and without the middle man/dealer)? Or is my irony detector malfunctioning?
The temp vehicle/middle man dealer makes it not Tesla's model...Tesla is just build on demand-ish. But given Tesla's simplified option system, they probably build/stockpile then pull from stock if they have a match on customer order.
 

·
Registered
Joined
·
5,086 Posts
The temp vehicle/middle man dealer makes it not Tesla's model...Tesla is just build on demand-ish. But given Tesla's simplified option system, they probably build/stockpile then pull from stock if they have a match on customer order.
When do automakers recognize revenue? I'm guessing it's when a vehicle is delivered to the dealer (although they probably carry some liability for future incentives on stale inventory etc.). If that's the case, there's little incentive to go to this model with a dealer/middle man, right? The incentive is to build as many as the dealers are willing to hold so the manufacturer can recognize more revenue sooner.

OTOH, this model is appealing for Tesla precisely because there's no middle man. Any inventory is on their own books and revenue is not recognized until delivered to the end customer.

Tesla seems to do the build-a-massive-batch-and-match-to-orders thing on some end-of-quarter pushes etc. but not in general. The delivery dates at normal times are several weeks out (e.g., 5-11 weeks in the US for Model 3 right now; probably longer in Europe etc.).
 

·
Registered
Joined
·
4,557 Posts
When do automakers recognize revenue? I'm guessing it's when a vehicle is delivered to the dealer (although they probably carry some liability for future incentives on stale inventory etc.). If that's the case, there's little incentive to go to this model with a dealer/middle man, right? The incentive is to build as many as the dealers are willing to hold so the manufacturer can recognize more revenue sooner.

OTOH, this model is appealing for Tesla precisely because there's no middle man. Any inventory is on their own books and revenue is not recognized until delivered to the end customer.

Tesla seems to do the build-a-massive-batch-and-match-to-orders thing on some end-of-quarter pushes etc. but not in general. The delivery dates at normal times are several weeks out (e.g., 5-11 weeks in the US for Model 3 right now; probably longer in Europe etc.).
My assumption is that they recognize revenue once the dealer pays invoice. I'm just spitballing ideas for how they could potentially use the shortage as an excuse to change their model. Dealers will never sign on to this because like you said, it'll kind of signal the end of dealerships as we know it. It'll kind of also hurt labor for plants that sell slow selling models...thinking of LGR with teh CT4/5/Camaro...the union would raise a huge stink if GM cut production to just what sells on those 3 and then the logistical nightmare of just transporting "sold" cars...yeah after fleshing this out a little, it looks like a huge no go for GM.
 
  • Like
Reactions: emh

·
Registered
Joined
·
9,457 Posts
When we learnt that Toyota Honda loses money on Civic, Suzuki left due to losses on small cars and etc, etc, I don’t believe anyone makes any money on small cars at all.. only if they are riding on old technology.

Money is made on big vehicles, and GM didn’t shrink f the sake of shrinking, they shrunk to invest in a future that others are yet to acknowledge is coming.. like, say, Toyota..

What you say is that somehow, Tesla and Apple have successfully set up Microchip operations, with partnerships, yet GM would fail at it, based on what exactly? Are the Engineers at GM somehow stupid?
Tesla and APPLE HAVE chip designers onboard VS GM that DOES NOT have ANY chip designers
SO GM would have to open A NEW chip design studio AND hire designers AND internalize ALL the computerized component making as the CHIP is made for ONE device and having a supplier having to use YOUR chip in there design will add to the slow down
and reports say APPLE spent 5 years getting M1 to this state and the M1 is basically an "off the shelf" design modified for there purpose
I agree GM SHOULD NOT DESIGN / BUILD chips
the suppliers like Bosch / Siemens VDO DO CHIP design work and that is BEST for everybody
 

·
Premium Member
Joined
·
34,058 Posts
Tesla and APPLE HAVE chip designers onboard VS GM that DOES NOT have ANY chip designers
SO GM would have to open A NEW chip design studio AND hire designers AND internalize ALL the computerized component making as the CHIP is made for ONE device and having a supplier having to use YOUR chip in there design will add to the slow down
and reports say APPLE spent 5 years getting M1 to this state and the M1 is basically an "off the shelf" design modified for there purpose
I agree GM SHOULD NOT DESIGN / BUILD chips
the suppliers like Bosch / Siemens VDO DO CHIP design work and that is BEST for everybody
GM does have long standing chip relationship with Qualcomm and has worked closely with them over the years in telematics, and vehicle diagnostics, given, the expanded role electronic brains have in automobiles, it behooves GM and any automaker for that matter to evaluate how much expertise they would like to retain in-house in relation to vehicle brain design and integration, shopping like they are building a PC would be foolish.

I don’t understand why you read GM should design chips, (from the ground up) I have said multiple times, have partnerships where they have significant expertise and input in design and development for their specific applications Given it’s going to be up to 50% of the cost of their product.
 

·
Registered
Joined
·
5,086 Posts
Tesla and APPLE HAVE chip designers onboard VS GM that DOES NOT have ANY chip designers
SO GM would have to open A NEW chip design studio AND hire designers AND internalize ALL the computerized component making as the CHIP is made for ONE device and having a supplier having to use YOUR chip in there design will add to the slow down
and reports say APPLE spent 5 years getting M1 to this state and the M1 is basically an "off the shelf" design modified for there purpose
I agree GM SHOULD NOT DESIGN / BUILD chips
the suppliers like Bosch / Siemens VDO DO CHIP design work and that is BEST for everybody
Plus Tesla has the cachet to go and recruit a top notch chip design team in Silicon Valley (including some of the best regarded folks in the chip design business). Unclear GM could do that. Perhaps under the Cruise umbrella...
 

·
Registered
Joined
·
790 Posts
Seeing as the current administration allowed a terrorist hacking group to successfully turn our east coast energy pipeline into their own personal atm machine yesterday, how much longer before other commodities like computer chips for instance start being hijacked or taken with ransom demands?
 

·
Registered
Joined
·
2,234 Posts
Seeing as the current administration allowed a terrorist hacking group to successfully turn our east coast energy pipeline into their own personal atm machine yesterday, how much longer before other commodities like computer chips for instance start being hijacked or taken with ransom demands?
I was told in the 80's: "Don't believe anything that you hear... and even less of what you read". Accusers may be instigators.
 

·
Registered
Joined
·
6,669 Posts
Seeing as the current administration allowed a terrorist hacking group to successfully turn our east coast energy pipeline into their own personal atm machine yesterday, how much longer before other commodities like computer chips for instance start being hijacked or taken with ransom demands?
How much longer? This has already been happening for decades. Hackers and cyber experts know how to exploit almost any piece of electronics. Anti tamper and counter exploitation techniques started right after it became a problem. There are whole government and defense agencies that study, exploit and counter these vulnerabilities and share it with industries for improving defenses. It’s an expensive and well paying field to be a part of.
 
  • Like
Reactions: sdotjeezy and emh

·
Registered
Joined
·
5,086 Posts
How much longer? This has already been happening for decades. Hackers and cyber experts know how to exploit almost any piece of electronics. Anti tamper and counter exploitation techniques started right after it became a problem. There are whole government and defense agencies that study, exploit and counter these vulnerabilities and share it with industries for improving defenses. It’s an expensive and well paying field to be a part of.
Exactly. This is not a political issue of this administration vs. last or whatever. To me, it seems a huge part of the challenge is getting private organizations that manage critical infrastructure (like the Colonial Pipeline Co.) to adopt known good cyber security practices. It's not cheap and non-tech-savvy management can see it as unnecessary cost until something goes wrong. At that point, it's too late.
 
1 - 20 of 27 Posts
Top