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Illustration: Shoshana Gordon/Axios

We have a shortage of semiconductors in part because of ... a shortage of semiconductors.

Driving the news: The chip shortage has entered a new phase. The main problem during the first half of the year was a dearth of wafers — but now that we have more wafers, the problem is assembling those wafers into integrated circuits for circuit boards, according to a report by IHS Markit.

  • There's a shortage of assembly equipment because the equipment, too, needs chips that are in short supply, according to the report.

Why it matters: The chip shortage's impact on vehicle manufacturing, and the global economy, is far-reaching. Auto plants have shut down, and newly made vehicles sans chips sit like zombies in parking lots. Prices for used cars — and car rentals — have skyrocketed.

  • Worldwide, the shortage will cut car and truck manufacturing by as much as 7.1 million vehicles this year, IHS Markit estimates.
  • The recovery from the shortage is now unlikely to start before the second half of 2022.

State of play: Other things needed for the assembly of the completed circuit board are in short supply. Materials like lead frames, substrates and resins are also constrained, IHS Markit says.

  • It's labor, too: Assembly and test locations are concentrated in Asian and Southeast Asian regions where Covid vaccination rates are low — and outbreaks have led to plant shutdowns. Malaysia, for instance, a hub for chip testing and packaging, has been on some form of lockdown since May.

"Wafer fabrication capacity got all the attention early this year, and rightly so," writes Phil Amsrud, IHS Markit senior analyst, in the report. But problems getting the wafers packaged and onto completed circuit boards means "you still can’t produce and sell a car."

Between the lines: The wafer problem impacted mainly automotive microcontrollers. But the assembly issue impacts a broader swath of semiconductors, including those used in items like laptops, smartphones and TVs, says Amsrud.

  • Unlike in wafer fabrication, profit margins in assembly and testing are exceedingly low — so there's little incentive for companies to speculatively invest in adding more capacity, IHS Markit said.

The bottom line: Wafer manufacturing is improving — but don't expect a normal car market any time soon.

Go deeper

Auto shows are back but they aren't just about cars any more

Hildegard Müller, president of VDA, organizer of the 2021 IAA auto show in Munich. Photo: Christof Stache/AFP

Auto shows are coming back, but they don't just feature pretty cars: Now they also have hands-on experiences showcasing innovative climate-friendly technologies and new modes of mobility.

Why it matters: Big, international auto shows have been dying for years, and the coronavirus pandemic looked like it might be the final straw. Instead, they're trying to stay relevant by reinventing themselves to reflect an industry undergoing historic change.

1 hour ago - Technology

Facebook is a news media magnet

Expand chart
Data: Signal AI; Chart: Jared Whalen/Axios

New data finds that Facebook has been mentioned in more online stories in the U.S. in the past year than all of its major tech competitors combined.

Why it matters: Press scrutiny of Facebook has become so intense and negative that the tech giant is reportedly planning to rename itself as soon as next week to signal that it's more than just a social media company.

Amazon is now a bigger shipper in the U.S. than FedEx

Expand chart
Reproduced from Supply Chain Dive; Chart: Axios Visuals

Amazon is not primarily known as a logistics company, but in 2020 the company shipped more parcels than FedEx.

Why it matters: Logistics is a $1.5 trillion business — and it has long been controlled by a handful of key players, like FedEx, UPS and the U.S. Postal Service. Now Amazon is poised to conquer it.