Domain Daily: Chip Makers Catch Up

The Dose

  • No Crypto Needed

  • Semiconductor Shortage Update

  • Hands on the Wheel

Mastercard Enables NFT Commerce

You'll soon be able to use a Mastercard to buy NFTs.

The Point: NFT marketplaces (with some minor exceptions) use cryptocurrencies for transactions. If you don't own or want to own crypto, you've pretty much been locked out of the NFT market. That's been a significant barrier to entry for most consumers. Mastercard wants to change that. Consider these two facts when thinking about the potential impact of this announcement. First, there are 2.9 billion Mastercards worldwide. Second, a recent Mastercard survey showed that half of the respondents wanted the flexibility "to pay with crypto for everyday purchases" or "use a credit or debit card to buy an NFT."

What Are NFTs?

Is This The Beginning of the End for the Chip Shortage?​

Look closely, and there's a glimmer of hope that the semiconductor bottleneck is clearing up. Delivery times, while still high, have plateaued over the last three months.

The Point: Lead times are still double what they were in May 2020, but at least they're not getting any longer. The 27.1 week wait time is still a record, but it's on par with what we saw in March and April. That said, the improvements are due to a decline in demand rather than an uptick in production. Admittedly, this isn't the most uplifting news, but it's encouraging nonetheless. "We still have more demand than supply, but we're starting to see in the second half of 2022, a more balanced equation," Qualcomm CEO Cristiano Amon told Fox Business earlier this month. "I think as we enter 2023, we're going to get out of the crisis." Once the backlog is resolved, prices should stabilize.

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Tesla Autopilot Comes Under Further Scrutiny

The US National Highway Traffic Safety Administration (NHTSA) investigation into Tesla's autopilot feature is getting more serious. NHTSA says it will now conduct a "formal engineering analysis."

The Point: This is a step toward NHTSA demanding a recall. If that happens, Tesla would be on the hook for fixing 830,000 of its vehicles. That'd be quite the undertaking, particularly if the remedy requires hardware upgrades. Over the last ten years, the average recall has cost auto makers about $500 per vehicle. This fix would come with a price tag of about $400 million at that rate. That works out to about 3% of Tesla's 2021 gross profit of $13.6 billion. And that's almost certainly a conservative estimate. In Tesla's favor, NHTSA indicated that the issue might not be with the cars themselves. Instead, it could be that the autopilot system gives drivers a false sense of security. Either way, a recall would be a worst-case scenario for Tesla and would significantly weigh on its stock price.

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