One way to deal with the bullwhip effect is to build robust futures markets around the underlying components. This improves the market two ways. 1) It allows both suppliers and demanders to hedge their exposure in the futures market, which gives them more confidence to plan the rest of their business without uncertainty. 2) It enables professional speculators to engage in price discovery and telegraph credible signals to the rest of the market about the long-term trajectory of supply and demand.
>> One way to deal with the bullwhip effect is to build robust futures markets around the underlying components.
These chips are not fungible commodities. In the automotive space chips are selected based on a number of things including feature set - how many CAN interfaces does it have, how many GPIO, how many PWM, what kind of brown-out handling, what voltage range, thermal rating, etc... Software is then written where a portion of the code is specific to that chip. There are cases where an OEM get really good pricing on a bigger (overkill) chip and helps a supplier get those at good prices too, but usually they just beat you over the head for the lowest cost. Even if everyone adopted a few larger parts and used just those, they're still usually made by a single chip company.
I think in time chips should be fungible commodities. A lot of components, such as DRAM, NAND are fungible. As we move towards more open source tech, like RISC-V, for microcontrollers, maybe many of them become completely fungible as well. Especially if there isn't an infinite variety of them -- I guess the completely custom RISC-V chips won't be fungible, but if one can use an off-the-shelf standardized module, those could be.
This doesn't exist now for the same reasons it probably wouldn't work in the future: You can save significant amounts of money if you cut the pieces out of the "standard" that you don't actually need. Chips are cheap to make, in bulk. It's almost entirely a fixed cost/area. That's the magic. So, it's almost always cheaper to make a custom chip than to pay for some bloated standard containing large sections that will never see power, especially when chips are something like 40% of the BOM, for modern cars.
Aren't these sort of year-out agreements basically futures contracts? Especially the ones that don't allow you to back out. I know at least in the business I'm involved in, the deals are tradeable in the same way futures contracts are.
