Champion Microchips, Inc.

A computer chip is essentially a series of micro$-$sized transistors that function as tiny switches to control the flow of electrons. Millions, sometimes billions, of transistors are packed into chips no bigger than a human fingernail. These chips are used in many industries such as appliances, airplanes, machine tools, health care equipment, transportation, smartphones, and even electronic money.

The combined demand from multiple industries plus the COVID$-19$ pandemic disruptions triggered a global shortage of computer chips. Lack of worldwide factory capacity, trade wars, hoarding, production shutdowns, and shipping and seaport bottlenecks have contributed to the shortage. Intel, a world$-$class computer chip manufacturer, recently announced an investment in a new $$20$ billion chip factory which will be located outside Columbus, Ohio. But these new factories, called foundries, take years to build and many more months to ramp$-$up production. Lead times on new chip orders take six months to a year.

The average electric vehicle uses about $2,000$ computer chips controlling and monitoring everything such as fuel consumption, braking, airbags, driver assistance, music channels, navigation, communications, and electronic displays. One chip that Champion has been producing, named PVENT$902,$ is used in vehicle airbags. Exhibit $9\mathrm{.}19$ shows quarterly sales demand in $100,000$ units for the last five years. We see that sales have been increasing, but the time series pattern suggests that it is influenced by quarter. Champion wants to forecast demand in the future.

Exhibit $9\mathrm{.}19$Champion Microchips, Inc. Chip Demand