Automotive electrification, intelligence, and connectivity are accelerating the reshaping of automotive electronic and electrical architecture. With the gradual rise of domestic automobile brand manufacturers, especially new energy automobile brand manufacturers, it will bring long-term development support to domestic automotive grade MCU manufacturers.
1. MCUs
Automotive MCUs are monopolized by large foreign manufacturers, and there are more and more companies that ship more than 10 million units domestically.
In terms of market size, benefiting from the huge scale of the global automobile market and the development of automobiles towards electrification, intelligence, and connectivity, the global automotive grade MCU market continues to grow.
According to IC Insights, the automotive MCU market will reach US$7.6 billion in 2021, a record high. It is predicted that the compound annual growth rate will be maintained at 11% in the next four years, and the market size is expected to reach US$11.6 billion by 2025. From the perspective of the Chinese market, with the acceleration of the "three modernizations" process of my country's automobiles in recent years, my country's automobile MCU The market size also continues to grow. According to Omdia data, China's MCU market size will be approximately US$8.2 billion in 2022, of which automotive MCUs account for 31.6%, amounting to approximately US$2.591 billion.
As a widely used control chip, MCU can be used in six functional areas: powertrain, ADAS, network interconnection, chassis safety, infotainment and body electronics. According to Strategy Analytics data, MCUs account for the highest value of automotive chips in traditional fuel vehicles, accounting for approximately 23%. In pure electric vehicles, MCU accounts for about 11% of the value of automotive chips, second only to power semiconductors.
However, because cars are often exposed to high temperature, high humidity, and high pressure environments, the MCU is required to withstand a maximum temperature range of -40°C to 150°C and a product life of 15 years or more, especially for high safety requirements such as power and brake lights. MCUs in the field must strictly comply with the corresponding automotive regulations of AEC-Q100, ISO26262, and IAFT16949, which impose strict requirements on the entire process of MCU design, manufacturing, packaging and testing. Therefore, high technology and entry barriers have caused the automotive MCU market to be highly monopolized by American, Japanese and European companies with developed semiconductor and automotive industries.
According to Omdia data, the global automotive MCU market is currently dominated by NXP, Microchip, Renesas, STMicroelectronics, Infineon, etc. Among them, Renesas Electronics has formed close cooperation with well-known Japanese car companies Honda, Toyota, etc. during the development process, and currently has the highest market share, reaching 30%; NXP strengthened the automotive field after acquiring Freescale in 2015, and its automotive MCU strength It has increased significantly and currently accounts for 26%, ranking second. After acquiring Cypress, Infineon has improved its automotive electronics MCU product line and currently has a market share of 19%, ranking third.
Specifically, Renesas was established in 2003. Its MCU products mainly use RX, RL78, and RH850 family cores. The products can be widely used in ADAS and autonomous driving, automobile body, chassis and safety, infotainment systems and other fields; NXP is in Market leadership in key areas such as ADAS, next-generation electric vehicles, and secure connectivity across the Internet of Things, mobile devices, and automotive ecosystems. Major customers include Bosch, Continental Mercedes-Benz, BMW, Volkswagen, Tesla, Ford, NIO, etc.; Infineon's MCU products are mainly developed based on ARM Cortex and TriCore cores. The main application areas are automotive safety, power control, ADAS, chassis control and other fields. Major customers include Bosch, Continental, Hyundai, BYD, etc.; STMicroelectronics MCU product line Rich, the flagship product STM32 product family has been continuously iterated and enriched. So far it has 18 product lines and 1201 product models. Its main customers include Bosch, Mobileye, Continental, Tesla, etc.; Microchip MCU is mainly 8-bit. In 2016 After acquiring Atmel in 2016, it expanded its 32-bit MCU product line. At present, the company's MCU product models exceed 1,000 types. Its 32-bit MCU uses ARM Cortex-MO+/M4/M4F/M23/M7 and MIPS cores, and can provide services to more than 120,000 customers around the world, including industrial, consumer and automotive.
Although China's total automobile production and sales have ranked first in the world for 14 consecutive years, and the production and sales of new energy vehicles have ranked first in the world for eight consecutive years, in the field of automotive-grade MCUs, according to data from IC Insights, my country's domestically produced The transformation rate is still very low, and the self-sufficiency rate will be less than 5% in 2021. However, with the strong support of national industrial policies and the gradual advancement of localization of automotive chips, there are already GigaDevice, Zhongying Electronics, China Micro Semiconductor, Chipsea Technology, Guoxin Technology, Jiefa Technology, BYD Semiconductor, Manufacturers such as Xinwang Micro are actively deploying in the automotive grade MCU field.
Specifically, Jiefa Technology’s Jiefa Technology chips have covered more than 500 car models around the world, with cumulative shipments exceeding 250 million units, of which SoC shipments exceeded 80 million sets and MCU shipments exceeded 30 million units, which are widely used In the fields of intelligent body control, chassis control and intelligent cockpit control; Xinwang micro-car grade MCU has entered many well-known auto parts manufacturers (Tier1, Tier2) such as Aptiv, Huayu Automobile, Top Group, Huayang Group, etc. etc.)'s supply chain system, the products are applied in batches to many well-known domestic automobile brand manufacturers such as SAIC Group, FAW Group, Changan Automobile, Guangzhou Automobile Group, BYD, Li Auto, Xpeng Motors, etc. So far, the company's automotive grade MCU product shipments have exceeded More than 50 million pieces; BYD Semiconductor took the lead in launching the first-generation 8-bit automotive-grade MCU chip in 2018, and launched the first-generation 32-bit automotive-grade MCU chip in 2019, which are installed in BYD’s full range of models in batches to realize the overall intelligence of the car. . In 2021, BYD's car-grade MCU mass production and installation has exceeded 10 million units.
2. international manufacturers
The performance growth rate of international manufacturers has begun to slow down, and the performance of domestic manufacturers is under greater pressure.
From a financial perspective, unlike the shortage of automotive MCUs in the first half of the year, in the 2023Q3 quarter, dragged down by markets such as consumer electronics, industry, and the Internet of Things, the performance growth rate of the world's top five MCU manufacturers began to slow down, and some manufacturers have already experienced year-on-year performance gains. / month-on-month decline.
Specifically, Renesas Electronics' revenue in Q3 was US$2.557 billion, a year-on-year decrease of 2% and a month-on-month increase of 2.89%. Net profit was US$508 million, a year-on-year increase of 0.83% and a month-on-month decrease of 16.85%. In the automotive business, the company's sales increased by 11.7% year-on-year to 176.3 billion yen, operating profit increased by 10.2 billion yen to 59.9 billion yen, and operating profit margin increased by 2.5 percentage points to 34.0%. The company's front-end capacity utilization rate in Q3 was just under 60%. Renesas Electronics said that Tier 1 manufacturer customers in Europe may significantly reduce inventories in Q4, and the company expects the European market to be significantly affected. For regions such as Japan and China, Renesas said it expects some growth. Overall, the company forecasts fourth-quarter sales of 358 billion yen, a year-on-year decrease of 8.5% and a 5.6% decrease from the first quarter. The full-year performance for fiscal year 2023 is expected to have sales of 1.4658 trillion yen, a year-on-year decrease of 2.5%, and the gross sales profit margin decreased by 0.6 percentage points to 56.9%.
NXP's financial report shows that the company's revenue in Q3 2023 was US$3.434 billion, a year-on-year decrease of 0.32%, a month-on-month increase of 4.09%, and a gross profit margin of 58.53%, a year-on-year increase of 0.51%, and a month-on-month increase of 0.15%. In terms of downstream markets, the automotive business's Q3 revenue was US$1.89 billion, a year-on-year increase of 5%, in line with the guidance midpoint; the industrial and IoT sector's Q3 revenue was US$607 million, a year-on-year decrease of 15%; the mobile device business's Q3 revenue was US$607 million, a year-on-year decrease of 15%. The revenue was US$377 million, a year-on-year decrease of 8%, but a sharp increase of 33% month-on-month, indicating that the smartphone business has recovered. According to NXP data, full-year revenue in 2023 is expected to be the same as in 2022, and revenue is expected to resume year-on-year growth in 2024. Looking at downstream markets, the automotive business in 23Q4 is expected to grow by a mid-single-digit percentage year-on-year and remain flat month-on-month. Q4 internal factory utilization is expected to be in the low to mid-70% range and will remain at this level until internal inventories normalize.
Infineon achieved revenue of US$4.458 billion in Q3 2023, a year-on-year increase of 13.02% and a month-on-month decrease of 0.75%. Net profit was US$906 million, a year-on-year increase of 60.74% and a month-on-month increase of 0.73%. In the first three quarters of 2023, the company achieved revenue of US$13.256 billion, a year-on-year increase of 20.69%. The net profit achieved was US$2.999 billion, a year-on-year increase of 65.10%. The company pointed out that the outlook for the fourth quarter of fiscal year 2023 predicts revenue of approximately 4 billion euros. On this basis, profit margins are expected to reach around 25%. The estimated annual revenue for fiscal year 2023 is 16.2 billion euros, with an estimated profit margin of approximately 27%. Infineon's performance in the third quarter was strong. Based on the Q2 company's order backlog of 32 billion euros, what remains unchanged is that more than half are automotive orders, and about two-thirds of the orders are delivered within the next 12 months. All in all, several product categories such as MCUs and high-voltage semiconductors are still quite tight, while the traditional automotive business has returned to normalcy. For microcontrollers, on the other hand, Infineon expects tensions to continue throughout the year.
STMicroelectronics' net revenue in the third quarter was US$4.43 billion, a year-on-year increase of 2.55% and a month-on-month increase of 2.31%. Net profit was US$1.09 billion, a month-on-month increase of 8.89% and a year-on-year decrease of 0.82%. The company's revenue performance was primarily driven by continued growth in its automotive business, partially offset by lower personal electronics revenue. Inventory at the end of the 23Q3 quarter was US$2.87 billion, an increase of 20.6% compared to the same period last year. The inventory turnover days in 23Q3 were 114 days, a decrease of 12 days month-on-month and an increase of 18 days year-on-year. Looking forward to the fourth quarter business, at the midpoint, net revenue is expected to be US$4.30 billion, a year-on-year and quarter-on-quarter decrease of approximately 3%; based on the midpoint of the fourth-quarter outlook, full-year revenue in 2023 is approximately US$17.3 billion, a year-on-year increase 7.3%, gross profit margin is approximately 48.1%. STMicroelectronics' MCU demand in the Chinese industrial market in 23Q4 was lower than expected. MCU delivery cycles and capacity utilization have returned to normal, and order visibility in the industrial market is low. The outlook for the automotive industry in 2024 is expected to be very optimistic, with year-on-year growth every quarter and clear order visibility. It is expected that the company's order coverage in the automotive field will reach 80% by 2025.
In terms of the domestic market, overall, because my country's MCU manufacturers such as GigaDevice, Zhongying Electronics, NavInfo, National Core Technology, Chipsea Technology, and China Micro Semiconductor currently mainly focus on the home appliances, consumer electronics, Internet of Things and other markets. Mainly, automotive-grade MCU chips currently account for a small proportion of shipments. Therefore, they will be greatly affected by the market downturn in the Q3 quarter. Generally speaking, performance is not very good, especially in the first three quarters of 2023. Compared with the same period last year, the profit has declined. More than 60%, while the net profits of four companies, NavInfo, Guoxin Technology, Chipsea Technology, and China Micro Semiconductor, have already suffered losses.
The high market share of foreign MCU manufacturers in the field of automotive-grade MCUs is closely related to the important position of Japanese, European, and American automobile brand manufacturers behind them in the global automobile industry chain. With the gradual rise of domestic automobile brand manufacturers, especially new energy automobile brand manufacturers, it will bring long-term development support to domestic automotive grade MCU manufacturers.
However, it should be noted that the threshold for automotive-grade MCUs to enter the automotive OEM market is relatively high. They need to pass a series of more stringent safety verifications such as AEC-Q100, ISO 26262, IATF16949, etc. before they are qualified to supply downstream vehicle manufacturers. . Even after passing, vehicle manufacturers usually need to conduct road tests with automotive MCU manufacturers for several months or even more than a year before they can be installed in batches. Therefore, this places very high demands on the technology, capital and supply chain integration capabilities of automotive grade MCU manufacturers.
The good news is that once these automotive grade MCU products are recognized by downstream vehicle manufacturers, strong cooperation stickiness will be formed if the supply is stable. In addition, due to the high cost and risk of product replacement by OEMs, early entrants in the automotive-grade MCU field will have a certain first-mover advantage, thereby forming a strong customer barrier for latecomers in the automotive-grade MCU field.
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