At present, there is not only no shortage of automotive chips, but also a glut.

Some popular and high-priced automotive chips in previous years have fallen to near normal prices. TI's TPS92662AQPHPRQ1 quotation has dropped from 1,800 yuan in March last year to 20-28 yuan. ST's L9369-TR, the market quotation has dropped from thousands of yuan to 13 yuan. . Many people suddenly discovered why there were so many unsold car materials in the spot market. Some friends had just sold a batch, and soon another batch arrived, and they were stuck in the car chip.

Major automotive chip manufacturers, wafer fabs, and research institutions have also begun to speak out, warning of the risk of a decline in the automotive chip market. The decline in demand for automotive MOS, IGBT, automotive power management IC, etc. is particularly prominent. Customer demand from upstream manufacturers has stopped soaring, leaving opportunities for market channels to decrease but not increase. Stocks are no longer out of stock. Demand for major automotive chips has dropped, and prices have fallen seriously, which is once again testing everyone's mentality.

1. Car chips can no longer be sold

Friends in the market said that the automotive chip market this year is quite poor, and the demand is not as good as 2021. The prices of automotive chips like TI have generally fallen sharply. "Some are lower than the previous normal prices, and some are a little higher." Automotive chip stocks Very many, out of stock is rare.

The market price of L9369-TR, which was very popular at that time, has dropped from thousands of yuan to 13 yuan. The NXP 32-bit MCU, which was priced at a high price of 300 to 400 yuan, has returned to the normal price of 2 digits.

Automotive chips are no longer valuable, so some people take out their inventory in exchange for cash flow, and some can't bear to lose money and just take them off the shelves instead of selling them and save them for themselves. "A friend sold a batch of automotive chips, and a week later a lot of inventory arrived. It's important to clear out a little bit."

In addition to TI, the prices and delivery times of other brands of automotive chips have also declined and improved.

In October, the overall delivery period of high-end devices such as NXP automotive MCU/MPU continued to improve in Q3, and the prices of Internet celebrity materials such as MK64 and MCF5282 also continued to fall. In terms of 32-bit MCUs, the delivery time has continued to shorten since Q2 this year, and the spot market price has gradually stabilized.

The price of Broadcom's automotive materials has plummeted, returning from tens of dollars to a few dollars, and the transaction volume has gradually decreased; the demand for Infineon's automotive specifications has dropped, and the price has changed greatly. The demand and price of the previous Internet celebrity materials have dropped a lot, especially Automotive MCU.

Recently, many major automotive chip manufacturers have expressed concerns about the expansion of automotive chip inventories.

NXP CEO Kurt Sievers said on a recent earnings call that the company is "intentionally reducing shipments of products to the automotive industry" to reduce the risk of inventory expansion. NXP is working with customers to help them reduce inventory rather than blindly executing "long-term supply agreements." He also said that the automobile industry is expected to complete inventory digestion in the second half of 2024. NXP made it clear at its second-quarter financial report that after two and a half years of supply turmoil, the delivery time of automotive chips has basically normalized and returned to a more normal order.

ON Semiconductor CEO Hassane El-Khoury said: "We are starting to see some weakness, European tier 1 customers are dealing with inventory, and there are increasing risks to automotive demand due to high interest rates." El-Khoury also said the company remains bullish Market demand for electric vehicles is growing, but at a slower pace.

In addition, Morgan Stanley issued an early warning in April this year: the downside risks of the automotive chip market have increased significantly, especially the weak demand for automotive MOSFETs, and automotive power management IC manufacturers are gradually losing their pricing power. TSMC also stated that although demand for automotive chips is stable, it will weaken in the second half of the year. TSMC is seeing declining demand for automotive MOSFETs and IGBTs.

In October this year, Morgan Stanley Securities pointed out in an industry report that demand for power management ICs (PMICs) and MOSFETs continued to be weak, with demand for automotive MOSFETs from global IDM manufacturers plummeting.

Reduced shipments, reduced inventories, slower demand growth, and declining demand... mark that the demand boom for automotive chips that started in 2021 has significantly cooled down.

At the end of last year, there was a sound of easing the supply of automotive chips. Some automotive chip factories such as Renesas and ON Semiconductor have begun to reduce chip testing orders. However, structural shortages still exist, and the supply of some automotive chips has been alleviated. Some automotive chip manufacturers are still In short supply, delivery times are getting longer.

After just one year, why can't car chips be sold?

2. Why?

First, let's briefly take a look at the growth and shortage of automotive chips in the past two years.

Automotive chips have generally gone through the following stages: severe core shortage - capacity allocation and expansion - while new production capacity is being released, demand slows down - chip surplus.

The core shortage wave was vigorous in the past two years. At that time, overseas production capacity was limited and the demand in the domestic new energy market exploded. Automotive chips became the "hardest hit area" for the core shortage. Many large car companies were directly forced to reduce or suspend production due to the shortage of chips, and chips have suddenly become the focus of the automotive supply chain.

At that time, the situation was urgent, and governments of various countries even began to help coordinate the production capacity of automobile chips. TSMC even "opened the back door" for automobile chips: reallocating production capacity. In addition to increasing the production capacity of automotive MCUs, it has also opened extremely rare "super hot run" orders, allowing temporary orders to be produced for automotive chips.

In addition to "emergency measures", TSMC has formulated long-term plans for automotive chips. During the epidemic, TSMC's automotive chip business increased by about 40% every year. In 2021, it increased production capacity by 50%. Later, it was still not enough, and it continued to increase production in 2022. , TSMC’s automotive semiconductor wafer output increased by 82% year-on-year in the third quarter of 2022.

Intel was also transferring its chip production capacity to automotive chips at the time, and foundries such as Samsung, UMC, and GlobalFoundries also made efforts to promote the automotive chip business.

Upstream chip original manufacturers are also actively expanding production. In 2021, mainstream automotive chip factories such as Infineon and STMicroelectronics will begin to use new wafer production lines. The production capacity of these new production lines will take approximately 1-1.5 years, that is, Production capacity will begin to be released around 2022-2023.

The supply of automotive chips is on the rise, but demand is starting to slow down. In 2021, the global automobile market will usher in explosive growth, but by 2023, the growth rate of the automobile market will begin to decline slowly.

Statistics and forecasts of mobile phone, PC and automobile machine markets, source: Semiconductor Intelligence (SI)

As a strong new demand for automotive chips, new energy vehicles will also see a surge in sales in 2021-2022. However, by 2023, the growth rate of new energy vehicles will also begin to slow down. This trend can be clearly felt in the Chinese market, which will account for more than 60% of global electric vehicle sales in 2022.

The slowdown in terminal demand has also been transmitted to upstream chips. Among the top 15 chip manufacturers in Q2 this year, the inventory and inventory turnover days of the six major automotive chip companies continued to grow, and only one of them, Renesas, experienced a decrease in inventory.

The automotive chip market continues to grow, and it is normal for corporate inventories to rise. But when inventory turnover days continue to rise, it means that automotive chips are beginning to oversupply.

For the spot market, the feeling of reduced demand for automotive chips may be deeper than that of original manufacturers.

After experiencing the wave of core shortages, automobile OEMs began to pay attention to the supply chain security of chips. In the past, Tier 1 served as a bridge between car manufacturers and chip factories. Now more and more car manufacturers are beginning to deal directly with chip factories and penetrate into the semiconductor supply chain, and this has become an important trend in the global automotive supply chain.

Under this trend, some car manufacturers have begun to sign supply guarantee agreements directly with chip manufacturers, skipping the role of "middlemen".

For example, this year, Volkswagen said it has begun directly purchasing chips that it believes may be in shortage from 10 companies including NXP, Renesas, and Infineon. NXP's original manufacturers and agents also signed supply guarantee agreements with major customers this year, and met the needs of car manufacturers by expanding production capacity and optimizing production lines. This also allowed NXP's supply to be largely relieved around the second quarter.

Demand has begun to decrease, and car manufacturers have begun to directly connect with original manufacturers. In the spot market, it has been raining all night, and the inventory of automotive chips has begun to rise and become "worthless".

03 Are there really a surplus of automotive chips?

The shortage of automobile chips has detonated spot market prices, and some people are buying them at high prices, which has given confidence to soaring prices in the market.

In 2021, the market has smelled the automotive chip business and has stocked up a lot of goods. When there is no shortage of chips, car manufacturers and Tier 1 factories rarely go to the market to look for goods, and a surplus occurs.

For the spot market, automotive chips have indeed become "unsaleable", but looking at the entire automotive chip industry, "surplus" may only be a relative term.

In terms of overall demand, whether it is traditional cars or new energy vehicles, with the development of intelligent network connectivity in automobiles, the demand for chips has exploded.

In the "2023 China Automotive Grade Chip Industry Innovation Research Report" released in August, the domestic industry research organization Yiou Think Tank proposed that by 2025, the average number of chips installed in fuel vehicles will reach 1,243, and the average number of chips installed in smart electric vehicles will reach 1,243. It will be as high as 2072. Foreign institutions predict that the average semiconductor cost per vehicle will rise from US$700 in 2020 to US$1,138 in 2028. ST predicts that the size of the automotive chip market will almost double by 2025 compared to 2021.

Observing the financial reports of major chip manufacturers in the first three quarters of this year, the life of major automotive chip manufacturers is somewhat better than that of other original manufacturers. The major automobile manufacturer ON Semiconductor achieved a new record in Q3 automobile business with a year-on-year growth of 33%. Although NXP is waiting to destock its inventory, its automobile revenue is still growing year-on-year. Even TI, which has been having a hard time recently, is still growing its automobile business.

Therefore, for upstream original manufacturers, some of their "downturn warnings" are more of a comparison with the abnormal growth rate during the outbreak period of the previous two years. If we broaden our horizons, the demand for automotive chips is still relatively strong, and there are Have to earn.

However, from the supply side, there are still some limitations in the supply of automotive chips.

According to a report by market research firm Yole, driven by new energy vehicles, energy storage and other applications, the global power semiconductor device market will grow from US$17.5 billion in 2020 to US$26.2 billion in 2026, with an average annual compound growth rate of 6.9 %.

Major manufacturers are betting on automotive power devices, viewing them as the meat and potatoes that will start the next semiconductor cycle. The production and verification cycle of automobile power devices is long, and most of them are produced on relatively backward 8-inch production lines, making it difficult to expand production. Nowadays, the electrical characteristics of energy vehicles are more obvious. Once they cannot keep up with demand, the production of automobiles will be blocked.

In addition, automotive chips are mainly supplied by European and American original manufacturers. Reliance on foreign supply chains sometimes also means increased risks. An error at any node will lead to the disconnection of the entire supply chain, causing problems in the supply of automotive chips. For example, ST's packaging and testing plant in Malaysia was closed, leaving many domestic car companies with no "core" available.

Plus the automotive supply chain is long and complex. It often takes six months or more for a chip to be manufactured, tested and packaged, and then delivered to an automaker's assembly line. Therefore, it usually takes some time for chip original manufacturers to sense and adapt to changes in demand in the automotive market.

However, the "long cycle" characteristics of semiconductor manufacturing make it difficult to adjust production flexibly and timely, and it is difficult for foundries to reserve idle production capacity for automotive applications. This is also the reason why the automotive chip gap is easily enlarged.

A research report released by consulting firm Roland Berger shows that the chip shortage in 2021 has reached its peak in recent years, and has subsequently eased year by year.

Roland Berger predicts that 8% to 13% of global automotive chip supply will still be unable to meet demand in 2023. It is estimated that the total supply of automotive chips will reach 846 million units by 2025, and the demand shortage will shrink to -5%. The automotive chip shortage will The phenomenon will persist for a long time, but will gradually slow down.

After car companies paid "high-priced" tuition fees, they no longer relied on a single supplier, but found more alternative suppliers. Everyone's acceptance of high-priced chips has been greatly reduced, which is also one of the reasons why the spot price of automotive chips continues to fall. , and as chip supply keeps up with demand, inventories will rise to high levels in a short period of time.

However, in the long term, there is a structural shortage of automotive chips, and the risk factors of shortage are still there, but it is difficult to reach the level of comprehensive shortage.

View more at EASELINK