The car chip is getting cold

In 2023, the chip market continues to decline sharply, particularly in PC, mobile phone, and storage sectors. As economic headwinds continue, weak end-market electronics demand is spreading from consumers to enterprises.

In this case, automotive chip, power semiconductor, domestic equipment is a few can maintain a strong business degree of the field, but with the major manufacturers focus on car regulations to increase supply, new energy growth is stable and other factors, the semiconductor industry cold wind, slowly blowing to the automobile market.

According to reports, the auto market price war is spreading to the chip end, due to the weak end demand, automotive chip designers will increase the number of cuts in the second quarter, about 10% to 20% from the previous quarter. Products that adjust orders include PMIC, driver IC, MOSFET, and some MCU products.

In terms of supply, supply chain survey results show that some automotive semiconductor shortages have begun to ease since the fourth quarter of 2022, with delivery of power management chips, CIS, eMMC, display driver ics and other products easing gradually.

The reason why the automotive semiconductor industry is also suffering is that:

1. Automobile chip production capacity has been greatly improved

Over the past year or so, the consumer electronics chip market has been in a slump, while the automotive industry is facing a global shortage of chips, leading the world's major chip suppliers to focus their production lines on automotive products and increase production capacity.

As the outlook for competition worsens, chip makers are now battling with each other to slash prices, as are automakers, and many have begun to consider retooling their production lines, possibly shifting to making industrial-grade chips for cars.

2. Demand is falling

The growth rate of new energy vehicles is stabilizing, and the sales of non-new energy vehicles are declining, leading to the weakness of demand side. The automobile market is changing from "global chip shortage leads to the decline of automobile production" to "global auto sales decline leads to the weakening of automobile chip demand".

3. When there is a shortage of core, the car enterprises place repeated orders

When there is a shortage of core, enterprises will place repeated orders because of AB orders, and in order to maintain stable supply, they will generally increase the purchase volume and increase inventory. Now, with weak demand and no longer a shortage of chips, enterprises will cut orders to reduce inventory.

However, relatively speaking, high-end chip demand is relatively stable, and in the low-end sector, due to the rapid expansion of domestic chip production capacity, aggravate the industry "internal volume", the price is also constantly falling.

On the other hand. With the falling prices of upstream raw materials, after the production of head chip manufacturers gradually recovers, auto manufacturers will still gradually tilt their orders to head suppliers, and cut off the orders of three chip suppliers and four chip suppliers, which further brings a lot of pressure to domestic chip manufacturers.

Of course, the development trend of the "new four modernizations" of the automobile industry makes the market space have a huge potential. The short-term pain is inevitable. It depends on who can survive, to usher in the next round of spring.

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