Car chip shortage, will car prices follow suit? Automotive chip supplfollow suit? Automotive chip supply, Millions type chip at stocks for selling!

2021 is undoubtedly a challenging year for the automotive industry. In addition to continuing to be shrouded in the shadow of the epidemic, it also encountered a shortage of automotive chips, and there is no obvious sign of improvement even now and in the short term. The lack of cores will not only affect global logistics costs, but also directly reduce the output of the entire automotive industry. According to statistics, due to the shortage of chips alone, the global car production will be reduced by 11.3094 million units this year.

Why is there a shortage of chips?

Depending on the functional complexity, the number of chips on a fuel vehicle is about 500 to 1500, and more than 95% of them still use chips with a 40-nanometer process and above. However, with the popularity of smart electric vehicles, the amount of chips used in advanced and cutting-edge processes has greatly increased. However, considering the current market share of smart electric vehicles, the automotive industry's demand for chips is still dominated by mature and traditional processes.

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This is undoubtedly a huge pressure on the production side, and due to the particularity of the industry, the capacity expansion of the semiconductor industry has always been cautious, with an annual growth rate of only about 6%. What is missing this time are low-end chips with a size of 40 nanometers, which are mainly responsible for recording and storage, such as automotive radar, ESP, etc. Compared with mobile phone chips, the foundry revenue of these chips is not high, and companies naturally have no incentive to expand.

In addition, force majeure factors such as the cold wave in Texas, the closure of packaging companies in Malaysia due to the epidemic, and the fire at the Renesas factory have further hit the semiconductor industry with a very long supply chain. Various factors have led to a global shortage of chips, and the demand for chips is huge. The automotive industry chain had to stagnate a little.

Will missing cores cause car prices to rise?

The answer is yes. This historic chip shortage has directly led to a reduction in the output of the automotive industry, but as the market picks up, consumer demand is gradually increasing, which leads to a state of short supply. Even if the official price does not rise, dealers will still offer discounts. It is not uncommon for the strength to weaken and the price to be raised to raise the car, which is equivalent to a disguised price increase.

In addition, another impact of the chip shortage is that the prices of used cars continue to rise amid the reduction in the production of new cars. The average transaction price of used cars in Japan hit a 10-year high in October, according to reports.

The situation in China is similar. According to statistics from the China Automobile Dealers Association, as of November this year, the average transaction price of second-hand cars in China has risen for four consecutive months, reaching 67,100 yuan per unit, hitting a new high in four years.

This is naturally not good news for consumers. Whether it is a new car or a used car, the current price has increased compared to before.

How long will the core missing problem last?

Since 2020, the automotive industry has always been shackled by the shortage of chips, and in 2021, many OEMs have reduced production or stopped production for a short period of time. Although the world's major chip companies have gradually increased the production and supply of automotive chips, they have not seen any signs of improvement in the short term, because increasing production is bound to increase a lot of software debugging, production line switching and verification work, which all take time.

The average lead time for semiconductor production is more than four months, and moving the product to another production base to increase capacity requires an additional six months on top of this, and more if switching to another manufacturer (such as changing a foundry) long, usually increasing by more than a year.

In general, automakers either choose to wait for existing suppliers to make more chips, or choose to spend more than a year replacing suppliers. In any case, it is a long process.

Summarize:

But don't worry too much. Many governments have intervened in the issue of chip shortages, and China is no exception. The Ministry of Industry and Information Technology has taken multiple measures to ensure the supply of automotive chips. In strengthening the connection between supply and demand, it has guided the establishment of the China Automotive Chip Industry Innovation Alliance, organized the compilation of the "Automotive Semiconductor Supply and Demand Connection Manual", and provided 568 types of chip products. The demand information of automobile and parts companies is for reference and use by industry companies; in strengthening policy guarantees, coordinate relevant departments and local governments to provide financial funds, tax incentives, insurance compensation and other support policies, and cooperate with the State Administration for Market Regulation to investigate and deal with car chip hoarding and price gouging and other acts of unfair competition, and speed up the construction of the automotive chip standard system.

It is believed that the situation will improve in the second half of 2022.