From shortage to surplus, what has happened to the automotive chip market
The "core shortage" crisis in the automotive industry
With the advancement of intelligence, the semiconductor content in automobiles is increasing, and the dependence on chips is gradually rising.
Data from the China Association of Automobile Manufacturers show that in 2012, the number of automotive chips used in China's traditional fuel vehicles was 438 per vehicle, and 567 in new energy vehicles; in 2017, the figures rose to 580 and 713, respectively.
The association expects that in 2022, the number of chips per traditional fuel car will reach 934, while the average number of chips for new energy vehicles will be as high as 1,459, and the future demand for chips for more advanced smart cars is expected to rise to 3,000 per car.
Along with the increase in demand for chips in cars, automotive chips have been caught in the ups and downs of the market.
After the outbreak in 2020, the automotive industry suffered an unprecedented core shortage crisis and the global automotive industry was severely hit by:
GM Korea cancelled the overtime schedule of the Bupyung project in Incheon as a way to cut capacity;
A plant of Ford Motor in Kentucky, U.S.A., was put into a complete shutdown;
the temporary closure of a plant in Ontario, Canada, and a small SUV plant in Mexico by Leatt Chrysler;
Toyota says shortages affect production at U.S. Texas plant, Tundra series production expected to be cut by 40% ......
This situation began to emerge in the second half of 2020. The industry rebounded far beyond expectations, even catching up to pre-epidemic levels. Supply and demand misjudged the situation, and the weakened production capacity in the earlier period did not keep up in time, resulting in far lower than normal automotive chip inventories in all aspects of the supply chain and an oversupply of chips.
In addition, the home office and study during the epidemic greatly boosted the demand for personal computers and cloud computing/storage, and major electronics manufacturers caught wind of the situation and frantically purchased chips, and orders were seized, squeezing out the share that belonged to automotive chips.
The above factors combined, making the automotive industry into a "core shortage" crisis.
Chip industry into the downward cycle?
After a gap of 2 years, the chip situation this year, and suddenly to the other extreme.
According to a study by market analyst Susquehanna Financial Group, the average global chip delivery cycle in October was 25.5 weeks, a shortening of 6 days, the largest drop since 2016, further indicating that the demand for electronic components is rapidly declining.
Analyst Christopher Rolland said all major product areas are now being supplied faster than ever, and 70 percent of companies surveyed by Susquehanna said they are able to supply chips faster.
Morgan Stanley's latest "Asia-Pacific Automotive Semiconductor" report shows that there is already an oversupply of automotive chips, and pointed out that Renesas and ON Semiconductor have issued a cut order to cut the fourth quarter chip test orders.
Morgan Stanley analysis, automotive chips from one extreme to the other for two main reasons:
First, TSMC's third quarter automotive semiconductor wafer output increased by 82% annually, 140% higher than before the epidemic;
Second, China's electric vehicle sales turned weak (accounting for fifty to sixty percent of global electric vehicles), making automotive semiconductors are now fully supplied, which in turn led to automotive chip makers have cut orders.
In the current downturn in the consumer environment, the automotive chip industry once became the "lifesaver" for many chip manufacturers. But now, from a hard to find to oversupply, whether the automotive chip industry has entered the downward cycle?
In fact, the current lack of core problem on the impact of automotive production is still greater, but compared with the previous, this year, the automotive chip shows a structural shortage of power semiconductors and MCU (micro control unit) supply is still in a relatively tight state.
In the third quarter of this year, the international mainstream chip suppliers MCU products continue to be in short supply, the longest delivery time of 52 weeks, and generally show price increases.
In early October, the Japanese head of the power semiconductor IDM factory Rohm Semiconductor officially raised the old and new product offer, up about 10%, some product lines offer a different rate of increase; at the same time, STMicroelectronics, Texas Instruments and Infineon also plans to raise the price of industrial and automotive components in the fourth quarter, an increase of up to 20%.
Domestic chip replacement opportunities
Correspondingly, the electrification of intelligent cars is gradually pushing up the demand for chips.
Tianfeng securities research report pointed out that China's automotive grade chips in the automotive computing, control class chip independent rate of less than 1%, sensors for 4%, power semiconductors for 8%, memory for 8%, automotive grade MCU localization rate of about 5%, such supply capacity and the huge production and export market is not matched.
The breakthrough point to solve this problem is to find a replacement for domestic chips.
The short-term breakthrough point of domestic automotive-grade chips is bound to be power class chips, because these are standard products, easy to control and easy to start production capacity.
At present, there are already some domestic manufacturers to develop automotive LED driver chips, motor driver chips, etc.
In the power device segment, in the car era semiconductor and Starr semi-conductor and other domestic manufacturers of automotive IGBT (insulated gate bipolar transistor) module in large quantities shipped;;
In the field of isolation chips, Naximicro's automotive-grade isolation chips have also performed well and made a breakthrough. Domestic Yachting Electronics, on the other hand, has imported domestic as well as overseas customers in LED driver chips for headlights and motor driver chips.
However, some chip manufacturers are still not very active in production.
Compared with the supplier system of consumer electronics, automotive grade chip requirements are too stringent, so in the short term, the semiconductor companies that previously mainly do consumer chips want to get direct automotive qualification certification is very difficult, no mutual trust system with the vehicle manufacturers.
And the current demand for automotive-grade production capacity is far from consumer-grade, and the investment is too large, the certification cycle is very long, the energy invested and output does not fully match, so the power is clearly insufficient.
Therefore, the automotive chip gap problem will still exist for some time and become an important factor disturbing the automotive industry.
With the advancement of intelligence, the semiconductor content in automobiles is increasing, and the dependence on chips is gradually rising.
Data from the China Association of Automobile Manufacturers show that in 2012, the number of automotive chips used in China's traditional fuel vehicles was 438 per vehicle, and 567 in new energy vehicles; in 2017, the figures rose to 580 and 713, respectively.
The association expects that in 2022, the number of chips per traditional fuel car will reach 934, while the average number of chips for new energy vehicles will be as high as 1,459, and the future demand for chips for more advanced smart cars is expected to rise to 3,000 per car.
Along with the increase in demand for chips in cars, automotive chips have been caught in the ups and downs of the market.
After the outbreak in 2020, the automotive industry suffered an unprecedented core shortage crisis and the global automotive industry was severely hit by:
GM Korea cancelled the overtime schedule of the Bupyung project in Incheon as a way to cut capacity;
A plant of Ford Motor in Kentucky, U.S.A., was put into a complete shutdown;
the temporary closure of a plant in Ontario, Canada, and a small SUV plant in Mexico by Leatt Chrysler;
Toyota says shortages affect production at U.S. Texas plant, Tundra series production expected to be cut by 40% ......
This situation began to emerge in the second half of 2020. The industry rebounded far beyond expectations, even catching up to pre-epidemic levels. Supply and demand misjudged the situation, and the weakened production capacity in the earlier period did not keep up in time, resulting in far lower than normal automotive chip inventories in all aspects of the supply chain and an oversupply of chips.
In addition, the home office and study during the epidemic greatly boosted the demand for personal computers and cloud computing/storage, and major electronics manufacturers caught wind of the situation and frantically purchased chips, and orders were seized, squeezing out the share that belonged to automotive chips.
The above factors combined, making the automotive industry into a "core shortage" crisis.
Chip industry into the downward cycle?
After a gap of 2 years, the chip situation this year, and suddenly to the other extreme.
According to a study by market analyst Susquehanna Financial Group, the average global chip delivery cycle in October was 25.5 weeks, a shortening of 6 days, the largest drop since 2016, further indicating that the demand for electronic components is rapidly declining.
Analyst Christopher Rolland said all major product areas are now being supplied faster than ever, and 70 percent of companies surveyed by Susquehanna said they are able to supply chips faster.
Morgan Stanley's latest "Asia-Pacific Automotive Semiconductor" report shows that there is already an oversupply of automotive chips, and pointed out that Renesas and ON Semiconductor have issued a cut order to cut the fourth quarter chip test orders.
Morgan Stanley analysis, automotive chips from one extreme to the other for two main reasons:
First, TSMC's third quarter automotive semiconductor wafer output increased by 82% annually, 140% higher than before the epidemic;
Second, China's electric vehicle sales turned weak (accounting for fifty to sixty percent of global electric vehicles), making automotive semiconductors are now fully supplied, which in turn led to automotive chip makers have cut orders.
In the current downturn in the consumer environment, the automotive chip industry once became the "lifesaver" for many chip manufacturers. But now, from a hard to find to oversupply, whether the automotive chip industry has entered the downward cycle?
In fact, the current lack of core problem on the impact of automotive production is still greater, but compared with the previous, this year, the automotive chip shows a structural shortage of power semiconductors and MCU (micro control unit) supply is still in a relatively tight state.
In the third quarter of this year, the international mainstream chip suppliers MCU products continue to be in short supply, the longest delivery time of 52 weeks, and generally show price increases.
In early October, the Japanese head of the power semiconductor IDM factory Rohm Semiconductor officially raised the old and new product offer, up about 10%, some product lines offer a different rate of increase; at the same time, STMicroelectronics, Texas Instruments and Infineon also plans to raise the price of industrial and automotive components in the fourth quarter, an increase of up to 20%.
Domestic chip replacement opportunities
Correspondingly, the electrification of intelligent cars is gradually pushing up the demand for chips.
Tianfeng securities research report pointed out that China's automotive grade chips in the automotive computing, control class chip independent rate of less than 1%, sensors for 4%, power semiconductors for 8%, memory for 8%, automotive grade MCU localization rate of about 5%, such supply capacity and the huge production and export market is not matched.
The breakthrough point to solve this problem is to find a replacement for domestic chips.
The short-term breakthrough point of domestic automotive-grade chips is bound to be power class chips, because these are standard products, easy to control and easy to start production capacity.
At present, there are already some domestic manufacturers to develop automotive LED driver chips, motor driver chips, etc.
In the power device segment, in the car era semiconductor and Starr semi-conductor and other domestic manufacturers of automotive IGBT (insulated gate bipolar transistor) module in large quantities shipped;;
In the field of isolation chips, Naximicro's automotive-grade isolation chips have also performed well and made a breakthrough. Domestic Yachting Electronics, on the other hand, has imported domestic as well as overseas customers in LED driver chips for headlights and motor driver chips.
However, some chip manufacturers are still not very active in production.
Compared with the supplier system of consumer electronics, automotive grade chip requirements are too stringent, so in the short term, the semiconductor companies that previously mainly do consumer chips want to get direct automotive qualification certification is very difficult, no mutual trust system with the vehicle manufacturers.
And the current demand for automotive-grade production capacity is far from consumer-grade, and the investment is too large, the certification cycle is very long, the energy invested and output does not fully match, so the power is clearly insufficient.
Therefore, the automotive chip gap problem will still exist for some time and become an important factor disturbing the automotive industry.
