Automotive chips since the supply shortage in the second half of 2020, when the relief has always touched the industry. In fact, the first half of 2021 was also exposed to automotive chip relief, but the reality is that the supply shortage is becoming more and more serious. According to Auto Forecast Solutions (hereinafter referred to as AFS), in 2021, the cumulative production reduction in the global automotive market will be about 10.2 million units due to chip shortages.

In recent times, the consumer electronics industry, a number of end-user companies to cut orders, resulting in part of the consumer chip oversupply situation, by this conduction, the automotive industry has also appeared the sound of chip supply shortage slowing down. However, I recently found that some automotive chip prices are still at a high level or even rise, an industry source even said that the production of new energy vehicles in some OEMs depends on the supply of IGBT.

Picture automotive chip shortage market slowing down?

According to AFS statistics, 2021, due to chip shortages, the global automotive market cumulative production cuts of about 10.2 million units, of which Asia is the hardest hit by production cuts, China alone has reduced production by 1.982 million units, bringing incalculable losses to the industry.

To the end of May this year, the shortage of automotive chips has not changed, a number of OEMs such as Xiaopeng Automobile previously said that the shortage of automotive chips still exists, of which He Xiaopeng revealed that the shortage of chips are mostly proprietary chips, effectively cheap chips, rather than advanced chips.

Automotive chip core panic when to alleviate has been a concern of the industry. In fact, in the first half of 2021, there are car companies have repeatedly expressed the news that the shortage of automotive chips market appeared to ease, but the reality is that the supply of tight situation is becoming more serious, the third quarter of last year was once faced with a "core" difficult to find situation, the state had to take action to rectify the illegal phenomenon of disrupting the normal market price. Industry analysts say that the production demand delayed by the epidemic superimposed on new demand, the shortage of automotive chips is unlikely to be alleviated in the short term.

And the recent impact of continuous price cuts and cut orders by consumer electronics terminals, consumer chips appeared in oversupply; industrial sector some chip manufacturers in the first half of the year also appeared to go to inventory pressure. Affected by this, chip shortage relief also began to the automotive sector conduction, recently, including Hyundai, Volkswagen and a number of OEMs have recently expressed the benefits of chip relief, including the outgoing Volkswagen Group CEO Dees believes that Volkswagen Germany and China market, the second half of the electric car will benefit from sales growth. Volvo also revealed that it has passed the most severe period of chip supply shortage, and even said it has returned to full supply levels.

So, is automotive chip relief really coming?

From the production side, since the shortage of automotive chips, the industry chain companies, represented by TSMC, have been trying to increase the supply. Data show that 60%-70% of the world's automotive MCUs are OEMed by TSMC. In 2020, TSMC's revenue from the automotive sector accounted for a very low 3% of total revenue; in 2021, with a 21.2% year-over-year revenue growth, its share of revenue from the automotive sector has increased to 4%; and in the recently released 2022 second quarter earnings report (revenue growth of 36.34%), TSMC's automotive business revenue share was again raised to 5%, signaling that upstream supply is still rising significantly, providing basic support for automotive chip relief.

Industry analysis believes that, in the context of the industry chain continues to increase supply, automotive chips are expected to ease the situation in the second half of this year. Dr. Kai Wang, director and CEO of CorePower Technology, also predicts that in the third and fourth quarters of this year, the shortage of automotive chips is expected to start easing.

Some industry insiders believe that the automotive chip industry is still in the structural relief stage, "a car needs hundreds to thousands of chips, it is impossible to do all at once to ease the shortage of some of the chips in high demand, short-term supply, will continue to shortage. Just the overall look at the shortage is now not as serious as before." It also believes that the shortage of key chips will still affect the normal production of cars if the problem is not effectively alleviated. Previously Azure Li Bin also expressed a similar view, "a car short of a part can not be produced." Among them, GM produced about 95,000 vehicles with incomplete parts in the second quarter, and the vast majority of them were produced in June.

In fact, Volkswagen, Honda, Geely, GAC and other OEMs also believe that some chips are still in shortage as of now, and some industry insiders are still worried about the easing trend in the second half of the year, "It will slowly improve in the second half of the year, but there are uncertainties such as the epidemic that will affect the normal supply of chips."

The incremental chips required for new energy vehicles, most of the current production capacity is still under construction, a large factory insider said, "Our current chips can only meet the demand for orders now, more orders, need to wait for the second half of the factory to be put into operation to receive." The source also said of the recent rumors that automotive chips are easing and some chips will see big price cuts, "I believe more in the feedback from car companies."

Another IGBT company insider said, "Although it is not very clear about the demand for other chips, but in terms of IGBT, it is still very tight this time, Infineon's IGBT has been lacking, and the very practical problem is that the B car companies I contacted, they told me that how many cars can be produced depends on the supply of IGBT, and the delivery cycle is also very long."

From the supply chain, we know that a number of domestic new energy vehicle brands are now trying to boost production, and a number of new factories have been put into operation in the past two months.

And now not only electric vehicles, fuel cars are also speeding up the intelligence of this part of the continued increase in demand, and along with the L2, L3 level cars continue to release, the second half of the incremental chip demand will expand, such as Qualcomm 8155, or there will be increasingly tight supply.

Even the traditional chips, such as NXP a certain automotive general MCU, July spot prices fell slightly from May, the normal price, need to go through a longer process of relief. Mercedes-Benz Cars Executive OlaKaellenius recently still insists on the chip shortage, which said the semiconductor situation is still very serious, and the global semiconductor shortage is expected to cover the entire year 2022 and last until 2023.