In recent years, the global automotive chip market has experienced dramatic fluctuations in supply and demand. The chip shortage during the pandemic has put the entire industry in trouble, and now, with the rapid expansion of production capacity and the phased slowdown in demand, the automotive chip market has ushered in the challenge of overcapacity. However, in the long run, with the electrification and intelligent transformation of the automotive industry, the automotive chip market is still full of opportunities.
During the pandemic from 2020 to 2022, there was a severe shortage of automotive chips worldwide. In response to supply chain disruptions, automakers significantly increased chip inventories and even signed "unequal" procurement agreements to ensure supply. At the same time, chip companies accelerated production expansion to meet surging demand. The number of Chinese automotive chip companies surged from dozens in 2020 to more than 300 in 2023, with rapid expansion of low-end chip production capacity, especially general-purpose chips such as MCU and PMIC. Due to their low threshold and low process requirements, they are prone to inventory backlogs when the overall market growth slows down.
After 2023, the global economic weakness and the slowdown in the growth of the new energy vehicle market, especially in the European and American markets, will lead to a decline in terminal demand, while the capacity of previous expansion will continue to be released, resulting in an imbalance between supply and demand. Data shows that global sales of new energy passenger vehicles will increase by 23% year-on-year in 2024, but the growth rate of the European and American markets will slow down. From January to May 2024, the sales of new energy vehicles in Europe will only increase by 1.85%, and the penetration rate will decline. The reasons include rising interest rates and the cancellation of subsidies. In addition, after taking office, US President Trump cut the investment budget for new energy infrastructure construction, further slowing the growth of new energy vehicles.
Recently, sales reports of some industrial chain companies have confirmed the phenomenon of overcapacity. NXP disclosed that the consumption of semiconductor chips in the automotive industry fell by 6% year-on-year. The financial reports of companies such as Texas Instruments and ON Semiconductor also showed that the decline in demand in the industrial and automotive fields led to deteriorating performance. Mobileye, an autonomous driving technology company, said that the pressure of excess inventory of customer automotive chips remains and still needs to be digested in the fourth quarter of 2024. The excess supply of its EyeQ advanced driver assistance chips is as high as 6 million to 7 million pieces. The financial report shows that the company's revenue in the first quarter of 2024 is initially estimated to drop by about 50% from the same period last year, and the revenue in fiscal 2024 will be US$1.65 billion, lower than the previous expectation of US$2.58 billion.