Magicxman
2023-03-18

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@Mrzorro：EVs Boost Chip Demand Despite Semiconductor Makers' Woes Chip sales that have declined across many customer segments are still enjoying one area of rising demand: cars. Growing sales of electric vehicles -- which tend to use more semiconductors than their gas-powered counterparts -- coupled with greater automation of all vehicles, have kept producers of chips for cars busy. The long-term outlook for the market appears robust, Tesla Inc. suggested this past week, as Chief Executive Elon Musk detailed plans for his car company to scale up to 20 million vehicles a year by 2030, from around 1.3 million in 2022. Chip executives say the growth in the number of chips going into cars has been staggering. As of 2021, the average car had about 1,200 chips, twice the number in 2010 and that figure is only likely to increase, executives said. NXP's automotive-chip sales rose 25% last year, and the company said it is expecting around 15% growth in the first quarter of this year. Renesas's automotive business climbed nearly 40% last year, and analysts expect more growth this quarter. Analog Devices, which gets almost a quarter of its sales from the automotive industry, reported 29% growth for that segment last year. It isn't just the cars themselves that are becoming more chip intensive; so is vehicle production as manufacturers embrace greater automation to deal with labor shortages and try to lower costs, semiconductor executives have said. Companies including Dutch auto-chip company $NXP Semiconductors NV(NXPI)$, Germany's Infineon Technologies AG, Japan's Renesas Electronics Corp., U.S.-based Analog Devices Inc. and Texas Instruments Inc. recently reported surging sales in their automotive divisions and gave strong outlooks for this year. $Marvell Technology(MRVL.US)$ CEO Matthew Murphy on Thursday said auto-related revenue in the current quarter should grow over 30%, even as the company's overall top line is projected to shrink. The company's car-related chip sales could reach $500 million in coming years, from around $100 million today, he said. The boom in car chips contrasts with sharp declines in other sectors for chip makers, whose products go into electronics tied closely to consumer appetites. Americans have tightened their belts over the past several months, worried about rising interest rates and stubbornly high inflation. $Intel(INTC)$ , the largest U.S. chip maker by revenue, reported a fourth-quarter loss and is expecting another loss this quarter, hurt by flagging demand for the personal computers that its chips feature in. Rival $AMD(AMD)$ is also contending with the choppy PC market, where industrywide shipments are expected to decline by 12.5% this year, according to a recent Morgan Stanley estimate. $Qualcomm(QCOM)$, known for its mobile-phone chips, illustrates how some chip suppliers are feeling both sides of the market dynamics. The company reported an 18% fall in handset revenue in its latest fiscal quarter, while automotive sales surged 58% to $456 million. Auto chips account for about 5% of the company's overall revenue. The resilience in car chips comes despite a historic fall in auto sales, which were the lowest in more than a decade in the U.S. last year. Sales have been constrained by supply-chain trouble, including a dearth of chips essential to a new generation of cars with an array of digitally enhanced features, from driver-assistance technology to automatic windshield-wiper controls. This year questions around demand have surfaced as consumers balk at high prices at dealerships. The increased digitization of cars means even lower vehicle sales aren't denting automotive-chip demand, said Kurt Sievers, CEO of NXP, one of the largest chip suppliers to the auto market. Market-share gains and the shift to electric vehicles have been enough to offset economic weakness and supply-chain issues that have limited car production, he said. The wake-up moment for both chip and car company executives about how interconnected their fortunes have become came during the pandemic. Supply-chain disruptions spurred a global chip shortage that left some car makers with incomplete vehicles stranded on the production line. Rivian Automotive Inc. in its most recent earnings report attributed its muted sales outlook partly to chip-supply issues. Still, there are signs that those pressures are starting to ease. Average lead times for chips, including many chips crucial in car manufacturing, were down by about four days in January compared with the prior month, according to analysts at Susquehanna International Group LLP, indicating an easing of constraints. Lead times, which measure how long it takes to fulfill orders, have fallen for seven months straight, Susquehanna said, although the industry average lead time is still nearly six months. Mr. Sievers of NXP said shortage problems were easing as production grew to meet demand, and he didn't expect the supply-demand imbalance to be ironed out until later this year or early next year. Chip companies broadly are preparing to add capacity, both to satisfy growing automotive demand and in anticipation of a rebound in other sectors such as PCs and smartphones. Texas Instruments last month said it would build an $11 billion chip plant in Lehi, Utah, and NXP has said it is weighing expansion in Texas. @TigerStars @Daily_Discussion @CaptainTiger
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