The chip shortage plaguing the auto industry since early 2020 probably will persist through 2023, a semiconductor industry analyst says. Strong demand for automotive chips should provide a tailwind to semiconductor stocks with high exposure to the industry, including NXP Semiconductors and ON Semiconductor.
"Shortages of automotive semiconductors will likely remain through at least the year 2023," Bill Jewell, a consultant with Semiconductor Intelligence, said in a blog post Thursday. "Although a few automakers indicate they are back at full production, most report continuing shortages. The shortages will prevent automakers from producing enough vehicles to meet demand in 2022 and 2023, resulting in continued high prices for most vehicles."
While some automakers report easing supply issues, chip shortages continue to bedevil others.
"It will take time for all the supply issues to be resolved," Jewell said. "Recent comments from major automakers reveal mixed trends in resolving the semiconductor shortages."
Chip Shortages Linger For Some Automakers
BMW and Mercedes-Benz currently report no significant supply issues related to automotive chips. Volvo says it's back to full supply. Nissan sees a recovery in the next few months. Hyundai and Volkswagen say chip shortages are easing.
However, other automakers continue to face chip shortages. Honda Motor says its production outlook is uncertain due to shortages. Ford Motor says chip shortages are still an issue. Toyota Motor sees shortages lasting at least through the third quarter this year, while General Motors expects the shortage impact to last into 2023.
Automotive production is likely to remain below pre-pandemic levels through 2024, Jewell said.
Automakers cut back on semiconductor orders severely at the beginning of the Covid-19 pandemic in early 2020. They were fearful of being stuck with excess inventories of cars if demand fell significantly due to the pandemic. But the economy bounced back much quicker than expected after the initial shock from the pandemic.
When automakers tried to increase orders, they had lost their place in line and were behind other industries such as PCs and smartphones. Now automakers are playing catch-up and facing chip shortages.
Top Automotive Semiconductor Stocks
The top 10 automotive chip suppliers accounted for 46% of the total market of $69 billion in 2021, according to World Semiconductor Trade Statistics.
European-traded Infineon Technologies of Germany was the top supplier, with 8.3% market share last year. NXP was second with 8% market share, followed by Japanese-traded Renesas Electronics at 6.1% and Texas Instruments at 5.6%.
Several semiconductor stocks that are major suppliers to the auto industry are on IBD's Tech Leaders list. They include Analog Devices, Microchip Technology, ON Semiconductor, STMicroelectronics and Texas Instruments.
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