Automotive Chipmakers Squeezed By 'Accordion Effect'
Two semiconductor companies recently warned of disappointing sales due to automakers pausing chip purchases.
Speaking at CES 2024, the CEO of a major semiconductor company said the downturn is a result of disruptions caused by the Covid pandemic.
The Covid emergency caused a disruption to the supply chain, resulting in automakers halting chip purchases. When the expected downturn in car sales did not materialize, the supply chain had difficulty catching up.
Supply caught up with demand last year, leading to excess inventory at automakers. The CEO believes this is the last correction cycle as a result of the Covid disruption.
The CEO’s company is the majority owner of another company that develops sensor systems for automotive safety and autonomous vehicles.
At CES 2024, numerous companies in the car sensor technology sector showcased their products. These include various types of vehicle sensors such as lidar, radar, thermal, and camera vision.
One company announced that it has secured production design wins from a major automaker for its automated driving systems, which will be used in several vehicle models starting in 2026.
Another company announced a contract to supply lidar for an autonomous commercial vehicle program.
At CES 2024, a semiconductor company also announced a new system-on-chip for software-defined vehicles and a partnership with a Chinese electric-car maker.
In a recent report, the same semiconductor company mentioned a decline in orders from customers due to a weakening economic climate.