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The “big reshuffle” in the automotive industry takes the core as the core, and the sales of components welcomes transformation opportunities

The sudden epidemic and the macro changes in various backgrounds have directly promoted the transformation of the automobile industry. The sudden interruption of chip supply is mainly to promote the supply chain to “change from line to network”. In the past, members of the chip industry were introduced into the established path consisting of car companies-T1-T2 to a longer supply chain. In order to solve the problem of chip supply, car companies can no longer follow the original supply chain path, but directly contact each node such as the original factory, the foundry factory, and even the spot market. It can be said that the core of this round of changes in the automotive industry chain is the chip.

The reform of the automotive supply chain must adapt to chips

When the chip shortage was in full swing last year, Wei Zhejia, president of TSMC, the world’s largest wafer foundry, revealed that he had received calls from many automakers seeking help for production capacity support. Before the chip shortage wave began, he had never seen a car company contact the foundry. What’s more, Wei Zhejia urgently asked for support of 25 wafers. Wei Zhejia was not polite to this, and directly responded, “No wonder you can’t get support.”

This incident has the effect of adjusting the atmosphere in the tense atmosphere of the continuous shortage of chips, but it also reflects the real changes in the automotive industry chain: OEMs are forced to change the previous inherent supply chain model. Contact the chip producer represented by the circle foundry.

Although the behavior of directly seeking help for “25 wafers” reflects the current situation of individual car companies’ lack of understanding of the chip industry, there will only be more opportunities for car companies to deal with chip companies in the future. The repair and reconstruction of the chip supply chain of car companies also requires the assistance of chip companies, and even this process requires car companies to adopt a model that adapts to or even accommodates the chip industry. For example, how long car companies have to make safety stocks for various chips, obviously, it must be formulated according to the planned delivery date given by the chip company.

New energy breakthrough, connecting chips and cars

With long-term development and precipitation, the profit margin of the automobile industry has been as low as 5%-10%. To make matters worse, the shortage of chips and declining consumption caused by the epidemic are squeezing car companies in both directions from manufacturing and sales. The concentrated outbreak of this group of pressure is reflected in the car price war that has recently been on the hot search. From this, we can see that whether it is a second-tier joint venture factory such as Dongfeng Citroen or a first-tier luxury brand such as “BBA”, they all play the banner of selling at lower prices, and strive to survive in the sluggish market conditions.

But the price war goes far beyond the internal competition of fuel vehicle brands. It seems that the real opponent is Tesla, which has deterred both fuel vehicles and other new energy brands. Since its inception, Tesla has always acted as a “price butcher”. After the establishment of the factory in Shanghai, its cost can be further reduced, driving domestic sales with low prices, thereby generating a strong scale effect. At present, the profit margin of Tesla’s Shanghai factory has reached 25%, which is a level that no other car company can match. The “catfish effect” stirred up by Tesla will intensify the competition in the domestic new energy market.

A few days ago, Tesla revealed at the 2023 Investor Day that its goal is to achieve an annual production of 20 million electric vehicles by 2030, corresponding to the need for 8 million wafers per year (currently, Tesla’s annual consumption is about 700,000). . Combining the demand of other car companies, and then calculating the exponentially increased chip usage of a single new energy vehicle compared to fuel vehicles, it is obvious how much chip demand this new wave can bring. For chip companies, the demand for consumer electronics is sluggish on the one hand, and the demand for automobiles is booming on the other. It is self-evident which one to focus on.

The expansion of the car core market drives the transformation of component sales

Obviously, the breakthrough of new energy vehicles and automotive electronics to the traditional automotive industry has already begun. After a wave of chip shortages, major chip manufacturers have launched plans to target the future market, expanding the production capacity of MCU, power, analog, and even new-generation compound semiconductors such as SiC and GaN.

With such a large-scale expansion of production, the supply problem of car cores will inevitably be resolved. In fact, the current car core supply situation has been greatly improved compared to before, and Infineon pointed out that the shortage of automotive MCUs will ease in the second half of the year. For the IC distribution industry, it is imperative for upstream original factories to transform into car cores, and downstream to follow closely behind. To do a good job in the car core business in the post-short core era, it is necessary to develop a new business model. Relying on the terminal and improving the level of professional services are the general direction.

At the supply level, car companies and car end customers have witnessed the difficulty of “hard to find a chip” at the beginning, and they obviously don’t want to repeat the past dilemma in the future. Therefore, ensuring supply, and on this basis, satisfying customers’ needs for flexible delivery and reasonable prices are the top priorities for distributors. Whether a distributor can provide competitive goods, delivery time and price is inseparable from the distributor’s channel resources.

On top of this, car cores often involve a high degree of professionalism and complexity, and it is also important to provide relevant technical support, material selection and other services. This requires distributors to expand their professional knowledge and introduce professional talents in real time. Car cores are a key opportunity for component sales to shift from earning price differences to providing services. The core point of future competition will be the service capabilities of distributors, or the ability to help customers reduce the cost of the entire industry chain. Just do the job right and the margins will obviously be bigger than before.

In general, this round of major reshuffle in the auto industry has highlighted the core important attributes of chips. It has become a trend for chip companies to deeply participate in the automotive supply chain. The opportunities contained in this, including the transformation of the chip sales model, will soon inject new momentum into the distribution industry. Especially in the context of the decline of consumer electronics, the opportunity for car cores is even more precious.