"Thank You Electric Cars"... High Demand for Automotive Semiconductors Despite Semiconductor Winter

Marvel Technology Forecasts 30% Increase in Q1 Automotive Semiconductor Sales
1,200 Semiconductors per Vehicle... Twice the Number in 2010
Tesla Aims to Sell 20 Million Vehicles by 2030, Up from 1.3 Million Last Year

Despite concerns over a global economic slowdown causing the semiconductor industry to go through a harsh winter, the automotive semiconductor market has continued to thrive in the first quarter of this year, following a strong performance last year.

According to the Wall Street Journal (WSJ) on the 5th (local time), Matthew Murphy, CEO of the U.S. semiconductor company Marvell Technology, stated on the 2nd that despite an overall decline in semiconductor sales in the first quarter of this year, automotive semiconductor sales are expected to increase by more than 30%. CEO Murphy predicted that automotive semiconductor sales could grow from the current $100 million to $500 million within the next few years.

The automotive semiconductor market, which showed growth despite last year's interest rate hikes and economic contraction, continues to maintain a positive outlook in the first quarter of this year. Dutch company NXP forecasted a 15% increase in automotive semiconductor sales in the first quarter of this year, following a 25% growth last year. Japanese company Renesas expects the growth rate of its automotive semiconductor business in the first quarter to surpass last year's level of 40%. Analog Devices, which accounts for a quarter of the overall automotive semiconductor market, grew 29% in this sector last year alone.

This contrasts with semiconductor manufacturers for consumer electronics such as mobile phones and TVs, who are struggling with performance setbacks. Intel, a leader in PC semiconductors, recorded its worst quarterly results in 50 years with $14 billion in revenue and a $700 million operating loss in the fourth quarter of last year.

The boom in automotive semiconductors is attributed to the growth of the electric vehicle market. WSJ explained, "It is important to note that the automotive semiconductor market has recovered despite U.S. new car sales falling to their lowest level in 10 years last year." The number of semiconductors installed per vehicle was 1,200 in 2021, double the amount in 2010.

As the transition to electric vehicles accelerates in the automotive market, demand for automotive semiconductors is expected to continue rising. Tesla, the global leader in electric vehicle sales last year, announced a goal to expand electric vehicle sales from 1.3 million units in 2022 to 20 million units by 2030. Kan Budhiraj, Tesla’s Vice President of Global Supply Chain Management, stated, "We consume semiconductors equivalent to 700,000 12-inch wafers," adding, "To meet the production target of 20 million vehicles, we will need 8 million wafers going forward."

The supply chain instability for automotive semiconductors, which began at the end of 2020, has also eased. According to global investment firm Susquehanna International Group, semiconductor lead times, including those for automotive semiconductors, shortened by 4 days compared to the previous month in January. NXP also explained that as automotive semiconductor production meets demand, the supply shortage issue is being alleviated.

Kurt Sievers, CEO of NXP, said, "With the transition from internal combustion engine vehicles to electric vehicles, a decline in vehicle sales no longer means a slowdown in demand for automotive semiconductors," adding, "The shift to electric vehicles is sufficient to offset the fragile economy and the supply chain issues that have limited automobile production."