The shortage of automotive chips caused by the imbalance between supply and demand is expected to gradually return to normal in the third quarter of 2021.

Guotai Junan believes that the imbalance between supply and demand has led to a shortage of automotive chips, and Q3 is expected to gradually return to normal in 2021. The recovery of the global automotive industry is better than expected, and the short-term pressure on chip supply has brought about a shortage of automotive chips, which will have an impact on the global production and sales of H1 in 2021, among which Q2 has a greater impact.

However, under the price increase and the giant game, the supply side will gradually improve, it is expected that the short-term problems of automotive chips will be gradually eliminated in Q3, and the global automotive industry will continue to recover in H2. Car manufacturers and suppliers with the ability to supply automotive chips will benefit in the short term, recommend the target BYD and benefit from the target Starr semiconductors.

The growing automotive chip industry, monopolized by international giants, depends differently on TSMC. Automotive chips can be divided into control categories (MCU and AI chips), power categories, sensors and others. The value of semiconductors from fuel cars to BEV, bikes will increase from US $457 to US $834. The market is basically monopolized by international giants. The manufacturing process of MCU is generally below 40nm, and different MCU comes from different suppliers, usually in contract manufacturing mode. TSMC accounts for about 70% of the market share of all automotive MCU; power manufacturing process is above 90nm, and the production mode is mainly IDM (designed and produced by manufacturers themselves), and some products are gradually replaced by domestic ones.

The short-term imbalance between supply and demand brings about the shortage of automotive chips, and MCU products are greatly affected. On the demand side, after the outbreak of the epidemic in the first quarter of 2020, the vehicle giant reduced the purchase quantity of chips, while the higher-than-expected global car sales in the fourth and third quarters of 2020 brought the chip demand side to exceed expectations. The supply-end automotive chip is mainly a mature process, the supply elasticity of the mature process itself is small, the proportion of automobile demand in the chip is relatively low, and the bargaining power is weak. When there is strong demand in other industries, it is difficult for chip suppliers to quickly switch production capacity like automotive chips, superimposed Japan, the United States and other production capacity is affected by natural events, supply is more difficult to quickly increase production. On the other hand, the versatility of MCU is weak, and it is mainly based on the contract production mode of TSMC, which is relatively affected.

In the short term, it will have a certain impact on the production and sales of the automobile industry, and it is expected that Q3 will gradually return to normal in 2021. IHS expects the short-term impact of the chip 2021Q1 global automotive industry will reduce production by 1 million vehicles, we judge that with the continuous reduction of chip inventory Q2 will be more affected. However, due to multiple factors such as higher prices and direct docking of chip enterprises by the mainframe factory, the supply of automotive chips will continue to increase and is expected to gradually return to normal in Q3.

The impact of the chip will also make the whole car factory re-examine the procurement model and the layout of countries in the chip field.