AutoBeta(AutoBeta.net)01/20 Report--

Due to the superimposed COVID-19 epidemic in the cold winter of the automobile market, the domestic automobile market declined by 6% in 2020 compared with the same period last year. Although there are obvious signs of market recovery, some domestic car companies have stopped production due to the global "lack of core" recently. Recently, it has been widely rumored on the Internet that Europe and the United States will completely stop supplying Chinese car chips.

According to media reports, due to global semiconductor production capacity restrictions and superimposed pressure from the US government, the governments of Europe and the United States are drafting a plan report that the United States will join forces with European semiconductor manufacturers to stop supplying chips to Chinese car manufacturers. If the news is true, it means that when some of the chips are digested, China's auto market will be mired in a large-scale shutdown.

It is understood that at present, the automotive chip market is basically monopolized by European and American enterprises. According to data, the top 10 suppliers of semiconductor assemblies control 80% of the global market share of automotive semiconductors, including NXP, Renesas, Infineon, STMicroelectronics, Bosch, Texas Instruments, on Semiconductor, Rom Semiconductor, Toshiba and Yadno, all from overseas companies. The global semiconductor manufacturer of TOP40 controls more than 95 per cent of the market share of automotive semiconductors.

China's own-brand car companies account for 98% of the demand for on-board semiconductors. And carmakers across China have an annual production capacity of nearly 60 million vehicles, accounting for more than 60 per cent of global car production, and almost all major car chips are imported entirely. According to the current demand for automotive chip MCU, the demand for MCU chips for fuel vehicles accounts for about 23%, but with the gradual popularity of electric vehicles, electric vehicles will have higher requirements for chips.

At present, Tesla is the only car company that has really realized its own research and development of chips. Although other car companies have such a voice, they are not particularly sure.

If the supply is really cut off, it may lead to the suspension of production in most parts of China. Last year, some place has already tried to stop production because of the epidemic. If it returns to the normal level, it will take at least nine months or more.

At the end of last year, affected by the supply of spare parts, a number of domestic car companies faced production cuts or suspension of production, among which the production lines of some models of FAW-Volkswagen and SAIC-Volkswagen, two joint ventures of Volkswagen, have been suspended. Although Volkswagen says the impact of the suspension of production due to chips is small, recently, Stephan Wollenstein, China CEO of Volkswagen Group, said that it lost tens of thousands of vehicles in China in December as global chip supply shortages affected its production.

Volkswagen is currently the largest foreign carmaker in the Chinese market. Earlier, some carmakers, including Ford, Toyota and Nissan, said they were forced to cut domestic production this month because of chip shortages.

In this regard, if the global market cuts off the supply to the Chinese market, it will also force the joint ventures of multinational automakers in China to adjust, either withdraw from the Chinese market completely or continue to split the Chinese business from the global business. However, it may not be easy to completely cut off the supply of Chinese car chips, after all, the Chinese car market will have a huge impact on the global car market, given that China is the world's largest single market.

The most likely thing is to further push up global chip prices, allowing overseas car companies to take advantage of the opportunity to "make a lot of money". It is understood that at present, the export price of foreign MCU chips has generally risen by 10% to 30%, and some have even doubled. For example, for every 10% increase in chip prices, the amount of money China spends on imported car chips will increase by about 10 billion yuan a year.

According to a report by Bloomberg, the cost of electronic components for a fuel-fueled car has gone up to 40%. If it is an electric car, the cost price will go to 75%. Therefore, with the continuous rise of chips, the possibility for automobile companies to cooperate with domestic automotive chip enterprises will also expand, but the current domestic software standards are still in the obsolete product standards of the 1990-2000s.

Earlier, the China Automobile Association also said that the shortage of chips reported by the media is real, but it is not as serious as rumors, and there is no need for the market to panic excessively. Due to the shortage of chips, the production of some enterprises was affected to a certain extent in the first quarter of this year, but the impact of the chip shortage for the whole of this year will not be too great. However, a rise in chip prices may be inevitable.

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