Xiaomi SU7 explodes the market, will domestic chips usher in new growth?

Earlier, Lei Jun announced on his personal Weibo that the Xiaomi Auto Factory will start double-shift production in June, delivering at least 10,000 vehicles that month; at least 100,000 units will be delivered this year, and the annual delivery volume will reach 120,000 units. The latest data from the China Association of Automobile Manufacturers shows that in 2023, China's new energy vehicle production and sales will exceed 9 million, with a market share of more than 30%, ranking first in the world for 9 consecutive years. Against the background of the continuous increase in the market share and penetration rate of new energy vehicles , automotive-grade chips , as the core key components of the automotive industry , determine the direction of China's future automotive market.

With the resonance of "policy support" and "enterprise demand", the upstream electronic components market related to new energy vehicles will also gain new development opportunities. After the release of Xiaomi su7, combined with the 2024 Q2 CIQ (Commodity Intelligence Quarterly) commodity dynamics business report, the three major component categories that may benefit from supply, market dynamics and prices are analyzed for reference by electronic engineers and procurement professionals on the electronic manufacturing side.

Electric vehicle market: an important driver of connector demand

In addition to the demand for connectors in the automotive market , the demand for connectors in AI data centers is expected to strengthen. In the first half of 2024, other 5G , cloud and wireless network hyperscale customers are still working hard to consume inventory, and demand is expected to improve in the second half of the year. With the widespread application of 5G technology , the demand for connectors in the mobile device field is expected to recover. The demand in the medical market is generally stable.

According to CIQ reports, the current capacity utilization rate of connector factories is 70%-80%. The delivery cycle remains stable and is not affected by the shortage of key raw materials such as metals and resins. The supply side remains stable and there is no obvious sign of suppliers withdrawing from the market.

In terms of price, most suppliers are open to bargaining in order to win new business or expand existing business share. The prices of low-profit products and old models such as plugs and sockets, D-Sub connectors, non-high-speed I/O (USD2.0) and labor-intensive products such as RJ45 MagJacks connectors are still rising to varying degrees.

In terms of enterprises, Amphenol has completed four acquisitions of TPC, Airmar, LID and PCTEL. Last month, the well-known local connector manufacturer Ricoh said that its overseas factory business is localized production and sales, serving customers nearby and is not affected by tariff policies.

Severe shortage of MCU products: no signs of relief in the short term

The automotive sector is the world's largest MCU market, accounting for about 33%. According to CIQ data, the most important and technologically advanced automotive chip MCU and crystal products are still in severe shortage, and there is no sign of relief in the short term.

In terms of price, manufacturers hope to maintain the current profit margin level, so prices are expected to remain stable by the end of the second quarter of 2024. Although the MCU category is generally in short supply, the delivery cycle of mainstream MCUs (STM32F, L, U, MP series) of STMicroelectronics is stable at 14-16 weeks; the delivery cycle of most MCU/ MPU products of NXP is stable at 13-26 weeks, including 13 weeks for LPC, 15 weeks for RT, and 16-26 weeks for I.MX6 and 7.

On the corporate side, on March 18, Xinwang Microelectronics officially announced that the cumulative delivery of its KungFu core automotive-grade MCU exceeded 100 million. By 2024, Xinwang Microelectronics will have more than 60 automotive-grade MCU products, which can be used in chassis systems, power systems , cockpit systems and other scenarios, covering more than 95% of body control application needs. As automobiles have become the fastest growing field in semiconductor demand in recent years, "getting on board" has also become a new growth driver pursued by domestic chip manufacturers. According to Gasgoo statistics, there are currently 23 domestic chip companies that have deployed automotive-grade MCUs.

According to a report released by market research organization Yole, the global MCU market size will be approximately US$22.9 billion in 2023, and is expected to reach US$32 billion by 2028 at a compound annual growth rate of 5.3%. In particular, as the leader and most important promoter of new energy vehicles in the world, China has a huge demand for automotive-grade MCU chips, but the self-sufficiency rate is less than 5%, so there is huge room for domestic substitution and urgent demand.

Optoelectronic device suppliers’ capacity utilization rate increases: New automotive-grade optoelectronic products are expected to be launched

According to CIQ statistics, the delivery cycle of large companies in the optoelectronics industry remains stable; however, as the shipment volume of automotive-grade products picks up in the next few quarters, the delivery cycle is expected to be slightly extended. The delivery cycle of Asian manufacturers is still 8-16 weeks, while that of manufacturers outside Asia is 15-28 weeks. Top optoelectronics suppliers are focusing on the automotive, electric vehicle , medical and industrial markets. New automotive-grade optoelectronic products are expected to be launched in the next few quarters.

As electric vehicle prices fall, electric vehicle manufacturers are continuing to seek cooperation with Asian suppliers to reduce costs. Small companies are stepping up their investment efforts in the hope of obtaining automotive-grade product supplier qualifications.

In terms of price, prices of all types of products remain stable in the first half of 2024. As demand is still unclear and raw material prices fluctuate, most suppliers are working hard to maintain current price levels in order to maintain market share. In order to win new business opportunities, suppliers are willing to provide a certain amount of bargaining space, such as new projects still have the opportunity to reduce prices. Demand in the automotive and medical industries has grown steadily, while demand in the consumer market has continued to be sluggish. Efforts are still being made to destock, and it is expected that inventory will be cleared in the first half of 2024.