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Automotive Semiconductor Companies Are Benefiting From Chip Shortage


  • Despite a shortage, revenues of IC companies increased in 2H 2020 as average selling prices rose with decreasing supply.
  • Total revenues of the top Automotive IC manufacturers increased an average of 9.7% YoY in Q4 2020 and 13.7% H2 2020/H1 2020.
  • Top chip companies as a percentage of revenues include Renesas (51%), NXP (47%), Infineon (46%), ON Semiconductor (32%), and STMicroelectronics (30%).
  • This idea was discussed in more depth with members of my private investing community, Semiconductor Deep Dive. Get started today »

In my February 15, 2021 Seeking Alpha article entitled “Semiconductor Companies Best Positioned For Automotive Recovery,” I discussed the shortage of semiconductor chips, end users experiencing shortages, and semiconductor companies with the largest exposure to automotive applications.

In this follow-up of that article, I want to show that despite a shortage of chips, ASPs and revenues are rising at the automotive chip companies. This represents a buying opportunity for stocks with my estimate of the greatest exposure to the automotive industry. I present the top 12 companies and their QoQ revenue change.

It is also important to note that the chip shortage is not restricted to just automotive companies, but they have been most affected, resulting in some plant closures.

IC shipments (excluding memory) decreased from 310,446,000,000 in 2018 to 290,189,000,000 units in 2019 (-7.5%) and increased to 306,407,000,000 in 2020 (+5.7%), despite the (1) slowdown from Covid-19 and (2) chip shortage.

Chart 1 shows that as unit shipments dropped, MoM ASPs change increased significantly due to the shortage of ICs.

Chart 1

The automotive industry is not alone facing the chip shortage, but they have been vocal in announcing automobile plant closures because of the shortage. The ever increasing semiconductor content of an automobile is responsible. In 2010, semiconductor content amounted to $294.5 per vehicle. That number increased to $497.3 per vehicle in 2020.

In automotive applications, chips are used for applications including infotainment, cabin/control electronics, safety electronics (e.g. airbags, ABS, LIDAR, back-up and circumferential camera systems, power train/engine management electronics, security electronics. active suspension, and LED lighting for automotive head/tail lights, according to The Information Network’s report entitled “Power Semiconductors: Markets, Materials and Technologies.”

This shortage in ICs and increase in ASPs has been a positive for semiconductor companies with a focus on Automotive ICs.

Table 1 shows

This free article presents my analysis of this semiconductor sector. A more detailed analysis is available on my Marketplace newsletter site Semiconductor Deep Dive. You can learn more about it here and start a risk free 2 week trial now.

This article was written by

Robert Castellano profile picture

Robert Castellano has 38 years of experience analyzing the semiconductor markets.

He runs the investing group Semiconductor Deep Dive. It provides investors with recommendations for stocks with the greatest near- and medium-term growth potential. Members receive detailed analysis and research tools to make investments in semiconductor and tech stocks. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (10)

bubbleking profile picture
Nice article. I've been watching UMC's stock price and it seems to never move. Not sure why.
Nice update into the auto chip debacle.
Long STM, NXPI and I'll add QCOM!
Seems like there would be more semiconductor of $500/auto based on how auto prices seem to rise.
Chip shortages suggest additional investment in equipment purchases to increase production and meet demand. Sounds like a typical economic cycle.
Robert Castellano profile picture
@Jeffrey888 I discussed chip shipments and the cycles in my Semiconductor Deep Dive Marketplace newsletter, and while there is some cyclical nature in this cycle, it is not typical of past cycles.
My purpose in this article is to show investors that although there is a chip shortage, the chip companies are making money and the automotive segments in their business are growing twice as fast.
@Robert Castellano from your article, it appears that the auto chip suppliers are stuck at 200nm fab to keep margin high. On the other hand, for chip equipment suppliers, the high margin sales are in the latest generation of 300mm tech.
Robert Castellano profile picture
@VictorN That's correct. Many of the chips used in automotive applications are either very large line widths or on substrates (MEMs, SiC) that aren't on 300mm substrates. So the chip companies are not "stuck" with the 200mm, its the nature of the business.
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