On December 4, a significant groundbreaking ceremony was held in Tampines, Singapore, marking the establishment of a joint venture between World Advanced and NXP, known as VSMC, set to commence operations in September 2024. Andy Micallef, the Executive Vice President of NXP, shared with attendees that this new venture aims to develop a chip supply chain in China for its clientsThis is a crucial step, especially given the growing demand for semiconductor technology in various sectors, including automotive and telecommunications.

According to Micallef, China boasts the largest electric vehicle and telecommunications markets globallyNXP is eager to devise strategies that will enable it to cater to an international clientele seeking manufacturing capabilities within ChinaWhile NXP has an advanced packaging and testing plant in Tianjin, it has yet to establish front-end manufacturing facilities in the country

Micallef expressed confidence, stating, "We will collaborate with our partners to build a robust Chinese supply chainFor those clients seeking services in this arena, we have the resources and capabilities to deliver." This proactive approach reflects NXP's commitment to expanding its footprint in China, aligning with the country’s burgeoning technological landscape.

Recent performance reports from major analog chip manufacturers such as Infineon, NXP, STMicroelectronics, Texas Instruments, Renesas Electronics, ON Semiconductor, Bosch, and ADI indicate that the overall health of the automotive chip market has been strugglingThe sluggish sales of electric vehicles have impacted these companies, keeping their performances at a plateauHowever, there are signs of a turnaround, with some leading firms reporting a mild recovery in their results over the last two quarters, suggesting that the depletion of automotive chip inventories is making progress

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The outlook for the electric vehicle sector remains robust, exhibiting a potential for growth and expansion as manufacturers navigate through current challenges.

NXP

In NXP's third-quarter financials, the automotive chip division reported revenues of $1.829 billion, marking a 3% decrease year-over-year yet a 6% increase from the previous quarterKurt Sievers, NXP's CEO, conveyed that the cautious behavior of customers has led to soft demand, which may extend to clients in the Western automotive marketThis comes amidst profit warnings from automakers and first-tier suppliers striving to manage inventoryNonetheless, Sievers highlighted that NXP appears to have successfully navigated the cyclical downturn in its operational performance, expecting a return to consistent growth moving forward.

When reflecting on the growth prospects for electric vehicles in China, Ron Martino, NXP's Executive Vice President and Chief Sales Officer, emphasized that electric vehicles continue to represent the fastest-growing segment in both the Chinese and global markets

NXP intends to maintain investments in innovative technologies applicable to both traditional combustion engines and a variety of electric vehicle platforms.

NXP expresses strong confidence in the Chinese marketAccording to Sun Hang, Senior Market Director for Industry and IoT in Greater China, 2024 will mark the 38th year since NXP entered the Chinese marketThe company has been expanding its operations in China, and in 2023, NXP established its first global artificial intelligence application innovation center in TianjinFurthermore, the partnership with the Tianjin Economic-Technological Development Area to renew the contract for NXP Qiangxin (Tianjin) Integrated Circuit Design Co., Ltdfor ten years demonstrates NXP's commitment to deepening its engagement in China.

Infineon

Infineon's third-quarter results showed an overall decline in revenue; however, the automotive sector demonstrated remarkable resilience

The company reported revenue of €3.702 billion, representing a 9% drop year-on-year but a 2% increase compared to the prior quarterTheir gross margin improved from 38.6% in the previous quarter to 40.2% this quarterMore notably, the automotive division reported revenues of €2.112 billion, indicating slight growth from the previous quarterInfineon's silicon carbide business also continued its impressive trajectory, anticipating a revenue increase of approximately 20% for the 2024 fiscal year, aiming for around €600 million (€4.68 billion RMB).

For the 2024 financial year, Infineon expects total revenues to amount to €14.955 billion, down 8% year-on-yearThis reduced forecast primarily stems from the sluggish global economy and underwhelming demand in industrial applicationsHowever, the Automotive Electronics Division (ATV) was the only sector to witness growth, particularly in electric vehicles (xEV) and autonomous driving (ADAS) markets

Jochen Hanebeck, Infineon’s CEO, noted that the automotive market’s growth can largely be attributed to an increase in their market share in the MCU segment and their success in China's automotive sector, which has seen a remarkable year-on-year revenue growth.

STMicroelectronics (ST)

STMicroelectronics reported third-quarter revenues of $3.25 billion, a significant year-on-year decline of 26.6%, with a gross margin of 37.8%. The company forecasts revenues for the fourth quarter to be around $3.32 billion, reflecting a 2.2% quarterly increase but a considerable year-on-year drop of 22.4%. This downward projection is attributed to anticipated revenue declines in automotive and industrial sectors, although an increase in personal electronics revenue partially counters these losses

The inventory level at ST is $2.88 billion, remaining steady compared to last year, but with the inventory turnover days extending to 130 days, indicating a slower pace of inventory depletion.

The automotive sector is crucial to ST's revenue, yet this quarter also saw an 18% decline in year-on-year performance in this areaCEO Chery acknowledged that customers further cut orders in the third quarter due to inventory constraints and lack of demand, notably in electric vehicle segments, where consumer interest has slowed and shifted towards hybrid models, particularly in the North American and European marketsDespite the anticipated short-term slowdown, the long-term trends in electric vehicles and automotive digitization indicate a gradual recovery likely to begin in the second half of 2025.

In response to the trend of electrification in the automotive sector, ST is actively advancing its fourth-generation silicon carbide (SiC) MOSFET technology, aimed at enhancing electric vehicles' efficiency, power density, and durability

The company is already securing numerous contracts for traction inverters and on-board chargers, showcasing its commitment to leading the market in next-generation electric vehicle components.

Texas Instruments

Texas Instruments (TI) reported a revenue of $4.151 billion in the third quarter, reflecting an 8.4% year-on-year decline but an 8.6% increase compared to the previous quarterThe net profit was $1.362 billion, marking a 20.3% decrease year-over-year despite a quarterly rebound of 20.9%. The inventory turnover days increased slightly to 231 daysTI disclosed that performance in the industrial sector saw a minor decline while automotive segment revenues spiked, primarily attributed to strong demand in the Chinese market.

CEO Haviv Ilan indicated that the company exceeded profit expectations for the third quarter due to rebounds from the analog chip orders and a bolstered demand from the Chinese automotive market

Reports indicate that the increased sales of TI semiconductor products are largely driven by rising orders from smartphone and personal computer suppliersAutomotive revenue showed a notable quarter-over-quarter increaseIlan attributes the “strong momentum in China's electric vehicle market” as a key reason for this growthHowever, he cautioned that the broader automotive market remains weak.

Renesas

Renesas Electronic Corporation recently published its third-quarter 2024 financial report, revealing a 9% year-on-year revenue drop and a 3.8% sequential decreaseWhile the automotive sector continues to grow, the industrial/infrastructure/IoT segments are underperforming, negatively affecting overall performanceAutomotive sales totaled ¥185.5 billion, which marks a 10.3% increase year-on-year but a 2.6% decline quarter-on-quarter.

In terms of inventory levels, Renesas acknowledged that channel inventories have risen since the previous quarter

While industrial/infrastructure/IoT applications saw reductions, automotive applications increasedTheir goal for the fourth quarter is to lower delivery volumes in the automotive sales channel to expedite inventory utilizationThe industrial/infrastructure/IoT inventory is expected to stabilize.

ON Semiconductor

ON Semiconductor's third-quarter results showed a revenue of $1.76 billion, which is down from the previous year, particularly within the automotive terminal market where revenues fell by 17.8%. CEO Hassane El-Khoury remarked that the demand environment remains sluggish, with ongoing inventory digest ongoing and terminal demand decliningHe characterizes the overall automotive market as still in a weak position, particularly as electric vehicle sales are slowing.

Bosch

Bosch exhibited steady growth from 2021 to 2023; however, 2024 has ushered in a downward trend

Revenue reached €78.7 billion in 2021, signaling a 10.1% increase, with profits soaring to €3.2 billion, reflecting a more than 50% increaseIn 2022, Bosch’s revenue rose to €88.2 billion, while profits and operating margin figures also showed significant growthHowever, projections for 2024 indicate a profit margin downturn to 4% compared to 2023's margin of 5%, amid global economic challenges and a slow start in the European electric vehicle marketCEO Stefan Hartung has reported a shortfall in orders and that Bosch is confronting the reality of a less than ideal performanceBosch has embarked on measures such as layoffs and acquisitions to mitigate losses, including a large-scale acquisition plan of $8 billion to acquire the HVAC business of Johnson Controls.

ADI

Analog Devices, Inc

(ADI) reported revenues of $2.312 billion for its third quarter, down by 25%. The company's gross profit was $1.311 billion with a gross margin of 56.7%, marking a 7.1% year-over-year declineIn terms of revenue distribution, automotive sales accounted for 29% at $670 million, with a year-on-year decline of 8%. The industrial sector generated $1.06 billion, contributing to 46% of total revenue but with a year-on-year decrease of 37%.

CFO Richard Puccio noted a slight drop in overall order volume in the third quarter, but a solid recovery is expected in the fourth quarter, particularly within the automotive segmentWhile macroeconomic uncertainties continue to pose challenges to recovery speed, there’s cautious optimism for robust growth in fiscal year 2025.

Microchip Technology

Microchip Technology reported that its third-quarter performance fell below expectations amid ongoing economic uncertainty, leading to sluggish demand from automotive customers