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Auto Suppliers Manage Surplus Semiconductors Amidst Industry Shift

by Zyrene D.
01/10/2024
in Importing & Exporting, Industry, Industry, Manufacturing, Supply Chain

The semiconductor shortage that marked the pandemic era had far-reaching effects on various sectors, most notably the automotive industry, where production faced setbacks due to chip supply constraints.

A recent report from Mobileye sheds light on how the automotive sector responded to the chip scarcity by accumulating excess inventory as a precaution against potential prolonged shortages. Now, as vehicle sales experience a decline, Mobileye’s customers are gradually depleting their surplus stock.

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The company stated, “As supply chain concerns have eased, we expect that our customers will utilize the majority of this excess inventory in the first quarter of the year.”

During this inventory drawdown period, Mobileye anticipates a decrease in chip sales, projecting between 4 million to 6 million fewer chips sold and a 50% reduction in revenue for Q1 compared to the previous year.

Mobileye did not disclose specific details about which customers held how much excess inventory. Its primary tier 1 customers, including auto suppliers ZF, Valeo, and Aptiv, represent 38%, 18%, and 15% of Mobileye’s revenue, respectively, as per its most recent annual report. These tier 1 customers further supply automakers, constituting a substantial portion of Mobileye’s business.

Similar supply and demand realignment challenges have been faced by other industries and chipmakers. For instance, Taiwan Semiconductor Manufacturing Co., a key chip supplier for companies like Apple, Qualcomm, and Sony, encountered revenue declines in 2023 as its customers managed their own inventory levels. However, recent reports indicate early signs of demand stabilization as of October.

Breaking supply chain news is just a click away at The Supply Chain Report. Enhance your knowledge of international trade at ADAMftd.com with free tools.

#SemiconductorShortage #ChipSupplyChain #AutomotiveIndustry #Mobileye #InventoryManagement #SupplyChainChallenges #AutoSuppliers #TaiwanSemiconductor #RevenueDecline #DemandStabilization #VehicleSales

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