Excessive inventory of automotive chips

Source: Guoxin.com

    On January 9th, it was reported that Mobileye, a self driving technology company under Intel, recently stated that there is still excess inventory pressure on customer automotive chips, which is still to be digested this quarter. The excess supply of EyeQ advanced driving assistance chips under its umbrella is as high as 6 to 7 million pieces.

    According to Mobileye‘s financial report, last year‘s initial performance was overall better than market expectations, but the 2024 performance guidance surprised Wall Street. It is estimated that the revenue for the first quarter of 2024 will sharply decrease by about 50% compared to the same period last year. The revenue for the fiscal year 2024 is approximately $1.83 billion to $1.96 billion, lower than the previously expected $2.58 billion. The reason is that sufficient customer inventory may reduce orders and affect revenue.

    Due to previous global supply chain production and transportation disruptions, car manufacturers have stockpiled a large number of Mobileye chips to avoid component shortages, which has also affected their order volume for the next quarter.

    Mobileye stated, "We have noticed an excess of customer inventory. As supply chain issues ease, we expect customers to use up the majority of their excess inventory in the first quarter of this year." This means that the number of new chip orders from customers will not reach the same level as last year.

    The highlight of Mobileye‘s 2024 forecast is the SuperVision business. SuperVision is a partial auto drive system, which combines the company‘s two vehicle chips, 11 cameras and a radar sensor. This system eliminates the need for car manufacturers to build a driving assistance platform from scratch and is the most advanced product among similar products in Mobileye‘s hardware product portfolio.

    Mobileye expects to sell 31 to 33 million chips this year, compared to 37 million in 2023. By contrast, SuperVision‘s shipment volume will nearly double from 100000 last year, reaching 175000 to 195000 units. In the high-end market, this is approximately three times the total sales of cars equipped with SuperVision as of the end of 2022.

    The demand for automotive chips has always been stronger than other fields in the electronics industry, as each car adds more electronic features. But this may no longer be enough to support high-level chip shipments, as overall demand for cars slows down and electric vehicles that require more chips show signs of fatigue due to the surge in sales.

    Mobileye is the largest listed company in Israel by market value, specializing in the production of chips for automotive driving assistance systems. Intel acquired Mobileye for $15.3 billion in 2018, spun it off and listed it in October 2022, and still holds approximately 88% of Mobileye‘s equity to this day.