Original auto chip inventories have risen for the first time in 9 months

As of the end of September, the inventories of Renesas Electronics, NXP, Infineon, STMicroelectronics, and Texas Instruments have all increased, which is the first increase since this year, indicating that the automotive industry's chip supply is improving.

According to Nikkei News, although demand is still strong and the outlook for the next few months is still uncertain, the rebound in inventories shows that supply constraints that forced automakers to stop production throughout the past summer are alleviating due in part to the increase in production by chip makers.

Chip manufacturers’ sales have surged since the fourth quarter of 2020, but inventory growth has lagged. Due to the difficulty in production to keep up with the needs of automakers, inventory levels deteriorated in the following quarters.

The situation began to improve in the third quarter of this year. The total inventory of these five chip manufacturers increased by 0.7% over the same period last year, the first increase in three quarters. Four of these companies have increased their inventories.

Both chipmakers and their customers say that the third quarter of 2021 marks a turning point . TSMC CEO Wei Zhejia said in July that starting from this quarter, the shortage of automotive chips is expected to be greatly eased.

Continental AG is one of the world's largest suppliers of auto parts. The company said on its recent earnings conference call, "We believe that the period of the most severe semiconductor shortage has passed."

But the risk of further shortages has not completely disappeared. As automakers plan to make up for the production cuts in the third quarter, demand for automotive chips remains high-end. Takeshi Kataoka, general manager of Renesas Automotive Solutions Business, said that automotive companies’ inventories are at historical lows.

It will take more time for chip inventory throughout the supply chain to recover. NXP CFO Bill Betz said on the company's recent earnings conference call: "We still believe that we need multiple quarters to rebuild existing inventory and lead inventory to our long-term target level."

According to Akira Minamikawa, a semiconductor industry analyst at research company Omdia, the shortage of automotive chips will not end until the spring of 2022.

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