The automotive chip sector is currently experiencing a new round of turbulence.
This week, global automotive chip giant NXP disclosed its fourth-quarter financial report, which fell short of capital market expectations, showing a 9% year-on-year decline in revenue and a 5% drop for the entire year, indicating that the sluggish demand in the industrial and automotive markets continues.
Public information shows that more than half of the company’s revenue comes from the automotive industry; since last year, other markets outside China have been continuously affected by the declining demand for electric vehicles, suppressing the growth of chip demand, while the issue of oversupply remains unresolved.
Annual data shows that NXP’s automotive business sales amounted to $7.15 billion, a 4% decrease compared to the same period last year. Additionally, Texas Instruments and STMicroelectronics, two automotive chip companies, also reported quarterly performance expectations last month that were below capital market expectations; among them, STMicroelectronics is considering laying off 3,000 employees to further cut costs.
Texas Instruments’ financial data indicates that its revenue for the fourth quarter of last year was $4 billion, a 2% year-on-year decrease and a 3% quarter-on-quarter decrease. Net profit was $1.2 billion, a 12% year-on-year decrease and a 12% quarter-on-quarter decrease. Revenue and profit are expected to decline year-on-year for four consecutive quarters in 2024, with annual revenue expected to decrease by 12%; the annual net profit is about $4.8 billion, down 26% from 2023.
Meanwhile, industry leader Infineon is also affected in the automotive and industrial markets, stating that “2025 will be a tough year.” Data shows that the company’s revenue for the first quarter of fiscal year 2025 was €3.424 billion, a 13% quarter-on-quarter decrease and an 8% year-on-year decrease. The automotive business saw an 11% quarter-on-quarter decrease.
Additionally, at the end of last year, major automotive MCU manufacturer Renesas also decided to implement a layoff plan in 2025 due to the ongoing weakness in various chip demands, planning to cut about 5% of its 21,000 jobs globally. The company’s revenue for the third quarter of 2024 saw a 9% year-on-year decline, with gross profit margin down 2.1 percentage points, and net profit plummeting by as much as 22.6% year-on-year.
“We are still in a very volatile economic and market environment,” said NXP CEO Kurt Sievers. Especially in the coming year, the continued uncertainty of U.S. trade policy may lead to further differentiation in the global automotive chip supply landscape.
Public data shows that Infineon, Renesas, NXP, and STMicroelectronics hold about 80% of the global automotive MCU market share.For these traditional automotive chip manufacturers, the MCU product line is fraught with crises.
On one hand, to clear inventories, major MCU manufacturers have started a “bloodbath” price war since last year. Especially in the mid-to-low-end automotive MCU chip market, due to the large number of participating enterprises, the price war has become the fiercest. “Most use ARM core designs, and the products are severely homogenized, leading to an extremely competitive market where price competition has become white-hot,” industry insiders said.
Especially in the Chinese market, the advancement of domestic substitution and the continuous improvement of traditional high-end MCU chip technologies and performances have led to an increase in the proportion of domestic automotive electronic MCUs in the coming years. This will exert continuous downward pressure on prices for manufacturers like Infineon, Renesas, and NXP.
However, competition in the MCU market remains fierce, and the industry has yet to clear. At the same time, in a weak recovery environment, new demand is insufficient to fully absorb the industry’s total capacity. Some industry companies believe that prices are likely to continue a bottom consolidation trend. Especially with the market introduction of RISC-V open-source architecture MCUs, further price pressure is anticipated.
According to the 2024 annual performance forecast released by Guoxin Technology, the company expects its annual revenue to increase by 28.42% year-on-year (benefiting from stable growth in downstream automotive electronics demand and rising revenue from MCU chip-related products), but the net profit attributable to the parent company continues to increase in losses.
On the other hand, the electronic and electrical architecture of complete vehicles is evolving towards a centralized computing-regional control architecture, entering a window period for large-scale delivery of highly integrated, high-performance MCU markets. At the same time, the trend of integrating high-performance MCU cores into computing SoCs is becoming increasingly clear.
Taking the first-generation intelligent driving domain controller as an example, the SoC+MCU dual-core combination has made Infineon’s TC3x series MCUs almost a standard configuration. However, market demands for cost-performance ratios continue to rise, and non-external MCUs are becoming a new choice that is highly sought after. High integration and multi-task processing capabilities on a single chip have also become key factors for various SoC manufacturers to compete for product solution cost-performance ratios.
For instance, the Wudang C1200 family of chips launched by Hezizhi Technology is the industry’s first intelligent automotive cross-domain computing chip platform, integrating CPU, GPU, NPU, DSP, ISP, MCU, and data exchange functions, with MCU computing power reaching 32KDIPMS; among them, the C1236 chip is aimed at high-end intelligent driving, with single-chip support for NOA integrated parking; the C1296 chip supports cross-domain integration.
According to the general perception in the industry, highly integrated SoC chips better meet the high cost-performance demands of large-scale popularization markets, especially the high-speed NOA+ integrated parking solutions as standard choices for the economy market under 200,000 yuan, where the costs of traditional single external MCUs can be completely “zeroed out.”
Against this backdrop, transitioning to high-performance MCUs (even with additional AI computing power) to meet the next-generation electronic architecture of vehicles and more complex vehicle control needs (integrating whole vehicle perception data, integrated control, etc.) has become the new goal for traditional automotive chip manufacturers.
In fact, NXP seized the first wave of market dividends. The S32G series leads in emerging markets such as cockpit integration gateways, high-performance central gateways, and HPC applications. Last year, Infineon launched the TC4x series, also targeting the huge potential market space mentioned above.
However, Chinese suppliers are also seizing opportunities.
For example, Xinchih Technology has launched the ZCU chip product family for the new generation E/E architecture, which can provide MCU products for core application scenarios such as body control, body + chassis + power cross-domain integration, and super power domain control.
Among them, the flagship ZCU chip product E3650 adopts the latest ARM Cortex R52 + high-performance lock-step multi-core cluster, supports virtualization, with non-volatile memory (NVM) up to 16MB, large-capacity SRAM, and more abundant available peripheral resources, with over 300 usable I/O interfaces.
Additionally, the E3650 integrates the Xuanwu ultra-secure HSM information security module, meeting ISO 21434, Evita Full and above information security levels, as well as AEC-Q100 Grade 1 and ISO 26262 ASIL D functional safety levels, satisfying market demands for cross-domain integration.
Hezizhi Technology also signed a memorandum of cooperation with Continental Group at the beginning of this year, and both parties will cooperate in the field of high-performance computing units (HPC), and jointly launched a complete Classic AUTOSAR solution based on the Wudang series C1296 chip with its subsidiary Elektrobit.
The C1296 is the industry’s first chip platform supporting multi-domain integration, utilizing a combination of hardware and software cross-domain architecture and system design, equipped with high-performance automotive-grade CPU and GPU, featuring high performance and high efficiency DynamAINN engine, built-in high-speed data exchange acceleration module, with 32KDMIPS real-time processing power.
Currently, the two parties have completed the EB tresos Autocore Generic Devdrop version base software package based on the Wudang C1296 chip, as well as OS adaptation for the real-time core, gateway core, and independent security island, achieving adaptation of chip MCAL software and toolchain integration.
Moreover, in July last year, Unisoc also launched high-end flagship products of the second-generation automotive domain control chip THA6 series, adopting Arm Cortex-R52 + core, and V8 RISC architecture, with strong computing power, core lock-step functionality, supporting virtualization and isolation of multiple tasks.
At the same time, this series of chips also features Bosch’s latest version GTM 4.1, supporting high-precision PWM, built-in hardware RDC module, capable of supporting both software and hardware decoding methods, perfectly meeting the demand for high-performance automotive-grade MCUs in the new generation E/E architecture.
Additionally, the market competition is intensified by more new entrants.
In February of this year, LG Electronics announced the official launch of its first high-performance automotive MCU and continues to enhance its automotive semiconductor development and design capabilities to improve its competitiveness in system solutions in the future mobility sector. Currently, the first MCU will be applied first in automotive entertainment applications and gradually extend to other product lines.
“In the medium to long term, the demand for automotive-grade high-performance MCUs will mainly come from intelligent driving, chassis, and other high-safety-level applications, as well as high-performance demands for centralized and regional control,” industry insiders stated, indicating that the next few years will be a window period for a reshuffle in the industry.
