Whenever automakers get their hands on chip supplies, the more expensive vehicles are first in line – NXP

And if the electronics aren't available, features are simply removed

Car makers are shutting down factories because of semiconductor shortages – and whatever chips they can get their hands are going into more expensive vehicles.

"We have seen multiple OEMs prioritize to production of premium vehicles, which require upwards of twice the semiconductor content from NXP and others," said Kurt Sievers, CEO of NXP, during an earnings call with financial analysts this week.

The trend in the car market is very similar to that of the PC market, with laptop and desktop makers squeezing out more profits by putting the limited supply of chips in expensive machines. Though that's a no-brainer for the bean counters, it's positively bad news for those hoping to pick up modestly priced equipment – and vehicles.

Automakers are either focusing on selling high-end cars, or defeaturing some premium features in vehicles for lack of chips, said Jim McGregor, principal analyst at Tirias Research.

He gave the example of Porsche, which is selling cars with dummy chips that it could ultimately replace with real chips, and GM, which has removed features like auto start-stop due to chip shortages.

"It would suck if you can't sell cars. You need to keep the doors open. They are getting squeezed," McGregor said.

Electric and hybrid vehicles will account for 20 per cent of the cars manufactured this year, compared to just eight per cent last year, which will also strain the auto chip market, Sievers said.

"This is very impactful since the average semiconductor content in an [electric vehicle] is about $900, which is roughly 2 times that of an equivalent [internal combustion engine] vehicle."

The lead time for car makers to receive 75 per cent of the NXP's automotive chips has increased to about a year, Sievers added.

"Our Tier 1 partners explicitly demand that more supply and inventory will be needed in the extended supply chain, which we believe cannot be broadly achieved before 2023," he explained.

Sievers sees a positive outlook for the company in the automotive space. But waiting too long to supply chips isn't good either, McGregor said.

"It's a dangerous game to say you should plan farther out. We have seen that in other markets like cell phones," McGregor said, adding that it's all "fine and dandy" with the supply shortages working in NXP's favor, but the demand could go away overnight with an event like the economy tanking.

NXP reported revenue for the third quarter of $2.9bn, growing by 26.2 per cent compared to the same quarter last year. About half of the overall quarterly revenue was from the automotive unit, at $1.4bn, growing 51 per cent year-over-year. On a GAAP basis, the company reported a net profit of $1.59bn, growing by 45 per cent. ®

Similar topics

Broader topics

Other stories you might like

  • Lonestar plans to put datacenters in the Moon's lava tubes
    How? Founder tells The Register 'Robots… lots of robots'

    Imagine a future where racks of computer servers hum quietly in darkness below the surface of the Moon.

    Here is where some of the most important data is stored, to be left untouched for as long as can be. The idea sounds like something from science-fiction, but one startup that recently emerged from stealth is trying to turn it into a reality. Lonestar Data Holdings has a unique mission unlike any other cloud provider: to build datacenters on the Moon backing up the world's data.

    "It's inconceivable to me that we are keeping our most precious assets, our knowledge and our data, on Earth, where we're setting off bombs and burning things," Christopher Stott, founder and CEO of Lonestar, told The Register. "We need to put our assets in place off our planet, where we can keep it safe."

    Continue reading
  • Conti: Russian-backed rulers of Costa Rican hacktocracy?
    Also, Chinese IT admin jailed for deleting database, and the NSA promises no more backdoors

    In brief The notorious Russian-aligned Conti ransomware gang has upped the ante in its attack against Costa Rica, threatening to overthrow the government if it doesn't pay a $20 million ransom. 

    Costa Rican president Rodrigo Chaves said that the country is effectively at war with the gang, who in April infiltrated the government's computer systems, gaining a foothold in 27 agencies at various government levels. The US State Department has offered a $15 million reward leading to the capture of Conti's leaders, who it said have made more than $150 million from 1,000+ victims.

    Conti claimed this week that it has insiders in the Costa Rican government, the AP reported, warning that "We are determined to overthrow the government by means of a cyber attack, we have already shown you all the strength and power, you have introduced an emergency." 

    Continue reading
  • China-linked Twisted Panda caught spying on Russian defense R&D
    Because Beijing isn't above covert ops to accomplish its five-year goals

    Chinese cyberspies targeted two Russian defense institutes and possibly another research facility in Belarus, according to Check Point Research.

    The new campaign, dubbed Twisted Panda, is part of a larger, state-sponsored espionage operation that has been ongoing for several months, if not nearly a year, according to the security shop.

    In a technical analysis, the researchers detail the various malicious stages and payloads of the campaign that used sanctions-related phishing emails to attack Russian entities, which are part of the state-owned defense conglomerate Rostec Corporation.

    Continue reading
  • FTC signals crackdown on ed-tech harvesting kid's data
    Trade watchdog, and President, reminds that COPPA can ban ya

    The US Federal Trade Commission on Thursday said it intends to take action against educational technology companies that unlawfully collect data from children using online educational services.

    In a policy statement, the agency said, "Children should not have to needlessly hand over their data and forfeit their privacy in order to do their schoolwork or participate in remote learning, especially given the wide and increasing adoption of ed tech tools."

    The agency says it will scrutinize educational service providers to ensure that they are meeting their legal obligations under COPPA, the Children's Online Privacy Protection Act.

    Continue reading
  • Mysterious firm seeks to buy majority stake in Arm China
    Chinese joint venture's ousted CEO tries to hang on - who will get control?

    The saga surrounding Arm's joint venture in China just took another intriguing turn: a mysterious firm named Lotcap Group claims it has signed a letter of intent to buy a 51 percent stake in Arm China from existing investors in the country.

    In a Chinese-language press release posted Wednesday, Lotcap said it has formed a subsidiary, Lotcap Fund, to buy a majority stake in the joint venture. However, reporting by one newspaper suggested that the investment firm still needs the approval of one significant investor to gain 51 percent control of Arm China.

    The development comes a couple of weeks after Arm China said that its former CEO, Allen Wu, was refusing once again to step down from his position, despite the company's board voting in late April to replace Wu with two co-chief executives. SoftBank Group, which owns 49 percent of the Chinese venture, has been trying to unentangle Arm China from Wu as the Japanese tech investment giant plans for an initial public offering of the British parent company.

    Continue reading
  • SmartNICs power the cloud, are enterprise datacenters next?
    High pricing, lack of software make smartNICs a tough sell, despite offload potential

    SmartNICs have the potential to accelerate enterprise workloads, but don't expect to see them bring hyperscale-class efficiency to most datacenters anytime soon, ZK Research's Zeus Kerravala told The Register.

    SmartNICs are widely deployed in cloud and hyperscale datacenters as a means to offload input/output (I/O) intensive network, security, and storage operations from the CPU, freeing it up to run revenue generating tenant workloads. Some more advanced chips even offload the hypervisor to further separate the infrastructure management layer from the rest of the server.

    Despite relative success in the cloud and a flurry of innovation from the still-limited vendor SmartNIC ecosystem, including Mellanox (Nvidia), Intel, Marvell, and Xilinx (AMD), Kerravala argues that the use cases for enterprise datacenters are unlikely to resemble those of the major hyperscalers, at least in the near term.

    Continue reading

Biting the hand that feeds IT © 1998–2022