The automotive chip market is set to take a downturn in 2024, following a new report from self-driving technology company Mobileye.
In its forecast for the new year, Mobileye, owned by Intel, noted that self-driving car manufacturers, such as Cruise parent company General Motors, purchased a surplus of automotive chip components during the COVID pandemic, allowing many to circumvent the semiconductor shortage that plagued other industries. In the years since, however, the autonomous vehicle market has grown at a glacial pace, leaving many companies with over-stocked chip inventories.
In 2023, semiconductor production began to normalize. As a result, self-driving car manufacturers are now looking to clear their storage facilities to improve the cost-efficiency of their operations, halting shipments of new chips until they achieve a better balance between supply and demand. Mobileye estimated the sector possesses an excess of at least 6 million units.
Consequently, the company warned shareholders that the first quarter will see a notable dip in demand, posing challenges for semiconductor and materials suppliers. Mobileye believes its Q1 revenue will decline 50% year-over-year, leading to an annual operational loss between $378 million and $468 million. In comparison, the firm’s 2023 loss forecast was between $33 million and $39 million.
Mobileye develops self-driving software and systems, including cameras and automotive computer chips. In response to its warnings for 2024, shares in the company plunged nearly 30%. Other semiconductor suppliers with clients in the car industry also saw their stock prices dip following their competitor’s report, but only by single-digit percentages.
