Edgewater Research: Electronics Supply Chain Weekly Digest 10-13-23

Important Disclosures in the Appendix

A weekly collection of news summaries, survey results and channel insights, and report summaries from Edgewater Research

Data Point of the Week: China's Electric Vehicle (NEV) Retail Sales Surge in September

In September, China's New Energy Vehicle (NEV) retail sales soared to 746,000 units, marking the second time it surpassed the 700,000 unit milestone. This information is sourced from the China Passenger Car Association (CPCA) data, indicating a robust 22% year-over-year (Y/Y) growth and a solid 4.2% month-over-month (M/M) increase. It's worth noting that this figure fell just short of the CPCA's estimate of 750,000 units made at the end of August. The breakdown of these sales reveals that Battery Electric Vehicles (BEVs) accounted for 500,000 retail units, with a 9% Y/Y increase and a 1.9% M/M gain. Plug-in Hybrid Electric Vehicles (PHEVs) also performed well, with 246,000 units sold, marking a remarkable 60% Y/Y increase and a 9.2% M/M boost.

Notably, total auto retail sales in September reached 2.018 million units, showcasing a notable 5% Y/Y growth and a similar M/M increase, making it the most significant year-over-year growth since May 2023. NEVs accounted for 37% of all light vehicle sales, maintaining consistency with the previous month's figures but showing a marked increase from the 32% reported a year ago. In the realm of exports, September recorded a significant 50% year-on-year growth, following a 31% gain in August, as indicated by the data. According to the China Association of Automobile Manufacturers (CAAM), production of passenger vehicles in September reached 2.496 million units, reflecting a solid 10% Y/Y increase and a respectable 4% M/M growth. Meanwhile, production of commercial vehicles totaled 350,000 units, posting an impressive 35% Y/Y growth and an 18% M/M surge, surpassing earlier expectations.

CAAM officials predict that China's auto sales will exceed the initial target of 3% growth for the year, and it's likely that the volume will surpass the market peak observed in 2017. In the third quarter of 2023, China's retail sales recorded a 2% Y/Y increase, while wholesale sales remained flat.

Headlines in the Auto Industry

• General Motors (GM) Reaches Deal with Canadian Autoworkers After Union Initiates Strikes
• The US Proposes a $270,000 Fine for GM Battery Plant Joint Venture Due to Health and Safety Violations
• BMW and Mercedes-Benz Report a Decline in 3Q Sales in China Compared to Flat 3Q Sales in the Country
• Ford Indicates That It Is Approaching Its Limit with UAW Contract Offer
• Electric Vehicle (EV) Sales in the US Surge by 50%, Surpassing 300,000 Units in 3Q; Market Penetration Rises to 8%, According to Cox
• SK Warns That US-China Tensions Will Keep EV Battery Costs Elevated
• Chinese Raw Material Suppliers for EV Batteries Pursue Deals with US Free Trade Partners to Bypass US Restrictions
• Li Auto Sets Aggressive Targets, Aiming for 3 Million Car Sales Assuming 90% EV Penetration in China by 2028
• Porsche's Global Shipments Continue to Grow Except in China
• Porsche Recalls 2,500 Taycan EVs in China Over Battery Safety Concerns
• Stellantis and Samsung Plan to Build a Second EV Battery Plant in Indiana
• Stellantis Union in Italy Cuts Its 2023 Production Forecast Citing Weakening Demand
• Tesla's China Sales Decline by 11% Year-over-Year in September, But Exports Surge by 50%
• UAW Unexpectedly Strikes at Ford's Highly Profitable SUV Plant in Kentucky, Signaling a Setback in Negotiations
• UAW Workers Strike at Volvo's Mack Truck Plant, Rejecting Contract Proposal
• UAW Warns That New Strikes at Detroit's Big Three Automakers Will Come Without Notice
• US Auto Sales Continue to Be Led by Fleet Sales in September, Reports Cox Automotive

In Other Industries

Datacenter/Telco

• Ericsson's North America Sales Dip by 60% in 3Q; Takes a $2.9 Billion Impairment Related to a Year-Ago Acquisition

Aerospace

• Boeing's Deliveries of 737 MAX Aircraft Fell in September to the Lowest Level Since August 2021

Semiconductors

• ASE Records September Revenue at a 10-Month High, but Uncertainty Remains in 4Q Due to Ongoing Inventory Digestion
• Amkor Prepares to Open an Advanced Packaging Plant in Vietnam Focusing on CoWoS Capacity
• AMD to Acquire Open AI Software Firm Nod.ai
• Denso and Mitsubishi Electric Plan to Invest $500 Million Each in Coherent's SiC Business
• Onsemi Announces the Hyperlux LP Family of Image Sensors
• Littelfuse Introduces IXYS Branded Automotive-Grade P-Channel MOSFET
• Microchip Unveils a New Family of PIC 32-bit MCUs with Integrated Hardware Security
• SK Hynix, Samsung, and TSMC Receive Approval from the US to Import Advanced Semiconductor Equipment in China
• Kioxia and WDC Expected to Agree on a Merger by the End of October, According to a Japanese News Report
• Chinese Nexchip Foundry Announces a 10,000 WSPM Expansion of Mature Edge IC Capacity
• The Conflict in Israel Poses Risks to the Semiconductor Supply Chain, with Tower Semia and Intel Fabs Most Vulnerable
• Samsung's Preliminary 3Q Results Exceed Expectations

Consumer/EMS/Distribution

• Apple Plans an OLED iPad Upgrade in 2024
• Farnell Partners with Mean Well for the Distribution of Power Supplies
• 3Q PC Shipments Increase by 11% Quarter-on-Quarter; ODM Forecasts Flat 4Q Shipments; TrendForce Predicts a 2-5% Rebound in 2024
• Huawei Stocks Up on Parts to Double Its Mobile Phone Shipments in 2024 to 60-70 Million; Seeks Early Orders from Qualcomm in 1H24
• Quanta to Invest $80 Million in AI Server Capacity Expansion in the US
• Taiwan Distributors Report Double-Digit Growth in 3Q Sales Due to Increased Demand from Mobile and Consumer Electronics
• Wiwinn Opens a Server Assembly Plant in Malaysia and Plans Phase 2 Expansion in 2024