Automotive market faces renewed supply-chain challenges in 2024

By Jonathan Cassell

For the automotive industry, the good news in 2024 is that the severe semiconductor shortage is largely in the rear-view mirror. The bad news is that the engine of automotive sales growth in recent years – EVs – is experiencing a decelerating expansion, contributing to a slowdown in overall car demand growth in 2024.

To add to the bad news, car makers are continuing to face challenges sourcing highly in-demand silicon carbide (SiC) discretes. At the same time, car makers may experience a new supply-chain challenge this year as booming memory pricing drives up automotive semiconductor costs once again.

Global light-vehicle car sales are expected to rise marginally this year, growing in the 1%-3% range, according to forecasters, as high interest rates and inflation impact demand. This flat performance contrasts sharply with the double-digit increase of 2023 when sales surged by more than 10%.

The main culprit for the slowdown is the EV segment, which is experiencing a sharp sales growth deceleration. Global EV sales will rise to 16.6 million units in 2024, up 21% from 13.7 million in 2023, according to the International Energy Agency (IEA). This rise represents a major slowdown from the 45.5% CAGR from 2018 through 2023, and is a far cry from the booming growth rates of recent years, such as the 117% rise in global sales in 2021.

Further concerns about the sustainability of the electric car boom were stirred by reports that global EV sales declined by 21% in Q1 compared to Q4. However, the nature of the decline in EV sales growth should be viewed in the context of a rapidly growing market. 

A first-quarter sequential decline is typical for EV sales, with the same occurrence happening in Q1 2023 and Q1 2022, according to IEA data. Despite this, annual sales rose robustly during those years. Furthermore, Q1 delivered the second-highest quarterly EV sales total of all time, at 3.4 million units worldwide, following 4.3 million sales in Q4, 2023. 

Most automotive discrete devices are readily available, with lead times of 14 weeks or fewer for general diodes, switching diodes, Schottky barrier diodes, bipolar junction transistors, and low-voltage and high-voltage MOSFETs. 

However, silicon carbide (SiC) discretes commonly used in EVs remain in somewhat tight supply, with extended lead times of 39-40 weeks. EV makers are migrating away from insulated-gate bipolar transistors (IGBTs) and toward SiC MOSFETs, which can support the high power densities and switching efficiencies required for EV powertrains. 

As EV sales are still on the rise, buyers will continue to encounter some challenges in sourcing sufficient quantities of SiC MOSFETs. Delivery lags for power MOSFETs totaled 134.2 in May, according to the Commodity IQ Lead Time Index, indicating that lead times are increasing.

As multiple companies are entering and participating in the SiC discrete market, buyers should identify and work closely with SiC makers to cultivate new sources of supply.

In 2024, the fastest growing semiconductor segment in the automotive area will be memory, with sales set to rise 14% in 2024, compared to a 24% contraction in 2023, according to one market watcher. Rising average selling prices for NAND and DRAM types, including DDR3 and DDR4, are expected to drive up automotive bills of materials (BoMs).

Under these circumstances, automotive buyers should solidify pricing with memory suppliers before costs rise further.