After the automotive supply chain, IC distributors have entered ASEAN and Mexico

IC distributors in Taiwan, China include WPG, WT, Edom, Weikeng, etc. Their main markets are in the Asia Pacific region, namely Chinese Mainland, Taiwan, China, and Southeast Asia, and consumer electronics is the main application field. However, the slow recovery of the Chinese Mainland market has led to a decline in the revenue share of IC distributors in Chinese Mainland. In response to the sluggish consumer electronics market, IC distributors are shifting their focus to emerging markets such as automobiles.

With the development of automobiles towards electrification and intelligence, the automotive electronics industry has ushered in new business opportunities. Although Chinese Mainland is the world's largest electric vehicle market, its growth has slowed down due to the reduction of subsidies.

In addition, as more and more local enterprises in Chinese Mainland are able to produce automotive electronics, distributors in the Asia Pacific region will need to act as agents for international companies such as Infineon, and expand to products with high profits and high added value to achieve differentiation in the market.

Supply chain manufacturers have observed that the global semiconductor market will gradually recover in 2024, with an expected growth of about 15% -20%. High expectations are placed on the growth rate of automotive chips.

Da Lian Da Group has stated that the intelligent cockpit will drive the demand for MCU, main control SoC, AI perception module, and other components. It can even be extended to V2X communication modules and 5G, as well as dashboard software.

Analyzing the automotive market share of IC distributors in the third quarter of the past two years, Da Lian Da increased from 3.7% to 6.6%, while Wen Ye increased from 6.8% to 7.1%. Yideng, Weijian and other dealers are actively expanding into the automotive industry.

Weijian Automotive Electronics accounts for approximately 14% of its overall revenue, and its revenue share is expected to increase year by year. NXP, Infineon, and Vishay have advantages in automotive electronics, charging stations, energy storage systems, and more. Weijian will continue to expand the automotive market to alleviate competitive pressure in saturated markets.

With Taiwan, China manufacturers transferring production from Chinese Mainland to Southeast Asia and the Americas, IC distributors pointed out that supply chain diversification has become the consensus of the industry. For the automotive industry, Thailand is the main target of Southeast Asia, while Mexico is the focus of the Americas. Brazil is seen by dealers as the next potential market.

In order to better serve downstream system manufacturing customers, in addition to Wen Ye's large-scale acquisition of Canadian dealer Fuchang Electronics to enter the automotive and industrial control fields, Weijian also expands into markets such as Thailand and Vietnam through its Singapore subsidiary to respond to the supply chain transfer of major electronics companies.

In the long run, the supply chain holds an optimistic attitude towards the electrification of automobiles. However, recent fluctuations in the overall economic environment have led international IDM companies to hold a conservative attitude towards the prospects of the automotive market. Despite short-term uncertainty, entering the automotive market seems to have become a consensus trend among global IC distributors.

For the outlook for 2024, IC distributors have indicated that some application inventories will continue to be adjusted. In markets that started adjusting earlier, such as smartphones and personal computers (PCs)/laptops, signs of improvement have been noticed. Applications such as automobiles and artificial intelligence (AI) are expected to continue to grow. The first half of 2024 is relatively conservative, but with the introduction of new applications.