Scarcity of automotive-grade chips in 2022 is still fresh in memory, yet in just two years, the industry has stepped into a phase of deep downturn. Entering the second half of 2026, signals of an industrial inflection point continue to emerge. Financial reports of overseas leading semiconductor manufacturers generally show recovery, industry chain inventory has fallen back to healthy levels, and Tier1 component suppliers are steadily seeing order repairs. Coupled with AI computing power continuously seizing 8-inch mature process capacity, the accelerated penetration of 800V high-voltage platforms and high-level intelligent driving vehicles, the two-year destocking cycle is coming to an end.
Overseas investment banks such as Deutsche Bank and Bernstein give their latest judgments that the automotive semiconductor sector will enter a structural upward channel in the second half of 2026. This round of recovery will not replicate the situation of across-the-board price increases seen in 2022; differentiation in industry chain prosperity will become the main characteristic. Cycle repair superimposed with industrial upgrades in electrification and intelligence has unveiled a new industrial upcycle.
01 Destocking Nears Completion, Restocking Cycle Officially Begins
From 2020 to 2022, global wafer capacity shortage combined with the rapid explosion of new energy vehicles plunged the automotive industry into a chip shortage crisis, with many OEMs reducing production or even halting operations due to chip supply disruptions. Facing supply chain risks, OEMs and Tier1 component companies like Bosch and Continental began overstocking, extending the original 3-month chip inventory cycle to over 6 months. Distributors also hoarded large quantities of general-purpose MCUs, low-voltage MOSFETs, and automotive power supply chips, leading to a significant increase in industry inventory turnover days. Inventory days for leading manufacturers such as NXP, STMicroelectronics, and Infineon peaked above 200 days. Massive advance orders overdrawing future market demand sowed the seeds for the subsequent two-year industry downturn.
In 2023, an industry inflection point appeared, as global new energy vehicle subsidies gradually phased out and terminal car purchase demand returned to rationality. The growth rate of EV sales in Europe and the US slowed down, the domestic Chinese car market initiated a price war, OEMs proactively compressed production schedules, and previously accumulated chip inventories entered a phase of continuous digestion. At the same time, the consumer electronics market remained sluggish, demand for consumer-end MCUs and analog chips shrank, and the 8-inch mature process capacity originally supplying consumer electronics overflowed outwards. Supply of general-purpose automotive-grade chips became ample, leading to a significant drop in product prices. Prices for basic 8-bit body MCUs and low-voltage MOSFETs fell by more than 30%, with the price of STMicroelectronics' general STM32 series shrinking by 70% compared to the peak period. Distributors' willingness to purchase declined, and industry-wide passive destocking thus began.
Facing operational pressure from inventory backlog, overseas IDM giants lowered wafer utilization rates, reduced 8-inch foundry orders, and paused production line expansions. Renesas and onsemi shut down some older SiC production lines, domestic power semiconductor manufacturers also saw capacity utilization rates decline, and company performance generally came under pressure.
Judging a cycle shift cannot rely solely on price fluctuations of a single product. Five dimensions—OEM inventory, Tier1 orders, chip delivery cycles, manufacturer revenue, and upstream price hike signals—have formed a positive closed loop, verifying the certainty of the upward cycle in the second half of 2026.
Industry chain inventory levels have returned to a healthy range, with previously accumulated inventory mostly cleared. In Q1 2026, inventory turnover days for the top five automotive semiconductor leaders—Infineon and NXP—fell back from peaks above 200 days to 120-140 days. The inventory-to-sales ratio for Tier1 suppliers dropped to 12.2%, returning to a safe threshold. Domestic distribution channels held only 1-2 months of stock for automotive power devices and NOR Flash, with buffer inventories essentially exhausted. Chip inventory for mainstream European and American automakers remained around 40 days, close to normal levels, ending the weak situation of inventory pressure and clearance sales. Influenced by market expectations of renewed chip shortages due to AI computing power seizing mature processes, automakers began replenishing strategic inventories.
Orders and corporate revenue turned upward simultaneously, achieving positive growth for two consecutive quarters. Bernstein statistics show that global automotive semiconductor industry revenue increased 11% year-on-year in Q1 2026 and rose another 5% quarter-on-quarter in Q2, indicating a steady upward recovery trend. At the corporate level, NXP's automotive business revenue reached $1.938 billion in Q2, a year-on-year increase of 12%, with the automotive business's revenue share stable at 56%. STMicroelectronics' automotive segment revenue grew 26%, Renesas' automotive business grew 24.8%, and Texas Instruments' automotive analog chip orders recovered. Automotive businesses of overseas leading companies all emerged from negative growth. In the domestic market, StarPower Semiconductor and Silan Microelectronics saw sequential improvements in automotive IGBT orders, automotive NOR Flash shipments increased for three consecutive months, indicating smooth upstream and downstream demand transmission.
Extended chip delivery cycles are the most direct signal of tightening supply and demand. During the downturn, delivery cycles for automotive-grade IGBTs and MOSFETs were only 8-12 weeks, with ample spot supply. As of August 2026, delivery cycles for mainstream automotive power devices have lengthened to over 30 weeks, with SiC main drive modules exceeding 40 weeks, some orders requiring a six-month wait for delivery. Original manufacturers generally implement quota-based supply, cash purchases for securing goods, and signing long-term pre-orders have become industry norms. Delivery cycles for high-end 32-bit domain control MCUs reached 28 weeks, automotive NOR Flash supplies are tight, only low-end 8-bit MCU supply remains ample, showing significant prosperity gaps between categories.
Industry price hikes have already taken effect, with the second round of price adjustments within the year covering most automotive chip categories. In July, Infineon took the lead in initiating the second price adjustment, raising prices for automotive IGBTs, high-voltage MOSFETs, and automotive power management chips by 10%-20%. STMicroelectronics, onsemi, and Texas Instruments followed suit, raising prices for automotive analog and signal chain chips. Domestic companies like StarPower Semiconductor, Yangjie Technology, and Core Link Integration raised prices for automotive power devices by 10%-25%. This round of price hikes is not merely passing on production costs but an inevitable result of the supply-demand reversal. Texas Instruments mentioned in its earnings call that automotive customer inventories have been pushed to low levels; even a slight uptick in terminal demand could trigger large-scale replenishment purchases, and the momentum for price hikes will continue to be released in the second half of the year.
02 Prosperity Differentiation Across Segments, Three-Tier Structure Emerges
The biggest characteristic of this automotive semiconductor recovery is structural differentiation; it will not replicate the across-the-board price increase scenario of 2022. It can be divided into three tiers according to prosperity levels. The differentiation stems from demand differences for 800V high-voltage platforms, high-level intelligent driving, and basic body electronics, and also reflects the progress of domestic automotive chip localization.
The first tier consists of Silicon Carbide (SiC), high-voltage IGBTs, and automotive power analog chips, maintaining a strong upward trend overall. SiC is the core leading category in this upcycle, primarily driven by the popularization of 800V high-voltage fast-charging platforms. The per-vehicle value of power semiconductors in traditional 400V new energy vehicles is about $200-300; after upgrading to an 800V platform, it directly increases to $700-1,000. Main drive inverters, onboard OBCs, and DC-DC power systems extensively adopt SiC devices, helping reduce vehicle losses, improve charging speeds, and optimize energy consumption. In 2026, annual sales of domestic 800V new vehicles are expected to exceed 4 million units, with the internal SiC main drive penetration rate in 800V models reaching 77%. From January to May 2026, the overall installation rate of SiC in domestic new energy vehicles reached 30.9%, and the annual automotive SiC market growth rate is projected to exceed 32%. Global 6-inch automotive-grade SiC substrate capacity is already fully utilized, with leading companies' order schedules extending into 2027. Products from Wolfspeed and Infineon remain in short supply. Domestic companies like StarPower Semiconductor and BYD Semiconductor have completed volume vehicle installation for SiC modules, entering a capacity release window. Superimposed with external demand from energy storage and industrial photovoltaics, the SiC supply-demand gap continues to widen, with prices steadily rising.
High-voltage IGBTs follow SiC closely, also showing strong performance. The expansion of hybrid vehicle models further opens up demand space, with both pure electric and hybrid vehicles driving demand for electric control IGBTs. In 2026, the domestic automotive IGBT market size is expected to exceed 15.7 billion yuan, a year-on-year increase of 22.3%. Infineon and onsemi control high-end capacity, prioritizing supply to overseas automakers, while domestic independent brands increase procurement proportions from local manufacturers, accelerating the localization of power semiconductors. Automotive high-voltage power management PMICs and isolated analog chips benefit from increased vehicle power consumption and the widespread adoption of domain controllers. Their delivery cycles continue to lengthen, and price increase magnitudes rank high among analog chips.
The second tier includes high-end 32-bit automotive MCUs, automotive NOR Flash, and automotive DRAM, overall in a state of moderate recovery. The MCU track shows significant internal polarization. Low-end 8-bit body control MCUs face oversupply and price pressure, with fierce homogeneous competition among domestic manufacturers. High-end 32-bit MCUs used in cockpit domains, intelligent driving domains, and powertrain domains show positive demand, with high-end MPU single-unit prices from NXP and STMicroelectronics exceeding $60. Meanwhile, 8-inch capacity continues to be squeezed by AI computing power, supply continues to tighten, and prices are gradually stabilizing and rebounding. Local 32-bit automotive MCUs from GigaDevice and CHIPSEA have successively passed automaker certifications, entering the vehicle supply chain to capture overflow orders from overseas.
Automotive memory chips have seen a clear recovery, becoming a major cost pressure source for automakers currently. High-level autonomous driving requires large-capacity storage and computing power cache support. NOR Flash is used to store cockpit and autonomous driving programs, while automotive DRAM ensures stable operation of domain controller computing power. The AI industry competes for mature flash memory capacity, with Samsung and Kioxia reducing 55nm and above NOR mature process capacity, shifting resources towards HBM and high-end NAND. Contract prices for automotive NOR Flash accumulated over 100% increase in the first half of the year, with the upward trend continuing into the second half. Supply chain personnel from XPeng and Li Auto have publicly indicated that the supply fulfillment rate for automotive memory in the second half is less than 50%. Automakers can only secure supply through price locks and long-term orders. Memory chips have become another scarce component after power devices.
The third tier comprises low-voltage MOSFETs, basic body electronic components, and general-purpose discrete devices, maintaining overall stable fluctuations. These products have relatively lower technical barriers and ample global supply. After two years of destocking, channel inventories are sufficient. Demand fluctuates slightly with vehicle sales volume and will not experience large-scale shortages or price hikes. They serve as a buffer sector for automakers to control hardware procurement costs.
03 Growth Logic Shifts, Growth Space Continues to Expand
This upcycle differs fundamentally from the 2022 scenario driven solely by vehicle sales growth. The growth rate of global new energy vehicle sales has already slowed; penetration rate increases in Europe are decelerating, and the domestic Chinese car market has entered a phase of stock competition. However, the per-vehicle semiconductor value continues to increase. Software-defined vehicles and the transformation of vehicle electronic/electrical architecture are the industry's core growth drivers, capable of offsetting demand disturbances caused by fluctuations in vehicle shipment volumes.
Traditional distributed electronic architecture is iterating towards domain controllers and central computing platforms. Vehicle electronic systems are being streamlined from dozens of independent ECUs to three main computing units: powertrain domain, cockpit domain, and intelligent driving domain. Single-chip computing power, storage, and interface specifications are significantly enhanced. The physical number of chips may decrease, but the per-vehicle semiconductor value markedly rises. The implementation of high-level autonomous driving brings LiDAR, millimeter-wave radar, automotive Ethernet, and high-definition camera supporting chips into vehicles. Per-vehicle chip value increases 3-5 times compared to traditional internal combustion engine vehicles.
Diverse application scenarios open up the industry ceiling. Commercial vehicle electrification, unmanned delivery vehicles, and special vehicles for ports and mining areas are gradually being deployed, driving demand expansion for power devices and MCUs. 6G vehicle communication and vehicle-road coordination are entering pre-commercial stages, high-speed optical interconnect is being installed in vehicles on a small scale, and indium phosphide optical chips and automotive Ethernet chips bring entirely new increments. Industry growth no longer relies solely on private passenger cars; the demand structure is becoming more robust.
Relying on the domestic vehicle market, the domestic industry chain ushers in a golden window for automotive chip localization. In the power semiconductor field, StarPower Semiconductor, CRRC Times Electric, and BYD Semiconductor hold major shares of domestic automotive IGBT and SiC markets. In the MCU track, GigaDevice and Espressif Systems continue to advance automotive-grade product certifications. In the automotive NOR memory direction, GigaDevice and Puya Technology see continuous volume shipment. Upstream manufacturing, packaging/testing, and equipment/material industry chains are synergistically improving, enhancing the domestic supply chain's anti-cyclical capability.
Simultaneously, the industry faces multiple potential risks that could constrain the upward pace. First is weaker-than-expected terminal consumption recovery. If the domestic price war persists or new energy vehicle demand in Europe and the US declines, automakers' restocking pace could slow, prolonging the upcycle and narrowing price increase margins for high-end chips. Secondly, concentrated release of SiC capacity poses a long-term oversupply risk. Multiple 6-inch and 8-inch SiC substrate production lines at home and abroad are expected to complete ramp-up by 2027, potentially leading to oversupply and price declines for low-end SiC devices. Additionally, if AI computing power capital expenditure contracts cyclically, some 8-inch wafer capacity could flow back to the automotive sector, marginally easing the tightness of automotive-grade chips. New 8-inch high-voltage power production lines built by overseas giants gradually starting production will release supply pressure in about two years, breaking the current tight balance.
Short-term, from the second half of 2026 to the first half of 2027, with the full implementation of automaker restocking and the tight 8-inch mature process situation unlikely to ease quickly, SiC, high-voltage IGBTs, high-end automotive MCUs, and automotive memory will maintain volume and price increases. Industry annual revenue is expected to achieve double-digit growth. Medium-term, as global wafer and SiC new capacities are released, supply and demand will shift from tight to a stable balance. The growth driver will switch to the per-vehicle electronic value increase brought by 800V high-voltage platforms and high-level intelligent driving. Industry cyclical fluctuations will weaken, and growth characteristics will become more prominent.
This article is from the WeChat public account "Semiconductor Industry Perspective" (ID: ICViews), author: Zihao
