Chip hunger from car manufacturers propels Melexis towards new record year

But Melexis mainly benefits from structural trends and the chip hunger in the car industry. It is not so much about the increased sales of cars, Biron says. ‘In 2021 80 million cars were manufactured. Well, in 2022 that figure will be about the same. The difficult supply chains play tricks on car manufacturers, they cannot fully produce. But what happens in those cars supports the demand for our chips. Electric cars contain more chips than cars that are powered by a conventional engine. And there is more attention for safety and comfort, applications that often also run on our chips.’

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Because automakers can’t run at full capacity, they prioritize the more luxurious models, which can be sold at higher margins. Those models rely more on Melexis chips than their simpler brothers. The more expensive models contain chips to monitor tire pressure, automatically brake or monitor the battery system and temperature, for example.

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More attention is being paid to safety and comfort. The applications for this often run on our chips.

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Every car that rolls off the production line somewhere in the world now contains an average of 18 Melexis chips, compared to 13 a year ago. That number varies greatly from brand to brand and model to model. For some Tesla models, Melexis supplies more than 50 chips, for a Mercedes model even 170 Melexis chips.

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The goal is to bring that average figure to 20 in the foreseeable future. ‘We only do the calculation once a year,’ says Biron. “But we are well on our way, that much is certain.”

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King Car

With continued strong demand from the automotive industry, which continues to outstrip supply, Melexis also faces what could be seen as a luxury problem. The chip developer has been trying for some time to become less dependent on the cyclical car market. The goal is to bring the ratio to 80 percent auto and 20 percent other markets. But due to the continuing chip hunger of the car makers, the figure is heading in the other direction. A few months ago, Melexis was ‘only’ 88 percent dependent on cars, today it is 90 percent.

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Biron is pragmatic about it. ‘We have increased our focus on the other markets in recent months. Of the six products we launched in the past few months, two were for markets other than the automotive industry. One chip is aimed at power tools, gaming consoles and the automation of home applications. The other measures the level of liquids in industrial processes, for example. We have also moved part of our sales force to other markets. But the demand from the car market is so strong that it is difficult to change the proportions.’

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18

chips

Every car that rolls off the production line somewhere in the world today contains an average of 18 Melexis chips.

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With demand outstripping supply, Melexis has to allocate its chips. ‘The car manufacturers sometimes get priority,’ says Biron. ‘Not only because they are our most important customers, but also because we are the only source of chips for many. Other markets can often fall back on other sources as well.’

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In the press release, Melexis says it is confident in the short term – thanks to the overflowing order book – and in the long term – thanks to the structural trends in the automotive industry. But the medium term is less certain due to macroeconomic and geopolitical uncertainties. ‘There are many question marks, it could go either way’, says Biron. ‘Who knows, the demand for cars may soon stop, but it could just as well be that no effect is visible. That’s why we prefer to be a little more careful.’

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Full screen display

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