Mobileye shares tanked on Thursday after the Israeli automated driving technology company warned it was sitting on a glut of EyeQ advanced driving system chips. Morgan Stanley estimated Mobileye’s overstock is equal to 16% of full-year volume. Mobileye’s warning marked another U-turn in the market for advanced automotive semiconductors. For more than two years, chips that powered advanced driving and other systems on vehicles had been in short supply, hobbling production.
Automakers splashed out billions to secure supplies of semiconductors. Governments promised huge subsidies to increase semiconductor production capacity. That now seems so 2023. Investors are worried the supply chain “bullwhip effect” that created chip shortages in 2022 is now cracking the other way.Analysts warned that the pullback in orders for Mobileye’s chips could herald trouble at Tier One auto technology suppliers such as Aptiv. Shares in chipmakers NXP, Wolfspeed and ON Semiconductor also fell. “Tier-1 automotive suppliers have been hoarding components related to advanced driver assistance systems (ADAS), after having struggled to obtain these items during the pandemic,” Piper Sandler analyst Alexander Potter wrote. “Now that they no longer need these components, the tier-1 suppliers are cutting orders.”