Strike Wave in the US Affects Chip Manufacturers

Recently, due to a dispute over labor contracts, the UAW launched a historic strike against the three major automakers, Ford Motor, General Motors, and Stellantis. As the strike continues, apart from the three major car manufacturers, automotive chip manufacturers may be significantly affected in this wave of strikes.
According to comprehensive foreign media reports, with the trend of automotive intelligence, the demand for automotive chips has skyrocketed, with 3000 chips per new car equipped. Affected by the UAW strike, the stock prices of global automotive chip giants NXP and Texas Instruments fell 2.62% and 2.07% respectively on the 15th, while TSMC ADR, which has the highest market share in automotive chip foundry, fell 2.43%.
According to institutional data, in terms of revenue scale, NXP’s revenue contribution from automotive chips reached as high as 52% in 2022, and Texas Instruments also accounted for a high proportion of 25%. TSMC’s automotive department accounts for 5% of its total revenue.

Over time, more chip manufacturers such as Qualcomm and Micron are expected to be affected, as both companies have significant connected vehicle businesses. In recent years, Qualcomm has doubled its efforts to develop its automotive business, while Micron is often considered a leader in the automotive storage chip market.
According to foreign media, the UAW strike may disrupt the production and supply of automotive chips, affecting automakers and technology companies. Although supplier diversification will play an important role in mitigating the impact of strikes, the duration and severity of strikes will determine their impact on the economy and individual companies.
According to public information, UAW is one of the largest workers’ associations in the United States. Within the General Motors, Ford, and Stellantis groups, UAW has up to 146000 union members, accounting for approximately 56% of all workers in the US automotive manufacturing industry.
The reason for this strike is that approximately 150000 American automobile workers have expired their labor contracts with three automakers, General Motors, Ford, and Stellantis Group, and the labor and management parties have not reached an agreement. This is the first time in over 80 years since the establishment of the Federation of Automotive Workers in the United States that automotive workers have held a simultaneous strike against the three automakers mentioned above.
In the new negotiation agreement, UAW hopes that three car companies will provide a 40% salary increase for automotive workers; At the same time, it is required to provide welfare pension, 32 hour work week, and additional living expenses benefits for all workers, and to abolish temporary workers and hierarchical wage systems. Taking top assembly workers as an example, the salary increase will increase from the current $32 per hour to $47. Due to the significant increase in labor costs, the three car companies believe that the union’s demands are unrealistic.

The automotive industry chain is long, and the strike event will have a chain reaction on the supply chain. The supply chain of the US automotive industry is complex and extensive, including hundreds of suppliers and manufacturers. The strike will lead to supply chain disruptions, causing significant difficulties for component supply and vehicle production. Jeff Schuster, head of global automotive business at consulting firm GlobalData, said that a strike at one engine or gearbox factory in each car company is enough to close nearly three-quarters of American assembly plants.