Bernstein: Automotive Semiconductor Price Surge is Coming, Cycle Accelerates

Bernstein is positive on Renesas' fundamentals (AI power, storage interface ICs, analog recovery, and price increases) and valuation, with Renesas having the lowest PE among covered analog companies, at just 19 times.

Bernstein also favors Infineon's AI power growth and price increase logic, and assigns "outperform" ratings to Qualcomm, Nvidia, TSMC, and Silergy.

The Price Hike Wave Spreads

Bernstein's report points out that since the beginning of the year, analog chip companies have announced price increases to customers. Infineon (IFX), Texas Instruments (TI), and NXP have even announced a second round of price increases. Bernstein expects analog chip companies to continue raising prices, driven by three main factors: firstly, AI servers consume a significant amount of semiconductor capacity, with the spillover effect affecting adjacent product areas; secondly, upstream wafer foundry companies have increased their manufacturing prices; and thirdly, the crisis in the Strait of Hormuz has increased the cost of raw materials and energy.

Specifically, Infineon notified customers of a price increase starting from April 1, and another increase starting from July 1, citing cost inflation across the value chain, especially in energy and raw materials. Renesas Electronics also plans to raise prices starting from July 1, citing tight capacity supply, increased costs of raw materials and energy, and the fact that competitors have already raised prices, with management believing that some price adjustment is inevitable. Texas Instruments reportedly raised prices starting from April 1, with some analog and embedded products increasing by 15% to 85%, and the second round of price increases to take effect starting from July 1. NXP raised prices for some products starting from April 1, and is reportedly preparing for a second round of price increases starting from June 1. Analog Devices (ADI) also stated that it has raised prices in FY26 to offset input cost inflation.

Bernstein emphasizes that current downstream inventory levels are very lean, and price increases will drive inventory replenishment, which in turn will drive more demand growth and exacerbate supply shortages, leading to more earnings revisions.

The Upward Momentum of the Cycle Strengthens

After nearly two years of decline, automotive semiconductor revenue recovered its year-over-year growth for the first time in Q4 2025 (+4%), accelerating further to a year-over-year increase of 11% in Q1 2026, remaining flat sequentially, outperforming the seasonal performance of the past six years. Regionally, this is the second consecutive quarter where all regions have recorded year-over-year growth, for the first time in three years. The United States is the fastest-growing region, with a year-over-year increase of 12%, followed by Europe (+10%) and Japan (+7%).

From a company perspective, for the first time in over four years, all companies have reported positive year-over-year growth. Qualcomm leads with a year-over-year increase of 38%; followed by STMicroelectronics (+15%), Melexis (+15%), Infineon (+10%), Renesas (+8%), ROHM (+7%), NXP (+7%), Texas Instruments (+mid-single-digit%), ON Semiconductor (+5%), and Analog Devices (+2%).

Management Outlook Becomes More Positive

Based on 2Q26 guidance, 7 out of 10 companies expect sequential growth in automotive business, with only ON Semiconductor and Melexis guiding flat. More importantly, 9 out of 10 companies expect growth in automotive revenue in 2026. Bernstein believes that the industry has begun to enter a moderate upcycle from the bottoming out phase, but there is no evidence yet of a widespread restocking wave.

Infineon stated that low customer inventory is triggering the beginning of a broader restocking, with significantly strengthened order books, especially from China and Europe. Renesas reports that both sell-in and sell-through exceeded expectations, and channel inventory still needs to be replenished further to support demand. Analog Devices points out that it has recorded record orders, with a positive book-to-bill ratio and customer inventory remaining low.

The Market Structure Undergoes Structural Changes

Although analog IDMs experienced a mild contraction during the downturn, the overall automotive semiconductor market still grew to $87 billion in 2025, driven mainly by the increased demand for storage and SoCs due to the rise in ADAS content. For the first time in over a decade, a new player has joined the top five—Micron replacing Renesas to