In late May 2026, STMicroelectronics, Infineon Technologies, and Vishay Intertechnology successively issued price increase notifications. STMicroelectronics stated that due to persistent inflation and rising costs of raw materials, transportation, and labor, it had expanded its price adjustments to product lines not previously covered at the beginning of the year. Vishay noted that sharply increasing prices of key precious metals had made it impossible to continue absorbing costs through internal optimization alone, and thus decided to implement emergency price hikes for its MOSFET and IC product lines, effective from subsequent shipments. Infineon attributed cost pressures to geopolitical tensions and emphasized the need for customers to share the burden of capacity expansion investments. This synchronized price adjustment by the three companies is not an isolated incident. Since January 2026, NXP Semiconductors led the way by raising prices on automotive MCUs and processors by 5% to 15%. Renesas Electronics initiated its annual price adjustment citing increased wafer foundry and packaging material costs. In March, Texas Instruments raised prices on certain automotive analog chips by 8% to 12%. As a result, all major global suppliers of automotive-grade semiconductors have now joined this round of price increases. The drivers behind these price hikes are multifaceted: prices of precious metals such as palladium, gold, and platinum continue to rise; shipping costs have rebounded; and base materials including silicon wafers, photoresists, and ultra-high-purity chemical reagents have also seen simultaneous price increases. Additionally, foundries such as TSMC, UMC, and GlobalFoundries had already raised their wafer pricing in 2025, passing costs downstream. Multiple manufacturers explicitly stated that their internal cost-absorption capacity has reached its limit and are now linking “acceptance of price increases” directly to “guaranteed supply.” Beyond semiconductors, overall vehicle manufacturing costs are being pushed higher by multiple factors. Li Bin, CEO of NIO, revealed that since 2026, rising prices of raw materials like nickel, cobalt, and lithium carbonate have increased per-vehicle costs by over RMB 10,000. Specifically, battery-grade lithium carbonate prices have fluctuated between RMB 150,000 and RMB 200,000 per ton, adding RMB 6,000–8,000 to the cost of a 70 kWh battery pack compared to previous lows. Copper and aluminum prices have each risen by more than 20%; with per-vehicle copper usage reaching 80–100 kg and lightweight aluminum usage exceeding 250 kg, combined material cost increases amount to RMB 2,000–3,000. Moreover, the Red Sea crisis has driven up ocean freight rates, while structural increases in domestic industrial electricity tariffs have further burdened manufacturing operations. Most vehicles currently on the market were priced based on cost structures from 2024 or earlier, meaning actual manufacturing costs now significantly exceed retail prices. Estimates suggest that semiconductor price hikes alone have added RMB 500–1,000 to per-vehicle chip costs. When combined with other factors, total cost increases could far exceed RMB 10,000. Meanwhile, mainstream Chinese automakers typically earn net profits of only RMB 2,000–8,000 per vehicle, leaving some companies operating at a loss on every unit sold. Industry profit margins remain under sustained pressure. From January to April 2026, the overall automotive sector’s profit margin fell to 3.4%, a sharp decline from the 9% level seen a decade ago. Automakers’ bargaining power has weakened, shifting profit allocation upstream. Although some OEMs are attempting to alleviate pressure through simplified configurations, software subscriptions, or requiring Tier 1 suppliers to share costs, domestic alternatives in power semiconductors and high-end MCUs remain insufficient to provide meaningful near-term support. On the market front, a two-year-long price war has made automakers hesitant to raise prices. However, signs emerged in the first half of 2026—including reduced promotional discounts, higher MSRP on updated models, and recovering used-car residual values—suggesting a subtle shift in the pricing equilibrium. Yet, against a backdrop of weak consumer confidence, any price increases risk suppressing demand and further exacerbating operational risks. Looking ahead, global semiconductor capacity expansions are expected to come online en masse between 2027 and 2028, potentially easing supply tightness. Until then, automakers must confront the reality of a structurally elevated cost base. Industry consolidation, technological cost reduction, and supply chain restructuring will be critical pathways to restoring profitability.