BMW Supplier Sees ‘Mind-Boggling’ Chip-Price Rises on AI Demand

German auto supplier Aumovio SE warned semiconductor prices will surge next year as booming demand from artificial intelligence data centers gives chipmakers enhanced pricing powers.

The impact from the squeeze on supplies to the auto industry, barely noticeable so far, is set to “explode” in 2027, Claus Bauer, Aumovio’s interim head of finance, said Thursday on a call with analysts.

The Frankfurt-based company, a former Continental AG unit that makes radar sensors, camera systems and connected cockpit electronics, expects a gross negative impact on earnings of around €1 billion ($1.1 billion) next year from higher material prices, particularly due to semiconductor inflation, he added.

AI data centers are absorbing supply at a capacity and prices automotive customers struggle to compete with, Bauer said, calling the cost dynamic “mind-boggling.”

Aumovio, which as well as BMW AG counts Volkswagen AG, Ford Motor Co. and BYD Co. among its customers, uses semiconductors across products ranging from braking systems to vehicle computers and other electronic control systems.

Its practice of annually negotiating contracts with suppliers means pricing can see a significant reset at the start of each year, Bauer said. Aumovio plans to pass on some of the additional costs to clients through price increases and offset the rest via revamping products and broader spending cuts.

Chip suppliers could double the capacity they sell to data centers, Bauer estimated, adding that the segment has “no price sensitivity whatsoever.”

Aumovio sees little relief from soaring data center demand next year, although power-generation constraints could eventually slow down the expansion, he added.