Electrical Equipment / Components & Telecoms

"Core shortage" has become a painful pain for global auto companies.

In 2021, automotive chips that have been unknown for a long time have been repeatedly exposed to extreme shortages, and chips have become the hottest supply problem in the automotive industry nowadays.

It is reported that FAW-Volkswagen plans to reduce production by 30% in the second quarter of this year, and the number of production cuts is as high as 200,000; Honda’s joint venture in China has also advanced the summer high temperature holiday to early June due to chip shortages; Tesla, in order to compete for chips, will Pay the supplier in advance to ensure the supply of key materials...

Now car companies are busy looking for "cores" all over the world.

The new crown epidemic has led to insufficient global chip production capacity

Why did the "chip shortage" happen suddenly?

The automotive chip market has long been monopolized by European and American manufacturers. During the epidemic, due to the global economic downturn, the production capacity of chip manufacturers was hit hard, and the supply of automotive chips was tight. Moreover, the rapid development of new energy vehicles has led to an increase in demand for chips, which has exacerbated the contradiction between supply and demand to a certain extent.

At the same time, the volatility of the new crown epidemic has also allowed companies to see potential crises, and they are placing orders in advance to reserve more inventory to deal with future market uncertainties.

Chips rely on imports, and the problem of "stuck necks" is serious

The intelligent level of automobiles continues to improve, and the demand for chips for vehicles is also increasing day by day.

The automotive chip industry has a high market concentration, and semiconductor giants such as NXP and Texas Instruments have monopolized this field for decades.

China's independent chip market share only accounts for about 5%, and the dependence on chip imports is higher than that of oil.

Among them, China's automotive-grade MCU (micro control unit) is almost 100% dependent on imports. The chip crisis this time is mainly due to the shortage of MCUs.

Automobile chip production technology is difficult, and the research and development cycle is long

Car chips are related to driving safety, and the requirements for quality are very high. Chip is an industry with a long related industry chain and requires coordination in various fields, involving software, computers, new materials, manufacturing equipment, precision processing and other industries, with large investment, long cycles, high risks, and fierce market competition.

It is understood that it usually takes 5 years for a car chip to go from research and development to mass production to market, plus multiple inspections such as quality certification.

At present, industry giants, such as Intel and Qualcomm, who have the ability to design automotive chips, have serious monopolies. At the same time, chip technology is iteratively updated quickly and investment risks are high.

It is worth mentioning that, in order to adapt to the needs of technological evolution, global chip manufacturers are working on 12-inch wafers, and the capacity of 8-inch wafers is limited. And 8-inch wafers are exactly what automotive chips need.

The chip crisis disrupted the pace of development of the automotive industry

The outbreak of the chip crisis broke the original production rhythm of car companies. Car companies are faced with pressures such as suspension of production due to lack of chips, and frequent changes in production lines, manufacturing equipment and personnel deployment methods in order to maximize the use of chips.

More importantly, the shortage of chips has caused the cost of the entire industry chain to rise in varying degrees. For example, chip-related industries such as copper foil substrates, electronic materials, silicon wafers, and special materials for components have generally increased by 10%-20% since April this year.

Auto suppliers are under pressure to increase chip prices by 10-20 times, and the pressure on market sales will also increase. This is undoubtedly even worse for the inherently weak Chinese chip market.

How to solve the chip problem and weaken the high dependency on chip imports? How to make use of China's superior resources and find a way out for independent innovation of Chinese car-level chips? These are all problems facing China's auto industry.