On June 29, 2021, Bao Haisen, Minister of Strategic and Business Development (Automotive Field) at Shanghai HiSilicon, was invited to deliver a speech on the trend insights of China’s automotive semiconductor industry at the 2021 China Automotive Semiconductor Industry Conference.
- Insight into the automotive semiconductor industry
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The automotive industry, like consumer electronics, is about to enter an era of intelligence. The characteristics of the current intelligent era are interconnectivity, perception, and intelligence. If a car, as an intelligent terminal, enters the new era of intelligence, it must have basic thinking capabilities, from physical world perception to physical world expression, which requires basic connectivity and core computing. However, the entire semiconductor industry in China, whether it is perception, connectivity, or expression, is relatively backward.
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Before 2000, semiconductors were mainly used in specialty fields such as aerospace, military, and home appliances. Between 2000 and 2010, the development of the entire semiconductor industry was driven by computers, especially desktops and laptops. In the past decade, mobile phones and tablet computers have been the main drivers.
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But now we are facing a new decade, which may bring a new challenge. The killer applications of the future may be edge computing, AI, or even cars. In fact, China’s intelligent automotive industry is already in a semi-leading position internationally. Chinese cars may become a new driving force leading the development of the next generation of semiconductors, but we are not prepared for it and need the industry to work together.
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Although China accounts for more than 60% of global semiconductor purchases, it only consumes a third. This means that half of what we purchase is exported through processing of incoming materials. Mobile processors and some classification devices have relatively high market share, but they have been affected by recent geopolitical struggles. However, through recent efforts, this proportion may change dramatically in the next five years.
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In terms of cars, China is currently most advanced in entertainment systems, but relatively backward in basic car bodies and power systems, whether it is components or semiconductors.
- Opportunities and challenges for China’s semiconductor industry
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Since 2017, autonomous driving has become a hot topic, but the topic has gradually declined since 2019, because autonomous driving is a long-term process. We predict that manual driving will still be the mainstay in the next ten years, and autonomous driving will only be in a small number of scenarios, such as mines and parks. Currently, manual driving and L4 and below manual driving are still the mainstays. But this will also bring more opportunities. For example, the demand for ADAS will bring more than 20% rapid growth to the DSP and SOC field.- The smart automotive industry this year has surpassed the heat of China’s economic growth. Due to the popularity of smart cars, there has been an increase in demand for chips. In the past, semiconductors in the automotive industry were a niche market. However, due to the significant impact of the automotive industry on GDP, and the restriction on car production caused by a lack of chips, the international community has started paying attention to it.
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Traditional car companies are gradually initiating their own autonomous control plans, while new forces from the Internet are entering the automotive industry by either manufacturing cars or producing core components. This indicates that more manufacturers are focusing on automotive intelligence, bringing new vitality to the industry. From a future perspective, the proportion of the entire automotive semiconductor or automotive electronics industry in the entire vehicle will continue to rise. Thus, the outlook is still positive.
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The entire chip industry is a large industry with a small market and an oligopoly. It also involves deep customization. Although the global size of the entire chip industry appears to be nearly 4 trillion, China alone accounts for nearly half of the market. Although the industry is large, the market is small because chips have numerous categories, and the scale of each vertically integrated chip area is very small. The area with the most potential in the future is possibly SOC, while MCU is currently more significant. However, even in the case of MCU, the scale is only around 16 billion dollars, and there are countless categories. Oligopoly exists, with the top 10 global manufacturers occupying 90% of the market share. This situation makes it increasingly difficult for new entrants to enter the market. We now see many automobile manufacturers entering chip design. However, this does not necessarily mean investing in semiconductor manufacturing and design. Instead, they are more involved in deep customization work.
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Automotive chips are more stringent than traditional industrial and consumer chips, and their design life is also different. Consumer chips only need to consider a three-year lifecycle, which may be upgraded after three years. However, a car must maintain a production cycle of more than ten years with a life expectancy requirement of 200,000 kilometers. Temperature and humidity requirements are also different from consumer electronics, and product yield must be high. Additionally, due to high customization, single-product output is lower, the return on investment cycle is longer, and it may even exceed eight years.
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The transformation of traditional past distributed architecture to domain controller centralized architecture requires new semiconductor designs and manufacturing. For example, in the increasingly popular software-defined cars, future cars will need to be connected to the network and require cloud services and real-time OTA updates. This change in business models will also affect chip design, and the need for increased data and multiple scenarios/applications will lead to longer development cycles.
- Outlook for the Automotive Semiconductor Industry
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Chinese independent companies have already entered the power device and power supply, transceiver, driver, storage, MCU, and SOC sectors. Traditional chip giants, such as Nvidia, can enter the automotive industry through industrial devices. Therefore, we will face many challenges.- Cabin chips are expected to reach nearly $2.9 billion by 2025. However, customers require high-performance automotive-grade products. ADAS chips are also a fast-growing category, with an estimated penetration rate of nearly 70% by 2025 due to the current low scale. The third category is the traditional chip market for automobiles, where MCUs are no longer focused on by the semiconductor industry. However, due to last year’s supply tension, it directly affected the large-scale production halt of automobiles. From the market perspective, the automobile field for MCUs accounts for 37% of the market share, so their unit price is still relatively high. In addition, the main manufacturers of automotive MCUs are currently dominated by foreign giants, with only a few domestic manufacturers starting to enter the field of automotive MCUs.
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According to the development of storage technology, by 2040, the scale of producing silicon wafers will cause a shortage in the storage market. Therefore, storage devices will also bring about new changes. After the interconnection and perception of all things, information security is absolutely the top priority. In the future, there will be a lot of information security challenges, because when the information has developed, it will definitely bring about information sharing. For example, there is no relatively mature analog device for taste perception yet. In an intelligent society, cars are in a state of being a robot, so they surely need a lot of sensor devices that require analog components. There will be plenty of market space for these analog devices.
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According to current communication technologies, the current core technologies cannot transmit the massive amount of data that we generate. Even the 5G network alone is far from sufficient. This field will become a development opportunity for the future of semiconductors.
🔗Source: 2021 China Automotive Semiconductor Industry Conference
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.