Author: Yan Yan
At the end of the year, everyone is concerned about the global automotive chip supply situation. Overall, the chip supply problem is gradually improving, with the inventory of major suppliers starting to increase.
Prior to these few months, the inventory levels of major automotive chip suppliers such as Japan’s Renesas Electronics, the Netherlands’ NXP Semiconductors, Germany’s Infineon Technologies, Switzerland-based STMicroelectronics, and US-based Texas Instruments have all increased.
However, overall, car companies that have been hit hard still have a sense of urgency for chips, and overall demand remains high, with the future outlook still uncertain for the next few months.
The increase in chip inventory levels indicates that the supply crunch that forced car makers to shut down assembly lines this summer is easing due to factors such as an increase in chip manufacturer production.
Globally, the COVID-19 pandemic has been intermittent, but the global automotive market is recovering rapidly. Coupled with recent domestic support policies for new energy vehicles, major automakers are also actively producing to meet the market demand explosion. However, who would have thought that the “chip” shortage would become the car makers’ “nightmare”. This problem can be traced back to its direct relationship with the COVID-19 pandemic.
China’s COVID-19 pandemic started in early 2020, which caused sudden market changes, leading to a significant misjudgment of car manufacturers’ production and demand. This misjudgment not only exists in the automotive industry but also spreads to other chip-dependent industries such as consumer electronics and industrial electronics, directly leading to a reduction in the scale of chip production. But what the market did not anticipate was that starting from the end of 2020, the domestic epidemic situation in China greatly improved, and the demand compressed earlier suddenly rebounded. When many chip-dependent industries simultaneously put on full throttle, the chip supply cycle was longer than that of other automotive component manufacturers, ultimately resulting in a global shortage of chips.
A traditional car has nearly 30-70 ECUs, and each ECU controller contains a large number of automotive electronic chips. Automotive chips are the foundation of the information technology development of the automotive industry, and the most indispensable part of the automotive industry at present.
In 2019, the global automotive chip market size was about 47.5 billion US dollars, mainly classified by use, with microcontrollers (MCUs and SOCs) accounting for 30%, analog circuits accounting for 29%, and sensor and logic circuits accounting for 17% and 10%, respectively. China’s domestically produced automotive chip scale is less than 15 billion yuan, accounting for only 4.5% of the global production capacity. For key components such as MCUs, the import rate exceeds 80%-90%.In the automotive chip field, MCU chips are the most concentrated type of product in terms of supply and demand contradictions. The microcontroller (MCU) integrates the central processor, memory, flash memory, counter, A/D conversion, serial interface and other peripheral interfaces into a single chip, forming a chip-level computer that performs different control functions for different application scenarios.
MCUs are widely used in various electronic devices, including consumer products such as mobile phones, PC peripherals, various household appliances, remote controls, etc., as well as industrial products such as stepper motors and control for robotic arms, involving smart homes, consumer electronics, network communications, industrial control and other fields.
From the perspective of the automotive industry, according to statistics from the Market Intelligence & Consulting Institute (MIC), the world’s top five MCU IDM companies in the automotive industry, including NXP, Renesas, Infineon, TI, and Microchip, outsource the manufacturing of 60%-70% of their car MCUs to TSMC. This has created a huge manufacturing capacity bottleneck, accelerating the shortage of core automotive chips.
In fact, the development of automotive electrification has gradually evolved from a distributed and compatible EE architecture with a relatively high dependence on ECUs to a centralized EE architecture across domains. From the standpoint of the entire vehicle function distribution, the new EE architecture, based on the vehicle computing platform (combining edge computing and cloud computing), places higher demands on chip functions. In the centralized electrical and electronic architecture, the domain division method is employed to integrate subordinate or related parts as much as possible, especially through system and software integration, breaking down the original hardware configuration, and only requiring a small number of domain controllers as the main calculation and scheduling units within a domain.
This has actually led to the replacement of existing architectures and products, and has also made global automotive electronics companies reluctant to expand their production capacity too much on their existing product lines. What should be done if there are new demands for supply of old products while new products and architectures have not yet been developed in recent years?
An interesting phenomenon that has emerged is direct communication between chip procurement platforms and whole vehicle enterprises.
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.