Automotive chips, how long can they last? | E-energyIT
Automotive chips, how long can they last?
Just a few days ago, Infineon smashed 5 billion yuan to expand production capacity of 12-inch plan is still making people sigh the automotive chip market "dominant" still, after all, the global semiconductor market downturn is an indisputable fact, but the automotive chip maker Infineon still choose to expand production against the trend, and even made the largest single investment in history, which seems to be the automotive chip market This seems to be the biggest proof of the strong upward momentum of the automotive chip market.
However, a week later, internationally renowned investment institution DAMO Securities warned that there is an oversupply of automotive chips, and pointed out that Renesas and ON Semiconductor have issued a cut order, will cut orders for chip testing in the fourth quarter. At a time when consumer electronics is weak, the automotive business once became the "lifeline" of many chip makers, from the beginning of 2020 to the end of 2022, the former infinite scenery is going to usher in the curtain moment?
Automotive chips in the "surplus" storm?
In fact, before, TSMC and the world advanced on the quarterly law said that the car and server chips will be adjusted inventory warning. And the big Morgan securities that automotive chips will turn from shortage to oversupply, mainly for two main reasons: First, TSMC 3 quarter automotive semiconductor wafer output annual growth of 82%, 140% higher than before the epidemic; Second, China's electric car sales turn weak (accounting for fifty to sixty percent of the world's electric vehicles), so that automotive semiconductors have been fully supplied, which led to automotive chip makers have cut orders.
The big Morgan semiconductor industry analyst Zhan Jiahong pointed out, compared with the global automotive semiconductor revenue trend and automobile production changes, can find that in recent years the automotive semiconductor revenue compound annual growth rate (CAGR) up to 20%, but only 10% of automobile production. Based on this trend, the oversupply of automotive semiconductors should have occurred at the end of 2020 and the beginning of 2021, but at that time, it was affected by the spread of the global new crown epidemic, and transportation was not smooth or even cut off, resulting in an extreme shortage of automotive chips and a continuous shortage of goods. However, recently, as the impact of transportation tends to ease, the increase in production capacity of chip manufacturers, coupled with the weakening of automotive end demand, resulting in the full production of automotive chips, the long-standing chip shortage problem plaguing the automotive industry has officially ended.
From a cyclical point of view, the shortage of automotive chips has been more than 3 years. 3 years ago, due to automotive manufacturers did not predict the rapid growth of new energy vehicles, smart cars, and therefore did not order chip manufacturers in advance, coupled with the impact of the epidemic, automotive chip shortage has become more and more serious. 3 years later, as the global epidemic tends to ease, the semiconductor market also due to high inflation led to demand contraction, coupled with the past few years of investment in new chip manufacturers Production capacity gradually released, the shortage of automotive chips to be relieved seems to be a natural thing, but many car manufacturers do not seem to feel the joy of automotive chips "within reach".
Just a few days ago, Ford CEO Jim Farley is still straightforward: "It's too painful, we need chip engineers. According to the Ford chief, chip supply constraints have cost Ford 1.3 million vehicles over the past two years, and the same problem has cost Ford 4 million employee days this year.
Apparently, Ford is not the only one whose car production has been affected by the lack of chips, as Changan also lost 606,000 vehicles in the first nine months of this year. According to Auto Forecast Solutions, an automotive industry data forecasting company, the global automotive market had lost a cumulative total of about 3.905 million vehicles this year due to the chip shortage by the end of October. According to the forecast, the cumulative production cut in the global automotive market will climb to 4,278,500 vehicles by the end of this year, an increase of about 16,200 vehicles from the previous estimate.
Judging from the number of cars whose production has been cut due to the lack of cores, the shortage of car chips is far from being the end of the story. On the other hand, according to the Economic Daily News, unnamed IC designers also said frankly that, compared with the previous situation of an unbelievable shortage of automotive chips, the supply and demand are now indeed more balanced, and the situation of long and short supply chain materials has improved, but still not to the extent of oversupply.
Why is the shortage of automotive chips still a problem, when it has been three years since the company began to lack them? Since the upstream chip cut single wind has been rumored, then the automotive chip market can still hold up for how long?
There are two main reasons why automotive chips are still in short supply: First, the automotive supply chain is long and complex. From the fab output chip to the automotive supply chain processing, and then to the supply chain like Bosch such a large factory can output, at least three to five months, after which they have to go through the group car factory to obtain the car chip and then assembled into a car, during which time, the time to reach the destination through logistics and sea transport is quite long. According to the Economic Daily News, many car manufacturers believe that the current supply chain situation, I'm afraid that by the middle of next year, because of the chip shortage caused by the lack of car problems, can not be improved.
Secondly, there is a serious shortage of mature chips needed for cars. Compared to advanced chips, mature chips are a major impediment to the production of cars, such as Ford's MOSFET chip for windshield wipers, the cost per chip is only $ 0.40, but it has affected the production of 40,000 vehicles for Ford.
To continue Moore's Law and strengthen their position in the foundry sector, semiconductor majors such as TSMC and Samsung have made a major push into advanced processes, but these moves have been more like a life-threatening butcher's knife for automakers hungry for mature chips. Although currently driven by the huge demand, chip makers have also realized the market prospects of mature chips and started to expand investment, but "distant water cannot put out a nearby fire", how can the future capacity of mature chips fill the immediate chip gap?
Jeremie Bouchaud, head of S&P Global Mobility Autonomy and E/E & Semiconductor, believes that in 2022-2023, chipmakers' investment in expansion of the surge in mature process node capacity will not show the desired capacity results any time before the next 18-32 months, which is the average lead time for commissioning new capacity in the semiconductor industry.
Although Mercedes-Benz, Hetai, Yu Ri car and other car manufacturers that the shortage of automotive chips will not be solved until next year, but from Jeremie Bouchaud proposed this point in time, automotive chips next year to get relief is already very optimistic expectations, Bosch China Executive Vice President Xu Daquan said, the lack of core problem has not been solved, and the forecast for next year is not optimistic, many chip suppliers respond Next year can not meet the procurement needs, the current supply of automotive chips there is still a gap, some chips gap is larger. Ford Farley even believe that the automotive industry chip crisis is unlikely to ease until 2025.
Storage makers, relying on cars to blow the counter-attack horn
At present, the automotive chip to hold up for another two or three years should not be a problem, but as a member of the semiconductor industry, the cycle fluctuations are inevitable, even if the supply exceeds demand again today, there will be a day of oversupply, DAMON Securities has given the industry a precautionary shot in advance, ON Semiconductor, Renesas cut orders also hinted at the seeds, but other chip makers for the automotive business preference is still "Emboldened", even storage vendors who are now facing the brunt of the semiconductor downturn market.
For storage manufacturers, 2022, especially in the second half of 2022, the situation is particularly difficult, storage market shrinkage serious, affected by its impact, the world's top three storage manufacturers Samsung Electronics, SK Hynix and Micron Technology in the third quarter of this year, the amount of revenue fell sharply, Samsung's third quarter sales fell 28.1% ringgit, and therefore by Intel to take away the leading position in the semiconductor market, SK Hynix Sales fell by more than 26% and Micron's sales fell by more than 27%.
In contrast to data centres, personal computers and mobile devices, where demand has fallen sharply, demand for high-performance chips for electric vehicles is growing rapidly, which may be one reason why storage vendors are turning their attention to automotive semiconductors. On the other hand, as smart cars become more popular, the demand for memory in cars is growing. The most common definition of a smart car is a "smartphone with four wheels", and in the years of smartphone development, the more memory you buy, the more you feel, and the more you socialise.
Software, games, etc. all take up a large amount of memory, and from this point of view, it is an irreversible trend that the memory capacity of smart car configurations will only get larger. According to Micron's estimates, a fully self-driving car will require 30 times or 100 times more DRAM and NAND than a human-driven vehicle alone.
Samsung, as the world's number one storage manufacturer, has made a recent push in the automotive semiconductor sector for all to see. Samsung Electronics predicts that automotive semiconductors will grow into the top three chips along with chips for servers and mobile devices by 2030, so it has set a target to take the number one position in the automotive memory market by 2025 and plans to respond to the demand for high-performance automotive semiconductors by offering next-generation memory solutions such as LPDDR5X and GDDR7 chips.
Samsung launched the industry's first automotive UFS solution back in 2017, and late last year Samsung began mass production of automotive memory with a product lineup that includes 256GB PCIe Gen3 NVMe ball grid array package (BGA) SSDs, 2GB GDDR6 DRAM and 2GB DDR4 DRAM for infotainment systems, and 2GB GDDR6 DRAM and 128GB Universal Flash Storage (UFS) for self-driving systems. As for SK Hynix, another Korean storage major, which set up an automotive team in 2016 to specialize in DRAM for cars, businesskorea recently reported that, like Samsung, SK Hynix is also turning its attention to automotive semiconductors.
However, when it comes to the current automotive DRAM, Micron is naturally the best. Micron has been working on automotive chips for more than 30 years, and with its geographical advantage, long cooperation with Tier-one car manufacturers in Europe and the US, and a full range of products (most traditional DDR to DDR4, LPD2 to LPD5 and GDDR6, as well as NAND, NOR Flash and MCP), it has a market share of nearly 50% in the automotive DRAM sector. As the top automotive storage supplier, we have a strong market share of nearly 50%.
As a top automotive storage supplier, Micron is very optimistic about the future of the automotive market, estimating that by 2025, the annual growth rate of DRAM bits in the automotive market will reach 40% and NAND 49%. Early last year, Micron launched LPDDR5 memory specifically designed for automotive use, with a 50% increase in data access speed and over 20% improvement in energy efficiency, making it the industry's first automotive memory to meet ASIL Safety Level D requirements. In November this year, Micron officially launched the world's most advanced 1β technology node DRAM, and while it has only sent samples to some smartphone manufacturers and chip platform partners for validation, Micron has also highlighted that it will mass produce 1β nodes in other applications such as industrial and automotive, embedded, and data centre in the coming year.
In addition, Taiwan's Nan Ya Tech and Huabang Electric are diversifying into the automotive market. Nanya has a complete product portfolio from DDR to DDR4, LPSDR to LPDDR4X, with stable yields for now. Huabang, on the other hand, has been working in the automotive field for more than 10 years, and its NOR Flash and niche DRAMs have been steadily supplied to the world's top tier car manufacturers.
The general manager of Huabang Electronics, Mr. Chen Pei-Ming, recently emphasized that Huabang Electronics will actively enter the automotive market, which is more favored by the market. According to him, in terms of Nor Flash, Huabang Electronics has about 20% of the automotive market in the industrial control field, and will further develop the DRAM field for automotive use in the future.
Macronix has been expanding into the automotive market since 2009 and has shipped more than 440 million units of coded flash memory worldwide. Its automotive NOR flash chips have penetrated many chip makers including NXP, TI, NVIDIA, STMicroelectronics and Qualcomm. It is expected that every luxury car will use Macronix's chips by 2023, making it the leader in automotive NOR Flash. Although Macronix's 2022 capital expenditure has been revised downward from the original NT$16 billion to NT$10.6 billion due to the general environment, Macronix will focus its future capital expenditure on NOR Flash applications and strive to maintain stable prices in the fourth quarter and 2023.
Although many storage manufacturers are turning to automotive semiconductors, it is not easy to do a good job with automotive chips. For example, since the life span of a car can easily start at 10 years, the maintenance and durability requirements for automotive storage product lines are much higher than those for commercial products; or in order to adapt to the different extreme climates of different countries, automotive memory needs to have a higher temperature tolerance threshold to avoid sudden failures during driving. All of these will pose challenges for automotive DRAMs with high production difficulties and high production costs.
Wafer foundry, pure car manufacturers will also be the target?
The automotive track is arguably the first new track that foundries are actively pursuing as consumer electronics shrink.
The cause is that TSMC's 5 nm fab in Arizona, USA is about to be completed, and foreign media reports say that one of the fab's most important customers is the electric car leader Tesla, and may be the largest order for TSMC's US plant, TSMC will OEM the new generation of fully automated driving (FSD) chips for Tesla, with 4/5 nm process production, and Tesla is expected to become the top 7 customers in 2023. TSMC's top 7 customers. If the news is true, then Tesla will be the first pure-play car manufacturer to appear among TSMC's main customers.
In the past, TSMC's top 7 customers were mostly branded factories, IC design companies and IDM factories, but this is the first time a pure car manufacturer has been included. Although neither Tesla nor TSMC has responded to this news, it must be admitted that TSMC's recent assault on the automotive sector has been very aggressive. In addition to the DAM Securities pointed out, TSMC 3 quarter automotive semiconductor wafer output annual growth of 82%, TSMC three quarter automotive electronics revenue is also very impressive, earnings data show that TSMC 3 quarter of this year, automotive electronics revenue accounted for about 5%, related revenue amount quarterly growth of about 15%, quarterly growth in the top three applications. Legal estimates, the third quarter of this year TSMC from automotive electronics revenue exceeded $1 billion.
In the field of MCU, TSMC production of automotive MCU has occupied about 70% of the market share, Infineon, ST, NXP, TI, Renesas Electronics and other major suppliers of MCU using TSMC foundry; in terms of capacity planning, TSMC Nanjing and Japan production line, are likely to be used for automotive wafer production.
In this news of Tesla's order for TSMC, the former can have a more advanced manufacturing process, the latter can have a not insignificant order, and Samsung may become the only injured person in this news. As the world's second largest foundry after TSMC, Samsung was the main foundry partner for Tesla's previous generation of fully automated assisted driving chip, Hardware 3.0, mainly using the 14nm process.
At the end of last year, it was revealed that Tesla and Samsung Electronics' foundry division had been working on chip design and prototyping since early 2021, with Tesla eventually deciding to outsource the HW 4.0 Autopilot chip to Samsung, which will be produced at its Hwaseong plant in South Korea using a 7nm process. But a year later, it was rumoured that Tesla would switch to TSMC's main supply and Samsung would provide the previous generation of older chip production and memory part support, which should not hurt Samsung a little.
After all, from the industry's estimates, Tesla's order volume is very substantial. The industry to Tesla production plan estimates, Tesla next year's production scale is expected to jump from 3 million vehicles, to fully automatic assisted driving chip using 2 chip design (a main and a backup assistance), if a long contract to focus on TSMC and with advanced packaging and other design, TSMC order volume is estimated to reach nearly 15,000 pieces, and continue to grow rapidly. From this point of view, with the continued expansion of the future smart car market scale, those self-researched chip-making core forces may also be expected to become the target of the foundry competition.
Although it is unknown whether Samsung will really lose this order from Tesla, but the car as a popular track nowadays, Samsung since in the field of memory chips will not miss, in the foundry market is even more so. October South Korean analysts pointed out that Samsung has plans to invest in Europe to build a new fab, its target customers is the European automotive electronics semiconductor demand. At the same time Samsung also shared its intention to strengthen its automotive semiconductor business at a technology forum held recently.
At the 2022 Foundry Forum, Samsung's Foundry Division also revealed plans to increase the number of mature and specialised processes in foundries by more than 10 by 2024, which would increase capacity by 2.3 times what it was in 2018. This is certainly good news for car manufacturers who are in serious shortage of mature chips.
In addition to TSMC and Samsung, of course, other foundries are also actively laying out their plans. UMC confirmed that automotive chips will be one of its focus areas and spine for the layout of special processes; World Advanced Automotive Electronics continues to introduce a number of process technologies and into mass production, and into the supply chain of international automotive majors; Gecon will continue to expand its automotive chip production capacity; Hua Hong to enter the automotive chip market; Jinghe automotive certification to accelerate...
As for why foundries actively layout automotive chip track, "foundries, targeting new track" article will be attributed to three reasons: First, the automotive market growth is large, production capacity continues to be tight; Second, the industry chain model adjustment; Third, "lack of core tide" after the automotive industry chain reshaping. But perhaps this is also inseparable from the automotive supply chain is too complex, as mentioned above, automotive chip from the foundry cast production to the end market, the middle needs a long time, the foundry only ahead of the deployment to cope with the subsequent boom recovery demand, but also to avoid the loss of chip drought repeat.
Packaging and testing manufacturers, local enterprises accelerate the layout of automotive packaging
From the perspective of the industry chain, the impact of the general environment on packaging and testing plants is not small, with many manufacturers extending their inventory correction to the first half of next year and lowering their capital expenditure planning for next year. However, even so, they remain bullish on the continued solid demand for automotive and industrial control.
In November, ASE spent US$300 million to build a new factory in Malaysia, which is expected to be completed by 2025, stressing that the new factory in Malaysia will cater to the demand for 5G, artificial intelligence, high-performance computing and automotive electronics. In addition, ASE's Huanxu Electronics is also actively expanding its automotive electronics business, aiming to exceed US$1 billion in annual automotive electronics-related revenue by 2024. ASE Semiconductor, on the other hand, has been developing chiplet advanced packaging, targeting artificial intelligence and automotive applications.
Although computers and communications are still the main pulling force in the IC market, automotive applications account for a relatively low proportion, but looking to the future, the prospects are undoubtedly huge, IDC report shows that the size of China's new energy vehicle market will reach 15.98 million units in 2026, a compound annual growth rate of 35.1%. A large part of the reason why chipmakers are turning to automotive semiconductors is to over-deploy to deal with the booming future. As for the oversupply problem they may face in the future, the entire semiconductor industry has a cyclical nature, so as long as the strength is strong, why fear the unknown future?
Prepare your supply chain
Buyers of electronic components must now be prepared for future prices, extended delivery time, and continuous challenge of the supply chain. Looking forward to the future, if the price and delivery time continues to increase, the procurement of JIT may become increasingly inevitable. On the contrary, buyers may need to adopt the "just in case" business model, holding excess inventory and finished products to prevent the long -term preparation period and the supply chain interruption.
As the shortage and the interruption of the supply chain continue, communication with customers and suppliers will be essential. Regular communication with suppliers will help buyers prepare for extension of delivery time, and always understand the changing market conditions at any time. Regular communication with customers will help customers manage the expectations of potential delays, rising prices and increased delivery time. This is essential to ease the impact of this news or at least ensure that customers will not be taken attention to the sudden changes in this chaotic market.
Most importantly, buyers of electronic components must take measures to expand and improve their supplier network. In this era, managing your supply chain requires every link to work as a cohesive unit. The distributor of the agent rather than a partner cannot withstand the storm of this market. Communication and transparency are essential for management and planning. In E-energy Holding Limited, we use the following ways to hedge these market conditions for customers:
Our supplier network has been reviewed and improved for more than ten years.
Our strategic location around the world enables us to access and review the company's headquarters before making a purchase decision.
E-energy Holding Limited cooperates with a well -represented testing agency to conduct in -depth inspections and tests before delivering parts to our customers.
Our procurement is concentrated in franchise and manufacturer direct sales.
Our customer manager is committed to providing the highest level of services, communication and transparency. In addition to simply receiving orders, your customer manager will also help you develop solutions, planned inventory and delivery plans, maintain the inventory level of regular procurement, and ensure the authenticity of your parts.
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