Car lacking cores to stop production?
The auto industry is also stuck, “the black hand behind the scenes” or chip.
Recently, it has been reported that, due to the shortage of automotive chips, from the beginning of December, most of the domestic high-end automobile manufacturers are facing the risk of production stoppage, of which, North and South Volkswagen (SAIC-Volkswagen and FAW-Volkswagen) have entered the production phase in early December. If the chip gap is not recovered, 4 million units a year of production capacity will be affected.
A stone stirred up a thousand waves, from cell phones to cars, stuck chip, once again ignited public opinion hot spots.
In this regard, Volkswagen China said that the chip supply has indeed been affected, but the actual situation is not as serious as rumors, is currently seeking solutions, and coordination with suppliers to start work. In addition, the vehicle market delivery has not been affected.
However, AI Finance News Agency learned from informed sources, North and South Volkswagen did have some factories in the first week of December due to chip shortages shut down for a day or two, but after re-scheduling, the current level of production capacity has been lower all back to work to resume production.
“The chip shortage is real, and caught up with the end of the year car enterprises scheduling season, production capacity is indeed affected,” said the person, “but car enterprises will generally stockpile a large number of, after the shutdown during the re-scheduling, the follow-up will not lead to the shutdown again.”
On December 8, the China Association of Automobile Deputy Secretary General and Minister of Industry Development Li Shaohua also told the media that the chip supply shortage is real, but not as serious as part of the media reports, the superposition of multiple factors, resulting in the contradiction between supply and demand of chips in this time period concentrated appear. A number of automotive companies have told AI Finance News Agency that their own factory capacity has not been affected by the chip supply shortage.
A semiconductor sources told AI Finance News Agency that a car to use dozens of MCU (microcontroller unit), involving the control of the car’s power system, entertainment system, air conditioning system, etc., the number of chips needed would have been relatively large. The shortage of chips is mainly used in ESP (electronic stability control system) and ECU (electronic control module) in the 8-bit functional MCU.
ESP is a part of the car’s active safety system, mainly playing the role of anti-skid. In the Chinese market, all models over 100,000 RMB, especially high-end models, are equipped with ESP, while in some countries such as the US, ESP is mandatory by law.
ECU is widely used in the car control system, the chip gap, mainly in the engine control module on the application of the ECU, “if the shortage can not be solved in the long term, then the impact is still very big.
It is understood that the automotive chip industry chain can be roughly divided into three levels, the most downstream is the OEM, the need to purchase from Bosch and Continental and other first-class suppliers such as ESP and ECU integrated modules, while Bosch and other enterprises need to be more upstream from the STMicroelectronics and NXP and other semiconductor manufacturers to purchase related chips.
In the chip shortage, the first to bear the brunt is the middle of the supply chain. Bosch and Continental have announced that, due to the neo-crown epidemic disrupted the supply of chips for certain electronic components, coupled with rising demand in local markets, as one of the automotive components of the semiconductor chip is facing a shortage of supply issues.
Responding to AI Finance, Bosch said that the global semiconductor parts procurement market is experiencing an overall shortage due to a number of factors. Bosch is not immune. Despite the difficult market conditions, Bosch said it will do its best to ensure the supply of customers, “always maintain close communication with suppliers and customers.
“The fundamental problem is now the chip semiconductor manufacturers,” said an industry insider analysis of AI Financial News, “the overall capacity of the automotive chip industry chain is no problem, the cause of the current chip shortage phenomenon is mainly a mismatch between supply and demand.”
why the lack of cores
Affected by the epidemic, most of the chip suppliers to reduce capacity or shut down factories at the beginning of this year, coupled with a pessimistic forecast of the car market, as the order situation to plan capacity semiconductor manufacturers, in the absence of sufficient orders, also took the initiative to reduce capacity.
With the epidemic gradually under control in China, the passenger car market has also been significantly recovered, car enterprises to increase production capacity has also led to the chip demand to enhance the supply side of the “mismatch” phenomenon.
“The supply cycle of the chip is 8 to 12 months, the chip shortage phenomenon now appears, up just can be traced back to the epidemic period,” said the automotive industry insiders to AI Finance analysis, “extrapolated down the cycle, the first half of next year, especially in the first quarter, the chip shortage phenomenon will be exist.”
At the same time, the increased demand in the field of consumer electronics, especially cell phone chips, but also to some extent crowded out the production capacity of automotive chips. Home office during the epidemic also led to the growth of demand for laptops, tablets and other electronic products, thereby driving up demand for related chips. A semiconductor source told AI Financial News Agency, the market during the epidemic appeared a lot of similar health medical equipment products, which will also be used in the MCU, the factory will take into account the priorities of supply, which will further squeeze the automotive chip production capacity.
AI Financial Agency learned from a semiconductor industry source that after Huawei was suppressed, Xiaomi, OV want to grab Huawei’s more than 100 million orders, coupled with upstream tension, they will rob through the supply chain to influence the market share, here also brought a lot of repeat orders, “some cell phone The main processors are also experiencing a chip shortage”.
These superimposed factors have exacerbated the global imbalance between supply and demand for chips, leading to a shortage of some downstream enterprises and even the risk of chip supply.
An electronics industry analyst told AI Financial News that the automotive electronics mainly needed 8-inch foundry capacity in the past few years overall are very tight, and now the endless stream of consumer electronics and snatched away some of the capacity. Especially from 2018 onwards, the demand for multi-camera cell phones, fingerprint recognition chips, etc. are improving. In the past three years, he observed, the related demand has expanded by 30%, but the 8-inch capacity has not been expanded.
Wafers according to the diameter can be divided into 6 inches, 8 inches, 12 inches and other specifications, the larger the diameter, the more integrated circuits produced on the same wafer, the lower the unit cost. In recent years, with the rapid growth of memory chips and CPU/GPU and other logic chips market, the demand for 12-inch wafers has surged. The industry is now in the iteration from 8-inch to 12-inch.
A lot of semiconductor equipment factory has been no longer producing 8-inch equipment, is a reason for the shortage of chip capacity, an industry insider said in an interview, almost all of the world’s 8-inch factory has been depreciated, the cost is very low. Although in the long run 12-inch higher production efficiency, but manufacturers are often reluctant to bear the cost of depreciation, so the short term has been stuck in the 8-inch plant production.
Capacity is already tight on the one hand, but according to the analysts mentioned above, the main reason is the “speculation” of the channels in the supply chain. “IGBTs (insulated gate bipolar transistors) have also been in short supply, with price increases of 10% to 20%, and even higher price increases for products represented by agents.”
In the semiconductor industry, the “speculation” is not a new thing, the industry is stupid, a few cents of the capacitor is no exception. A semiconductor company revealed that the tone of next year is to raise prices.
Not long ago, automotive chip makers NXP, the leader sent a letter to customers to increase prices: by the new crown epidemic, NXP is facing a serious shortage of products and raw material costs, the dual impact of the decision to raise prices across the board. Japanese semiconductor manufacturer Renesas Electronics also sent a price increase notice to its customers, saying that the company has recently faced inventory, cost pressure and product shipping risks, and had to raise prices to ensure the continued input and production of these products.
Some analysts believe that in the next year, wafer supply will continue to be tight, NXP product price increases or jump from 5%, some products require customers to sign a one-year NCNR (no cancellation, no return) agreement.
But the appearance of “speculation” in the automotive sector still surprised one industry insider. In the past, “speculation” appeared more in the memory market, due to the large amount of memory and just needs, in the past often to a certain point in time, there will be tight supply, Samsung Electronics has been dominant in the DRAM and Memory field, a steady grasp of resources, in 2017, even relying on the chip prices skyrocketed, the semiconductor sector. The revenue exceeds that of Intel, which has been the dominant company for more than 20 years.
Previously, Samsung, Hynix, Elpida, and Magnesium had a history of joint price fixing – several companies worked together to increase DRAM prices by over 300% in half a year, for which Samsung was fined $240 million by the U.S. Department of Justice.
Independent “Core” Opportunity
In fact, Tier 1 suppliers and downstream OEMs, such as Bosch and Continental, are facing the current chip shortage without a good solution.
Continental says that while semiconductor manufacturers have responded to unexpected demand growth through capacity expansions, the unexpected demand growth has left existing chips sufficient to last only six to nine months of supply, so potential supply chain bottlenecks are likely to persist through 2021.
“ESP and ECU supply chains have been formed for more than a decade, and even a temporary change in upstream suppliers is not necessarily less time consuming than waiting for capacity to recover,” Automotive industry analysts told AI Financial News, “As a link between OEMs and semiconductor manufacturers, such as Bosch and Continental, all they can do now is coordinate capacity, as well as waiting for recovery.”
Although the shortage of automotive chips is a common phenomenon in the global automotive industry and the field of electronic consumption, but this also once again so that China’s chip “controlled by others” situation is exposed. Some data show that the current Chinese MCU market localization rate is less than 5%.
“Just because China’s automotive manufacturing chips and modules need to import the vast majority, so overseas capacity is affected, the entire supply chain is broken. The above-mentioned automotive industry sources told AI Finance, “The shortage of 8-bit functional MCU technical barriers are not high, profits are not big, competition in the foreign market is also relatively fierce, so there will not be a break in supply, but similar to the new energy vehicles generally need to be assembled IGBT chips, if there is a break in supply then the impact will be even greater.”
Compared to the overall chip market, although the automotive chip market accounts for a smaller proportion, but with the upgrading of automotive electrification and intelligence, the chip will be like the engine of the traditional fuel car era, as the automotive industry’s “lifeline.
With the fermentation of the topic of the lack of automotive cores, the domestic alternative speech is again on the agenda. But a semiconductor industry sources said bluntly: “Short-term unrealistic.”
At present, the domestic design and manufacture of car-grade MCU manufacturers Zhaoyi Innovation, core wang microelectronics, Jifa Technology, etc., but 80% of the car-grade MCU is still monopolized by overseas manufacturers.
Roland Berger in the “China’s new energy vehicle supply chain white paper” pointed out that in the top 20 automotive semiconductor industry, China’s local enterprises only 1, in China’s annual 28 million vehicles market, China’s automotive semiconductor output value accounted for less than 5% of the world, part of the key components imported more than 80% ~ 90%.
Another data show that in 2019, the global automotive chip market size of about 47.5 billion U.S. dollars, but China’s own brand car enterprises chip industry scale of less than 15 billion yuan, accounting for about 4.5% of the world. Compared to the scale of China’s auto industry accounts for more than 30% of the global market, there is indeed great catch-up space for automotive chips.
A semiconductor industry sources said, the domestic can do car-level chip factory would have been very little, although SMIC also has 8-inch capacity, but the manufacturing technology has not been able to meet the car-level requirements.
In the automotive industry, BYD is the first to enter the semiconductor. As early as 2004, BYD established BYD Semiconductor Company, which has more than a decade of accumulation in chip development and production. Most of the car companies are facing a shortage of chips in the dilemma, BYD has said that self-produced chips can not only be self-sufficient, but also “have surplus for outside”.
In 2005, BYD formed a team and started to develop IGBTs (insulated gate bipolar transistors). According to the data disclosed in September this year, at present, the IGBT-based vehicle-grade power devices have been installed in more than 1 million vehicles. Since 2007, BYD has also been simultaneously developing vehicle-regulation-grade MCUs.
According to an industry source, BYD’s MCU is actually working with Huawei now. In his view, the best hope for domestic automotive chips is in Huawei. According to his understanding, at least 3-5 car brands have been using Huawei’s central control system, which is equivalent to the chip plus software, Huawei is a large corps of internal combat engineers, very many, the division of lines is also very detailed, has been in the car to enter the powertrain involved in the car-regulation level chip. “Huawei may be able to break through the main force of automotive chips, but this will take time.”
Just in April this year, Huawei joint STMicroelectronics (ST) chip development began to be known to the outside world, the two sides in addition to smart phones, will focus on chip development involving automated driving and other automotive fields. Cell phone chip by the United States sanctions, Huawei is also looking for another way out.
In addition to BYD and Huawei, some auto companies have also started the related layout. 2018, SAIC and Infineon established a joint venture company for automotive IGBTs – SAIC Infineon Automotive Power Semiconductor (Shanghai) Co. In May this year, BAIC joined hands with Imagination Group and Cuiwei to conduct research and development of automatic driving chips and language interaction chips, and established a joint venture company, Beijing CoreTech Technology Co.
At the same time, Geely and Arm China also jointly funded the establishment of ASRock Technology, which will formulate long-term R&D and mass production plans in the field of automated driving, microcontrollers, intelligent cabin and other chips. Among the new carmakers, both Ideal and Celeste have set up self-driving teams and started the self-driving chip research process.
In August this year, the State Council issued a “new period to promote the development of integrated circuit industry and software industry quality policies,” to support the development of the chip industry to make deployment. 20 November, under the support of the Ministry of Industry and Information Technology, the Ministry of Science and Technology, more than 120 domestic vehicle and parts, chip companies set up the China Automotive Chip Industry Innovation Strategic Alliance, the Alliance said, the future will focus on completing the key automotive chip independent Supply system and internal circulation pattern.
However, in the industry, under normal circumstances, the car specification level chip to be on the service, from design to test to complete a variety of verification and certification, the fastest also takes 2 to 3 years.
So, in the context of the current layout of the chip of the relevant institutions and enterprises, the automotive industry and then appeared “broken core” crisis, China can be immune?
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