The Current Situation And Layout of the Automotive Chip Industry

Automotive chips have become an important force to promote innovation in the automotive industry. Driven by the "new three modernizations" (electrification, intelligence, and networking) of the automotive industry, the market for automotive chips is vast, and the transformation of the automotive industry chain and its supply chain Consolidation is also accelerating. Automotive chips have strict requirements on various performance indicators such as service life, reliability, stability, and environmental tolerance, and have high technical and industrial barriers. Judging from the current global competition pattern, Europe, the United States and Japan are in a dominant position. Since 2020, the global shortage of automotive chips has become prominent. This is mainly the result of the imbalance of market supply and demand under the impact of external environmental impacts such as changes in the geopolitical pattern, and the interweaving of multiple factors such as business model adjustments. In response to the shortage of chips, developed countries and regions such as the United States, Europe, Japan, and South Korea have adopted different supply guarantee policies to open up room for industry development and innovation opportunities.

1. Definition and classification of automotive chips

Automotive chips refer to semiconductor products used in car body automotive electronic control devices and on-board automotive electronic control devices. In the field of automotive chips, it generally includes computing chips, control chips, power chips, communication chips, sensor chips, information security chips, power chips, driver chips, storage chips, analog chips and other chips. Moreover, with the increase of automotive electrification and intelligent applications, the number and value of automotive chips are still increasing, and most automotive chips must meet the requirements of automotive regulations.

1.1 Classification by Function of Automotive Electronics

Automotive electronics can be divided into power control systems, vehicle network systems, body control systems, safety systems, infotainment systems, chassis control systems, and advanced driver assistance systems (ADAS) according to their functions. Every system requires chips to perform specific functions.

1.2 Classification by device type

Automotive chips can be divided into micro control units (MCU), system-on-chip (SoC), power semiconductors (IGBT, MOSFET, power management chips, diodes, etc.), memory chips (NOR, NAND, DRAM, etc.), sensors (pressure , radar, current, image, etc.) and interconnect chips (radio frequency devices, etc.) Sensors, micro control units, storage devices, and power devices are in demand in various sectors, while interconnect chips are mainly used in body and information systems [1].

2. Characteristics of Automotive Chip Industry

Automobile chips have the characteristics of "high reliability, strong consistency, and long life". They are strategically important places for international competition, and their pulling effect on GDP is getting stronger. With the wave of "new three modernizations" in automobiles, automobile chips are expected to usher in new opportunities. Compared with consumer-grade chips, automotive-grade chips have higher requirements, so the design of automotive chips is more difficult than the design of consumer chips or general-purpose industrial automatic drive chips. Automotive chips need to go through a strict certification process, including reliability standard AEC-Q100, quality management standard ISO/TS 16949, functional safety standard ISO 26262, etc. Among them, the AEC-Q series of standards are recognized by the automotive industry as certification standards for automotive-grade electronic components, and AEC (Automotive Electronics Council) is the Automotive Electronics Council. It is an organization established by North American automotive companies to establish a set of common parts qualification and quality system standards. AEC-Q100 is a failure mechanism based stress testing and identification specification for integrated circuits. Comprehensive reliability testing and certification standard for automotive chips. This is the basic threshold for the application of chip products in the automotive field.

Table 1 shows the comparison between the automotive power chip product standards and consumer power chip product standards established by AEC. It can be seen that the use environment of automobiles is closer to industrial machinery products, so automobile chips usually work in harsh environments with extreme temperature and high humidity. In addition, automobiles have zero tolerance requirements for safety accidents, which have great impact on the anti-interference ability and reliability of chip products. and high stability requirements.

Requirements for Automotive Chips

serial number	main difference	Specific introduction
1	Test items should be comprehensive and stress should be higher	Cars are products with a long life expectancy. Cars will withstand harsh natural environments such as high temperature and high humidity, low temperature, rapid temperature changes, and severe vibrations during work. ) have extremely high reliability requirements. The above factors have led to automobile manufacturers putting forward extremely high reliability requirements for automotive chips. power chip requirements.
2	The sampling plan should be strict	The sampling plan stipulated in the automotive power chip product specification should be more stringent. Taking the temperature cycle test as an example, the sampling plan stipulated in AEC-Q101 is: 77 devices are selected, and no one device is allowed to fail. The sampling number for zero failure specified in GB/T12560-2006 is 11 devices.
3	The failure criterion should be stricter	After the power chip undergoes various tests (especially the life test), the electrical parameters will generally change. The rate of change of electrical parameters reflects the consistency of the product, and can reflect the long-term reliability of the product to a certain extent. The minimum design life of a car is 15 years. Therefore, there are high requirements for the reliability of electronic components, and large changes in electrical parameters after product testing are not allowed. AEC-Q101 stipulates that after the test, the value of the electrical test (except for parameters with large changes such as leakage current) should not change by more than 20% from the initial value, and more than 20% can be judged as failing the test.

2.1 Chip companies need to have long-term supply capabilities

Unlike the one-year upgrade cycle of smartphones, the replacement frequency of automobiles is very low. The new products launched every year basically focus on the appearance and small upgrades of some power components. The service life of a first-hand car usually reaches 5-10 years. After that, the car will enter the second-hand car market and will be eliminated after about 10 years of service. This requires the supporting cycle of auto parts to reach nearly 20 years, which is a long-term supply for automotive chip companies. Capabilities make high demands.

2.2 The product certification cycle is long and the standards are strict

The safety and reliability of automotive chips have extremely high standards. Chip companies are required to establish corresponding development and production process standards and obtain corresponding certifications before they can enter the automotive industry chain. This has greatly increased the product development costs of automotive chip companies and the difficulty for new entrants to enter the industry chain.

2.3 Long product development cycle

The high requirements for product performance make semiconductor manufacturers have to conduct joint research and development with component and vehicle manufacturers 4-5 years before the products are applied. However, for network communication, consumer electronics, and computer-related chip companies, they can develop general-purpose products by themselves, and the development cycle is only 1-2 years.

2.4 Higher consistency requirements

Because cars last much longer than consumer electronics, automotive chips typically last more than twice as long as consumer electronics chips. In terms of reliability requirements, zero kilometer failure rate is an important indicator. In order to ensure the reliability of the vehicle, the requirements for the subsystems of the vehicle are more stringent. Most automotive companies require a base part-per-million (1 ppm) requirement for chips; by comparison, consumer electronics chips require only 200 ppm. When automotive chips are mass-produced, they also need to ensure a high degree of product consistency. Due to the complex composition of vehicle components, chips with poor consistency will lead to potential safety hazards in vehicles. Such results will not be accepted by vehicle companies. Therefore, they will have strict yield control and product traceability management [3]. The above characteristics of the automotive chip industry chain have made chip companies, component suppliers, and vehicle manufacturers form a strongly bound supply chain relationship, forming a solid industry barrier for new entrants.

3. Overview of Automotive Chip Industry

3.1 Automotive Chip Market Situation

Traditional automotive chips are mainly suitable for local functions such as engine control, body, battery management, and in-vehicle entertainment control. With the continuous development of automobile intelligence, automotive electronic chips are also continuously upgraded, and the automotive chip market continues to expand.

It should be noted that with the development of traditional automobiles to new energy vehicles and intelligent networked vehicles, electrified, intelligent, and networked vehicles have higher and higher requirements for automotive-grade chips and computing capabilities. At present, developed countries represented by Europe, the United States, Japan and South Korea account for 37%, 30% and 25% of the market share respectively, and have monopolized the automotive regulatory chip industry for a long time. The top 8 companies in the industry account for more than 60% of the market share, among which NXP (Netherlands), Infineon (Germany) and Renesas (Japan) are the top three, accounting for 14%, 11% and 10% respectively. % market share.

According to IHS Markit, the global automotive chip market will be worth $37.43 billion in 2020. Since automobiles entered the era of electronic control, at least 40 types of chips (more than 70 MCUs) have been installed in ordinary cars, and more than 150 types of chips (more than 300 MCUs) have been installed in high-end models. According to Gasgoo statistics, in 2019, the value of a single semiconductor for a mild hybrid electric vehicle (MHEV) is $531, the value of a single semiconductor for a plug-in hybrid electric vehicle (PHEV) is $785, and the value of a single semiconductor for a pure electric vehicle (BEV) is for $775.

As shown in Figure 1, according to IHS Markit statistics, the global automotive chip market will be worth US$44.2 billion in 2021, and will become the fastest growing segment in the semiconductor segment. It is estimated that the global automotive chip market is expected to reach US$112.3 billion in 2030, with a ten-year compound annual growth rate of 11.2%, and it is expected to become the next 100 billion-level market after smartphones.

Figure 1：Global Automotive Chip Revenue Status and Forecast Table(IHS Markit)

On the supply side, due to the global spread of the epidemic in early 2020, factories around the world were forced to suspend operations. On the demand side, measures such as the stay-at-home economy have greatly reduced the public's demand for cars. In addition, supply chain disruptions have forced global automakers to delay the launch of new models, further hurting the auto market.

Although the automotive market is facing severe challenges, major automotive chip companies are still actively carrying out research and development of automotive ICs and their expansion. In addition, various car manufacturers need to meet their own certification standards. Major semiconductor companies have made plans to enter the supply chain of car companies.

3.2 Competitive Landscape of Automotive Chip Market

At present, the global automotive chip market is monopolized by giant companies from Europe, America, Japan and other countries. As shown in Figure 2, according to Gartner data, dominant companies are mainly concentrated in the United States, Germany, France, the Netherlands, Switzerland, Japan, South Korea, China and Israel. Among them, Infineon (Germany), NXP (Netherlands), Renesas Electronics (Japan), Texas Instruments (USA), STMicroelectronics (Switzerland), Bosch (Germany), ON Semiconductor (USA), etc. Leader advantage.

Figure 2: Revenue of the world's top ten automotive chip markets (unit: million U.S. dollars)-Data source: Gartner

As shown in Figure 3, according to Statista data, from 2019 to 2020, the top five automotive chip companies (Infineon, NXP, Renesas Electronics, Texas Instruments, STMicroelectronics) accounted for nearly 50% of the global market share. The high barriers formed by the supply chain and product verification cycle have resulted in not many new players with a scale in the entire industry.

Figure 3: Distribution of Global Automotive Chip Market Share in 2020(Data source: Statista)

4. Automotive Chip Industry Trends

4.1 The development of electrification drives the demand for automotive chips

With the continuous advancement of the new third-generation vehicles, the global new energy vehicle market will usher in rapid growth, and the penetration rate of new energy vehicles in various countries will continue to increase. According to Deloitte's analysis, it is estimated that by 2025, global sales of new energy vehicles will exceed 21 million, with a five-year compound growth rate of about 37%. Main manifestations: First, at the perception layer, vehicle-mounted multi-sensor fusion includes collecting data of the surrounding environment through radar systems (lidar, millimeter-wave radar, and ultrasonic radar) and vision systems (cameras). The second is at the decision-making level, where the data is processed through the on-board computing platform and appropriate algorithms, and then the execution module converts the decision-making signal into vehicle behavior. The third is the control execution layer, which mainly includes vehicle motion control and human-computer interaction to determine the control signals of various actuators, such as motors, accelerators, brakes, etc.

4.2 Increase in the value of intelligent driving bicycle chips

Compared with traditional fuel vehicles, the number of chips used in new energy vehicles is gradually increasing. Taking autonomous driving technology as an example, the higher the level of autonomous driving, the higher the requirements for the number of sensors. According to Deloitte analysis, the average number of sensor chips for L3 autonomous driving is 8, while the number of sensor chips required for L5 autonomous driving increases to 20. At the same time, the amount of information that vehicles need to process and store is also positively correlated with the maturity of autonomous driving technology, which further increases the carrying capacity of control chips and memory chips.

4.3 The evolution of the hardware architecture to a centralized system will promote the structural change of chip performance

In recent years, with the improvement of consumers' demand for vehicle economy, safety, comfort and entertainment, the distributed electronic and electrical architecture can no longer meet the demand for higher vehicle computing capabilities in the future. In addition, electronic intelligence further drives the number of electronic controllers. With the increase in the number of electronic controller units (ECUs) and sensors in the vehicle, the cost and difficulty of wiring harnesses in the vehicle also increase significantly.

4.4 "Chip shortage" continues to spread, and supply protection policies have been introduced around the world

Since the beginning of 2021, the global shortage of automotive chips has affected many manufacturers. Major auto companies such as GM, Ford, Hyundai and Toyota have all been affected, and many factories have stopped production to varying degrees. According to data from relevant research institutions, the shortage of chips will lead to a global reduction of about 11.3 million cars in 2021. Among them, the annual production in North America decreased by about 3.4 million vehicles, and in Europe, where there are many automakers, the annual production decreased by about 3.35 million vehicles. At present, Europe, the United States, Japan and South Korea have introduced policies to promote the chip industry to ensure the supply of automotive chips. As shown in table 2.

Policy review of some global chip industries

	Policy Papers/Meetings	Release time	policy points
European Union	"United Voice of European Processor and Semiconductor Technology Initiative"	end of 2020	Invest 145 billion euros in the next two to three years, and increase the EU semiconductor market share to 20% of the world by 2030
	Digital Compass 2030: A European Scenario for the Digital Decade	March 2021	To double chip production by 2030, and to account for 20% of the world's advanced chip manufacturing. To reduce the EU's dependence on key technologies from the United States and Asia.
	The European Chip Act	2022	Linking research, design and testing, and coordinating EU and national investments, with a view to jointly creating a state-of-the-art European chip ecosystem and ensuring a stable supply of chips
United States	"Government Incentives and U.S. Competitiveness in Semiconductor Manufacturing"	September 2020	It is suggested that the United States will build 19 local factories in the next ten years through a federal investment of 50 billion U.S. dollars to enhance the status of the U.S. manufacturing industry
	"Strengthening the Global Semiconductor Supply Chain in Uncertain Times"	September 2020	Emphasize that the United States should strengthen the development of domestically produced chips
	The American Chip Act	January 2021	Proposed that the purchase of semiconductor manufacturing equipment and related investment can obtain tax relief, and requested the federal government to allocate 10 billion U.S. dollars to encourage semiconductor manufacturing in the United States, establish the "National Semiconductor Technology Center", and encourage the Department of Defense and the Department of Energy to expand semiconductor investment
	Innovation and Competition Act	June 2021	The U.S. Senate approved appropriations totaling $250 billion, including $52 billion for the chip industry. Among them, including $39 billion in production and research and development funds, and $10.5 billion in project implementation funds, will be used to support the establishment of chip manufacturing plants in the United States in the future.
Japan	Semiconductor Digital Industry Strategy	March 2021	Japan will strengthen cooperation with overseas countries, jointly develop cutting-edge semiconductor manufacturing technologies and ensure production capacity, optimize the layout of the domestic semiconductor industry, and strengthen industrial resilience
	Growth Strategy Meeting	September 2021	The policy of adding support measures to various fields such as semiconductors and electric vehicles (EVs), will formulate support policies to introduce overseas semiconductor factories, and establish a semiconductor development fund of trillions of yen
	Economic Security Advancement Act (tentative name)	November 2021	The aid system for strengthening domestic production bases such as chips will be clearly stipulated, and overseas companies and Japanese companies will be attracted to return to the country by providing subsidies for investment and construction of factories.
South Korea	K-Semiconductor Strategy	May 2021	The semiconductor industry cluster will be planned in South Korea. By 2030, 510 trillion won will be invested, involving semiconductor design, raw materials, production, parts, cutting-edge equipment and other links, aiming to dominate the global semiconductor supply chain.
	Innovation Conference	November 2021	The government will use all its strength to promote the development of the three innovative growth industries of semiconductors, future automobiles, and biological health, and strive to raise the competitiveness of these three industries to the world's first by 2025

5. Conclusion

Driven by the "new three modernizations" of the automotive industry, the importance of automotive chips has been further highlighted. Due to the high requirements of the automotive chip industry, automotive companies should strengthen cooperation with chip, software or system developers, strengthen technical exchanges and docking with upstream and downstream industries, establish an ecology suitable for the development of automotive chips, and achieve healthy development of the automotive chip industry.