Four tips for local IC design companies to enter the automotive electronics market

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Four tips for local IC design companies to enter the automotive electronics market [Copy link]

According to the China Semiconductor Industry Association, as of 2005, China's automotive chip supply capacity was zero. China's automobile production has approached 6 million vehicles, making it the world's third largest automobile country and the fastest growing in the world. According to IC Insight, the average value of electronic devices in each car worldwide increased from US$672 in 1990 to US$2,132 in 2004. It is expected that by 2010, the proportion of electronic devices in each car's total value will increase from 23% in 2001 to 35%, and the proportion of electronic devices used in hybrid vehicles in the total value will reach 50%. By then, the annual sales of the global automotive electronics market will reach US$300 billion.

Why are Chinese IC design companies so far away from this tempting market pie?

Only when consumer applications are good can we talk about automotive electronics

The experience of success in the civilian market is the foundation for design companies to enter the automotive chip market. Without rich experience in the consumer electronics market, it would be difficult to enter the ranks of demanding automotive chip suppliers. Philips said that automotive electronics has relatively high requirements for quality and design cycle, and the requirements for ambient temperature are different from those of consumer electronics. This determines that it has very high requirements for design technology, which is not something that anyone can do by finding an office. Although local IC design companies have made considerable progress in consumer electronics applications in recent years, their foundation is still weak.

Automotive electronics have to be integrated with the design of the car itself and the launch of the brand, so there is a long payback period. Therefore, for those Chinese machine manufacturers that have entered or plan to enter the automotive electronics market, whether they can "endure" is a big test.

Design and produce by yourself

Self-owned chip manufacturing capabilities are the key to ensuring high product quality for automotive chip suppliers. IDM in the automotive electronics field is irreplaceable by the Fabless+Foundry model. Having their own wafer fab is a critical weapon for IDMs to deal with Fabless companies, because many of the specialized processes developed by IDMs for automotive chips are difficult to outsource, and the biggest challenge faced by foundry companies is to fight against the professional capabilities, design capabilities, advanced and specialized process technologies and materials of IDM factories at the system level. In this way, since China's chip manufacturing mainly relies on foundry manufacturers, the corresponding automotive chip production processes may not be available at present.

While Infineon is divesting its DRAM business, it is building a 200mm wafer fab in Kulim, Malaysia. It is reported that the fab, which is scheduled to start production at the end of 2006, will turn to automotive electronic chip manufacturing in 2007, and the 150mm production line currently located in Munich, Germany will stop operating. Clause Geisler, vice president and general manager of the automotive power business unit of Infineon's automotive industry and diversified electronic market division, said, "Regarding automotive chips, Infineon will not outsource the production of automotive chips." It is reported that Germany's Melexis also has its own wafer manufacturing plant and has technical expertise in RF BiCMOS technology, so it has considerable advantages in controlling product costs.

Entering the vehicle supply chain is the key to success

The experience of successful cooperation with vehicle manufacturers is the decisive factor for the adoption of automotive chip suppliers' products by system solution providers. At present, in addition to increasing technical support for system solution companies, the world's leading automotive chip suppliers have established extraordinary commercial cooperation credibility with well-known vehicle manufacturers, which is their "trump card" to firmly control the automotive electronics market. Clause Geisler said, "By maintaining close cooperation with these well-known manufacturers, Infineon can know in advance the customer's requirements for the next generation of automotive electronic products and develop products that meet the requirements as soon as possible."

However, the business understanding that the world's automotive electronics chip giants have established with automakers through decades of cooperation is out of reach for the Chinese automotive electronics market, which only entered its start-up stage in 2002.

Standing on the shoulders of giants and working with strong hands

There is no basis for cooperation between Chinese IC design companies and outsiders in the field of automotive electronic chips. At present, it is becoming increasingly important for vehicle manufacturers, terminal electronic equipment manufacturers, semiconductor companies and supporting factories to work together to develop products and technologies. World-class automotive chip suppliers that have established solid cooperative relationships with world-renowned automobile manufacturers and terminal electronic equipment manufacturers for many years have continued to do so in China as these vehicle manufacturers enter China.

Market research data from CCW Research shows that in 2005, there were more than 1,000 Chinese automotive electronics companies or companies involved in automotive electronics production. However, the Chinese automotive electronics market is still mainly controlled by the world's leading automotive electronics manufacturers. The top 10 Chinese automotive electronics manufacturers account for 70.5% of the Chinese automotive electronics market share, and Shenzhen Hangsheng is the only domestic independent brand manufacturer to enter the top 10, ranking 6th with a market share of 5.3%.

It is understood that seeking solution development partners in China is a common demand of these world-leading automotive chip suppliers. For Chinese IC designers who want to enter the automotive electronics market, this is an opportunity.