Automotive chips, where are the opportunities?

The automobile industry is developing toward electrification and intelligence, and automotive chips have become a battleground for military strategists. According to research figures, the global semiconductor market will reach US$575.1 billion in 2022. It is expected that by 2030, due to the rapid expansion of market demand, the global market size will reach US$1 trillion, of which automotive electronics will account for 15%, and high-performance computing ( HPC) related applications accounted for 40%, smartphones accounted for 30%, automobiles accounted for 15%, and the Internet of Things accounted for 10%.

According to data from the vehicle testing center, in 2010, vehicle electronics accounted for approximately 30% of the total cost of a vehicle, but by 2030, the proportion of vehicle electronics costs will increase to 50%. If AI demand is added in, this proportion will be even higher.

Taking the number of chips as an example, a car originally required about 200 to 300 chips, but in the future the number will climb to more than 2,000. According to research by IEK International Institute of Obstetrics and gynecology, it is estimated that global electric vehicle sales will reach 50 million units in 2040. Based on this projection, more than 100 billion chips will be needed a year by then. This business opportunity is astonishing.

Global automobiles are developing toward intelligence and electrification, bringing new opportunities to the semiconductor industry! Hong Chunhui, director of the Industrial Information Research Institute of the Taiwan Information Policy Council, observed from an industrial research perspective that intelligence and electrification will bring about both qualitative and quantitative changes to the automobile industry, and the shape of industrial competition will also change. This means that the role Taiwan played in the automotive field in the past will also change in the future.

Hong Chunhui pointed out that during the epidemic from 2020 to the first half of 2022, the world was still discussing the shortage of materials in the automotive industry. The global automobile market volume in 2022 will be 70 million vehicles. It is expected to rebound to more than 80 million vehicles this year and turn to positive growth. It is expected to return to the level of 90 million vehicles in 2024. Driven by the policies of various countries, the global electric vehicle (broadly defined) penetration rate is about 10%, and there is an opportunity to challenge the 20% penetration rate in 2025. "Among them, mainland China accounts for the highest proportion, and Europe and North America also account for a very high proportion." BYD and Tesla have firmly ranked first and second in sales, which is very different from the rankings of traditional fuel vehicles.

"Today's cars are becoming more and more different." Hong Chunhui said that the level of autonomous driving is shifting from Level 1 to Level 2/Level 2+. Level 2 is the mainstream of today's automobiles. According to a Yano Research research report, the estimated market shares of Level 1 and 2 in 2024 are 31.6% and 67.8% respectively, while the compound annual growth rate of Level 2 in the past five years has been as high as 32.6%. It is the main driver of the self-driving market and the main driver of the growth of ADAS (Advanced Driving Assistance Systems) products.

Observing the focus on the development of self-driving cars in various countries and regions, Hong Chunhui believes that Level 3 and above have much higher safety requirements and need to pass relevant vehicle regulations certification by the supervisory authority. It is estimated that they will not start to grow significantly until 2025. "By 2025, the probability of jumping directly from Level 2 to Level 4 is quite high." Sensors (vehicle sensors) will become the focus of self-driving development, and their quality and quantity will be improved.

For the ADAS market, TSMC, the leading wafer foundry, has also made predictions. The company estimates that by 2030, 90% of cars will be equipped with advanced driver assistance systems (ADAS), of which Level 1, Level 2 and Level 2+/Level 3 are expected to each have a market share of 30%.

What impact will the technological advancement of self-driving cars have on the semiconductor industry? What is the driving force for future growth? Hong Chunhui believes that semiconductor manufacturers have been relatively active in this field in the past period, because the proportion of electric vehicles is increasing year by year, and the quality of chip computing must change accordingly. Currently, the proportion of advanced manufacturing processes in chips used by vehicle manufacturers is also increasing.

In the past, the field of automotive semiconductors was dominated by large IDM (vertically integrated manufacturing) companies. Unless the original automotive supply chain players, such as ICT companies, were "unable to enter". Hong Chunhui said that the automobile industry used to have a very closed supply chain. Because safety was emphasized, suppliers would not be easily changed.

He believes that the reason why China's electric vehicle market is surging is that they do not treat cars as an automobile industry. Many people are even worried that future electric vehicles and smart cars will be like a mobile phone with four The wheels run on the ground. But in the final analysis, cars are still an important means of transportation related to life safety. "Currently, 70% to 80% of the market is still controlled by automotive semiconductor IDM manufacturers, and the remaining 20% ​​to 30%, such as AI chips and storage, will be released to other manufacturers for design and production."

The so-called change in the industrial ecology is that automobile manufacturers are more actively cooperating with semiconductor manufacturers to solve the shortage problem and accelerate the ADAS process and the development of electric vehicles. "Therefore, semiconductor manufacturers and IC designers are becoming more and more important in the automotive supply chain, and automakers are paying more and more attention to them."

Hong Chunhui believes that to seize the opportunity for cooperation in the international supply chain of automotive semiconductors, we can start from improving the global resilient and secure supply chain system in the short term, continue to expand international cooperation in the global semiconductor industry in the medium term, and in the long term deepen cooperation between advanced and mature, automotive and information communications. Division of labor, such as entering the automotive industry chain under the trend of smart cockpits and autonomous driving, and cooperating with the automotive industry through cross-domain integration.

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