Major automotive chip manufacturers, each showing their special abilities

In the current rapidly changing automotive industry, the rapid popularity of electric vehicles and the importance of silicon carbide (SiC) in the electric vehicle market have had a profound impact on participants throughout the SiC value chain. As the saying goes, "Those who gain silicon carbide will gain the world of automobiles." According to McKinsey's statistical analysis, the current market value of SiC devices is approximately US$2 billion and is expected to reach US$11 billion to US$14 billion by 2030. The compound annual growth rate is expected to be 26%, and 70% of SiC demand is expected to come from electric vehicles. . In the face of this huge market cake, global automotive chip giants including ST, Infineon, ON Semiconductor, Rohm and Renesas have rushed to the market and launched fierce competition.

In addition, under the trend of software-defined cars, the electronic and electrical architecture of cars will evolve from a distributed architecture to a centralized architecture, and MCUs will assume more computing, control and communication functions. This has put forward higher requirements for MCU manufacturers. They must not only provide high-performance, low-power MCU chips, but also provide complete software platforms and tool chains to help automobile manufacturers quickly develop and deploy software.

In short, in order to occupy an important position in the ever-changing automotive chip market, these automotive chip manufacturers have come up with unique strategies.

Infineon is the leader in power semiconductors and the world's largest automotive chip supplier. In fiscal year 2023, Infineon set a new record for revenue and profit, with total revenue of 16.309 billion euros, a year-on-year increase of 15%, and profit of 4.399 billion euros, a year-on-year increase of 30%.

In the entire power semiconductor market, Infineon has continued to grow in recent years, far widening the distance from other companies. As shown in the figure below, according to the analysis and statistics of Yole, the first place is Infineon, the second place is ON Semiconductor, the third place is STMicroelectronics, then the fourth place is Mitsubishi Electric, the fifth place is Vishay, sixth to fourth place Nine are Japanese companies, including Rohm, Toshiba, Fuji Electric, and Renesas, and the tenth is China's Nexperia.

Behind Infineon's leading position in power semiconductors, acquisitions play a big role. Infineon acquired International Rectifier with Power GaN business in 2015, and Siltectra with SiC wafer cutting technology in 2018. In April 2023, Infineon announced the acquisition of GaN Sysytem for US$830 million in cash. On October 24, 2023, the acquisition of GaN System officially came to an end.

This is the largest deal in the power GaN industry to date and a major move for Infineon. The acquisition price of US$830 million accounts for approximately 18% of Infineon's power electronics product revenue. This also implies that Infineon attaches great importance to the growth potential of GaN and hopes to use GaN again to enter the high-power market in addition to SiC and consolidate Its position in the field of power semiconductors. According to Yole estimates, GaN revenue for power applications will increase more than 10 times by 2028, with a compound annual growth rate of as high as 53%. By then, the entire GaN market will grow to US$2 billion.

In addition to power semiconductors, Infineon's sensors and microcontroller products also help it win the automotive market. In almost all automotive applications, Infineon has very complete, comprehensive, system-level solutions, such as multi-body control modules, gateways, zones, etc. in the fields of body and electronic and electrical architecture; in chassis and In the field of safe autonomous driving, there are radar solutions, cameras, lidar, including TPMS, tire pressure, etc.; in terms of powertrain, Infineon continues to have a very rich range of products, ranging from infotainment, vehicle machines, instruments disk, heads-up display, and then to OBC, DCDC, BMS, main inverter, etc. Infineon has secured multiple long-term contracts for automotive semiconductors including MCUs and power semiconductors.

More than half of NXP's business comes from automobiles, and its automotive processor business is an important pillar. According to TechInsights Strategy Analytics, NXP ranks first in the global automotive processor field in 2022.

NXP's representative automotive processor product is the S32. NXP is continuously expanding the capabilities of the S32 processor. Its recently launched software-defined automotive edge node dedicated motor control solution S32M2 is a great example. It is reported that S32M2 can fully improve the software reuse rate of the S32 automotive computing platform. In addition, NXP is also one of the few companies that pushes automotive chips into advanced processes. Traditionally, chips in the automotive field use more mature processes, and NXP's most advanced S32 flagship processor has reached 5 nanometers.

Driven by business in the automotive and core industrial sectors, NXP predicts that full-year revenue in 2023 will be the same as in 2022 in a challenging and cyclical market environment. Among them, NXP's revenue in the first quarter of 2023 was US$3.12 billion, with a gross profit margin of 56.7%; in the second quarter of 2023, revenue was US$3.3 billion, with a gross profit margin of 57.0%; in the third quarter of 2023, revenue was US$3.43 billion. Gross profit margin was 57.2%.

If you look at the development trend of NXP in recent years, you can see that it pays more and more attention to software. This is also a major change made by NXP in the era of software-defined cars. This is specifically reflected in the fact that NXP is increasingly focusing on platform solutions and making platforms and tools as compatible as possible.

Since the release of the first CAN transceiver in the 1990s, NXP's product line now includes a variety of product categories, including MCU microprocessors, analog front-ends, gate drivers, secure power management, automotive networks, and sensors. wait. NXP organically combines these products to become a system-level solution provider in the electrification domain. Almost all NXP products are based on the Arm architecture, which facilitates top-down expansion by users. This allows NXP to win long-term orders and cooperation with many automotive OEMs.

NXP is the only company among the top automotive chip manufacturers that does not have a SiC layout. However, so far, NXP is one of the few companies in the world that can present almost every electronic control unit of its customers in a holistic system thinking manner. Companies that give to and interact with customers.

The early cooperation between Tesla and STMicroelectronics (ST) in the SiC field allowed ST to occupy the largest market share. As shown in the figure below, according to McKinsey research, ST will occupy the largest market share of 36% in the SiC discrete device and module market in 2022. Therefore, ST is increasing its bets on SiC. ST plans to invest approximately $4 billion in capital expenditures this year to expand its 300mm wafer manufacturing and silicon carbide manufacturing capabilities.

Market share of SiC discrete devices and modules

(Source: mckinsey)

According to McKinsey's analysis, China is the country with the highest expected demand for electric vehicles and is expected to account for about 40% of the total demand for silicon carbide in electric vehicle production, and by 2030, China will remain the largest SiC market. In the face of China's rapidly rising automotive electric market, ST has also made a local manufacturing layout. In June this year, ST and China's Sanan Optoelectronics announced that they would establish a joint venture manufacturing plant in Chongqing to carry out large-scale mass production of 8-inch silicon carbide (SiC) devices to meet the demand for ST SiC in China's automotive electrification, industrial power and energy applications. growing demand for devices.

In 2023, benefiting from the growth of its automotive business, ST will go against the industry trend. Revenue in the first quarter of 2023 was US$4.25 billion, with a gross profit margin of 49.7%; revenue in the second quarter of 2023 was US$4.33 billion, with a gross profit margin of 49%, with automotive and industrial chips still contributing; in the third quarter of 2023 ST’s revenue was US$4.43 billion, with a gross profit margin of 47.6%. Both automotive products and power discrete device revenue increased.

According to ICinsights statistics, Renesas’ automotive MCU market share ranks first (in 2022), with a market share as high as 30%. Renesas' main chip product is the R-CAR series. Currently, all mainstream domestic models use Renesas' R-CAR V3H.

In order to meet the needs of the automotive market, Renesas Electronics recently announced the next-generation automotive SoC and MCU processor roadmap, in which SoC introduces advanced packaging chip technology. The new MCU is designed to provide the high performance required for domain and regional electronic control units (ECUs) in the next generation automotive E/E architecture. As part of its roadmap, Renesas Electronics plans to provide a virtual software development environment to accommodate the automotive industry's shift-left approach.

In addition to continuing to work in the traditional MCU and SoC fields, Renesas is also following the development trend of the automotive industry and starting to target SiC power devices. Renesas plans to start producing SiC in 2025. Renesas also signed a SiC wafer supply agreement with Wolfspeed worth a total of US$2 billion to receive 150mm and 200mm silicon carbide die and epitaxial wafers.

However, due to the current uncertainty in the automotive industry, especially changes in the Chinese market, Renesas said it will slow down the production of SiC. Although Renesas' overall performance in 2023 has not declined significantly, some declines have also been felt: Renesas' sales in the first quarter were 359.7 billion yen (a year-on-year increase of 3.7%), and operating profits were 124.8 billion yen (a year-on-year decrease of 108 yen). billion yen); second quarter sales were 368.7 billion yen (down 2.2% year-on-year), operating profit was 129.1 billion yen (down 16.3 billion yen year-on-year), sales of automotive and industrial/infrastructure/Internet of Things There has been a certain decline in Chengdu. In the third quarter of 2023, Renesas' sales were 379.4 billion yen and operating profit was 132.3 billion yen. Sales of the automotive business increased by 11.7% year-on-year to 176.3 billion yen. Sales in the industrial, infrastructure and Internet of Things business fell 11.5% to 200.7 billion yen.

An overview of Renesas’ revenue in the past three years

(Source: Renesas)

Central to Texas Instruments' strategy in recent years has been heavy investment in expanding its in-house manufacturing capabilities. As the first manufacturer to enter the 300mm wafer fab, Texas Instruments' strategic focus has always been 300mm wafer manufacturing. In the past few years, Texas Instruments has carried out a series of expansion plans based on existing factories and is adding six new 300mm wafer fabs, focusing on investment and increasing production capacity at the 45- to 130-nanometer technology nodes:

• Texas Instruments has two wafer fabs in Lehead, Utah, namely LFAB1 and LFAB2: LFAB was acquired in 2021 and began 300mm wafer production in 2022; announced in February 2023, Texas Instruments announced that it would A second 300mm semiconductor wafer fab will be built at the site and connected to the existing wafer fab.

• Richardson, Texas (RFAB1, RFAB2): Opened in 2009, RFAB is the world’s first 300mm analog fab. The second connected 300mm wafer fab will start production in 2022.

• Dallas, Texas (DMOS6): DMOS6 introduced 300mm analog technology in 2014 and was one of Texas Instruments' first 300mm fab operations.

• Texas Instruments is currently building four fabs in Sherman, Texas, namely SM1, SM2, SM3, and SM4. The location was announced in November 2021, with the first fab expected to come online in 2025.

Texas Instruments is very optimistic about the growth potential of the automotive field. Texas Instruments produces analog and embedded processing chips for markets including industrial, automotive, personal electronics, communications equipment and enterprise systems. In the first three quarters of 2023, the automotive business was Texas Instruments' only growing business, and weakness was felt in the industrial sector.

Specifically: revenue in the first quarter was US$4.38 billion, revenue in the second quarter was US$4.53 billion, revenue in the third quarter was US$4.53 billion, net profit was US$1.71 billion, and revenue fell 14% compared with the same quarter last year. The forecast for the fourth quarter is $3.93 billion to $4.27 billion. Even at the highest figure, the total in 2023 will only reach $17.71 billion, down 10% from $20.03 billion in 2022. However, Texas Instruments continues to invest. Around October 23, according to TI President and CEO Haviv Ilan, they invested US$3.7 billion in R&D and capital expenditures in the past 12 months. $4.9 billion.

Looking back on the past, ON Semiconductor is an IDM semiconductor company that focuses on the manufacturing level and is not leading in specific product levels. But since 2020, especially with the joining of CEO Hassane El-Khoury, the company's business has achieved strong growth. Behind these developments, what has ON Semiconductor done right?

A very important point is the strategic change of ON Semiconductor.

In August 2021, ON Semiconductor began to move from a typical IDM company to a more flexible Fab-lite and exited under-scale wafer fabs. This allowed ON Semiconductor to quickly seize market opportunities in the automotive and industrial markets. In May of this year, ON Semiconductor proposed the Fab Right strategy to improve efficiency and first-class return on invested capital (ROIC), claiming that this is its way to accelerate the revenue growth of the semiconductor industry by three times. According to ON Semiconductor's accelerated financial model forecast: ON Semiconductor's revenue will grow at a compound annual growth rate of 10% to 12% from 2022 to 2027, and the growth rate is three times the predicted growth of the semiconductor market.

ON Semiconductor has achieved outstanding results due to its focus on smart power and smart sensing, focusing on silicon carbide (silicon carbide), silicon power (IGBT, FET) and power ICs, as well as smart sensing in the automotive and industrial fields. Even in a challenging 2023, ON Semiconductor achieved record revenue: revenue in the first quarter of 2023 was US$1.9597 billion, with automotive revenue increasing 38% year-on-year, accounting for 50% of total revenue; revenue in the second quarter was US$2.0944 billion US dollars, automobile revenue exceeded US$1 billion, a year-on-year increase of 35%; third quarter revenue was US$2.1808 billion, of which revenue from automobiles hit a record high of US$1.2 billion, a year-on-year increase of 33%. It can be seen that ON Semiconductor's revenue in the automotive field has been rising this year.

At a previous media communication meeting, Simon Keeton, executive vice president and general manager of ON Semiconductor’s power solutions department, said: “In traditional fuel vehicles, ON Semiconductor’s electronic components are worth about US$50-100 per vehicle, while in electric vehicles On a car, that number can exceed $2,000."

ON Semiconductor’s highly successful “magic product” in the automotive field is EliteSiC. Its silicon carbide products have performed well in this year's revenue. In 2023Q1, ON Semiconductor's silicon carbide revenue nearly doubled from the previous quarter, and in 2023Q2, silicon carbide revenue increased nearly 4 times year-on-year. In order to support the improvement of SiC manufacturing capabilities, ON Semiconductor's most advanced and world's largest silicon carbide (SiC) manufacturing plant in Bucheon, South Korea, has completed expansion in October 2023. When operating at full capacity, the plant will be able to produce more than One million 200mm silicon carbide wafers. ON Semiconductor is maintaining or even outperforming the growth rate of the silicon carbide market.

Due to overall market weakness this year, the automotive market has become one of the few growth segments for Rohm. Therefore, Rohm is also betting heavily on SiC and plans to inject 510 billion yen into SiC by the end of March 2028.

It is worth mentioning that Rohm has begun to invest in the development of domestic wafer manufacturing. On November 7, 2023, Rohm acquired the assets of Solar Frontier's former Kokutomi plant in Japan. The factory will be operated by LAPIS Semiconductor, a subsidiary of ROHM Group, as the second Miyazaki factory. It will become the main production base of ROHM SiC power devices and is scheduled to be put into production in 2024. This is the first time that Rohm has started producing wafers in Japan. Previously, Rohm's SiC wafers were produced at SiCrystal in Germany. The acquisition is also conducive to Rohm's rapid production expansion. Rohm's goal is to increase SiC wafer production capacity by 35 times by 2030 compared with 2021. What can be seen is that by 2025, Rohm's SiC production capacity will increase by 6.5 times.

Rohm’s SiC capacity expansion plan

(Source: ROHM)

To sum up, it can be seen that in order to meet the higher requirements for chips in the development of intelligent and electrified automobiles, all major chip giants are actively deploying automobile products, technology, cooperation and other aspects, and each shows his or her own talents. It is foreseeable that the automotive chip market will become more intense in the future.

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