"Automotive Semiconductor Supply and Demand Matchmaking Manual" released! How to resolve automotive "chip" issues?

According to the China News Service of China National Radio and Television, electrification, networking, and intelligence have become the development trend of the automotive industry, and semiconductors are the key to supporting the upgrade of the "three transformations" of automobiles. Affected by the epidemic, many automakers reduced production since the beginning of 2020, and chip companies were conservative in product scheduling. The rapid recovery of the market then led to a short-term increase in demand, resulting in a mismatch between supply and demand. Since the fourth quarter of last year, the global supply of automotive chips has been tight.

In response to the tight supply of automotive chips, the Ministry of Industry and Information Technology officially launched the "Automotive Semiconductor Supply and Demand Matching Manual", which will support companies to continuously improve their integrated circuit supply capabilities, strengthen supply chain construction, and increase production capacity allocation in the future. How will the new measures build a bridge between the supply and demand of chip-related products?

The "Automotive Semiconductor Supply and Demand Matchmaking Manual" shows that electrification, networking, and intelligence have become the development trend and trend of the automotive industry. Qiao Yueshan, Director of the Electronic Information Department of the Ministry of Industry and Information Technology, introduced that my country is the world's largest automobile production and sales country, especially in the fields of new energy vehicles and intelligent connected vehicles. "In January 2021, domestic automobile production and sales reached 2.388 million and 2.503 million respectively, up 34.6% and 29.5% year-on-year respectively. Among them, the production and sales of new energy vehicles were 194,000 and 179,000 respectively, up 285.8% and 238.5% year-on-year respectively. A number of models with energy-saving and efficient electric drive systems, outstanding assisted driving performance, and high degree of intelligence have been launched on the market one after another, and have been favored by the majority of users."

Chips are a general term for semiconductor components, which are essential parts for electronic products such as phones, electric cars, and even some medical products. Today, semiconductors have become the cornerstone of the veritable information society, supporting the foundation and driving force for the "three transformations" of the automotive industry.

Qiao Yueshan introduced: "In terms of electrification, the use of power chips in new energy vehicles is four times higher than that of traditional vehicles; in terms of networking, the interconnection of vehicles requires the installation of communication chips, and there is a strong demand for 5G baseband chips, WiFi, Bluetooth, and various radio frequency communication chips. In terms of intelligence, the capacity of storage chips and the speed of computing chips continue to increase, and image sensors with tens of millions of pixels will become the mainstream configuration of automobiles."

However, due to the impact of the epidemic, since the beginning of last year, many automakers have reduced their production, and chip companies have been conservative in scheduling their products. Since the fourth quarter of last year, the global supply of automotive chips has been tight.

As a "country on wheels", the United States has the highest car ownership rate in the world, with an average of more than 80 cars per 100 people. When the epidemic crisis hit, they suffered from the chip shortage. The global semiconductor shortage has forced the US automotive and other manufacturing industries to cut production capacity. US President Biden recently said that he would seek $37 billion in funding for legislation to strengthen the US chip manufacturing industry. On the same day, he also signed an executive order aimed at addressing the impact of the global semiconductor chip shortage on the US industry.

Biden said: "Even a small problem in the supply chain will have a huge impact on the upstream of the supply chain. Recently we have seen a shortage of chips, just like this computer chip in my hand, you can hardly see it, it is called a semiconductor, which is also the reason for the suspension of automobile production and the reduction of working hours for Americans."

General Motors recently issued a statement saying that due to insufficient chip supply, the company was forced to cut production capacity at its factories in the United States, Canada and Mexico, and will reassess its production plan in mid-March. Ford Motor also said that production will be reduced by up to 20% in the first quarter and decided to cut production capacity at its Chicago plant.

As an indispensable link in the industrial chain and supply chain, the chip shortage has also led to production restrictions in related industries in my country. The problem of insufficient supply capacity is like a sword of Damocles hanging over the heads of auto parts manufacturers. Dong Yang, co-chairman of the China Automotive Chip Industry Innovation Strategic Alliance, said: "In the short term, the main reason is that the automotive industry has withstood the test of the epidemic and recovered relatively quickly. This process coincided with the demand for consumer electronics, resulting in tight global semiconductor production and manufacturing capacity."

On the one hand, the current difficulties in the supply of automotive semiconductors are mainly short-term fluctuations caused by market reasons; on the other hand, overall, domestic semiconductor companies lack experience in the demand for the automotive industry and the development and promotion of automotive semiconductor products, and have not yet formed a systematic supply capability in the automotive field. It is an indisputable fact that my country's key automotive semiconductors have long relied on imports.

Dong Yang pointed out: "The scale of China's automotive chip industry accounts for about 5% of the global proportion, which is far lower than the 33% share of the global proportion of my country's automotive industry. It is still far from the goal of 'China's chip self-sufficiency rate reaching 70% in 2025' proposed by the State Council.

There is a big gap, which shows that my country's automotive chip industry urgently needs to develop vigorously and build a domestic big cycle."

The development of China's automotive industry requires China's solutions - China's "chips". In order to better cope with the shortage of chips in the automotive industry and promote the increase in orders for automotive chip companies, the Ministry of Industry and Information Technology guided the China Automotive Chip Industry Innovation Strategic Alliance and other institutions to start the compilation of the "Automotive Semiconductor Supply and Demand Docking Manual" (hereinafter referred to as the "Manual").

Dong Yang said that the Handbook surveyed nearly 120 semiconductor companies, automobile companies and parts manufacturers in the industry chain, and widely solicited opinions and suggestions from the automobile industry and the semiconductor industry. He introduced: "In terms of product supply, the Handbook includes 568 products from 59 domestic semiconductor companies, covering 10 major categories of products such as computing chips, control chips, power chips, communication chips, sensor chips, information security chips, power chips, driver chips, storage chips, and analog chips, involving a total of 53 subcategories, of which 246 products have been used in vehicles, accounting for 43%. In terms of product demand, the Handbook includes 1,000 product demand information from 26 domestic automobile and parts companies."

Qiao Yueshan said that in the future, the Ministry of Industry and Information Technology will continue to strengthen the connection between automotive semiconductor supply and demand based on the Manual and promote the application of excellent automotive semiconductor solutions to various models. "In the next step, we will continue to increase technical research on automotive semiconductors, promote the improvement of automotive semiconductor production line manufacturing capabilities, guide the construction of automotive-grade verification and trial capabilities, and strengthen the application and promotion of excellent automotive semiconductor solutions; at the same time, we will focus on the key role of local governments and leading enterprises in the industry, concentrate our strength and resources, and promote the leapfrog development of automotive semiconductors."

In addition to the launch of the "Manual", in order to respond more promptly to changes in the automotive chip market, Zou Guangcai, deputy general manager of the National New Energy Vehicle Technology Innovation Center and deputy secretary-general of the China Automotive Chip Industry Innovation Strategic Alliance, revealed that in the future, the Ministry of Industry and Information Technology will also guide the establishment of the country's first online platform for upstream and downstream supply and demand linkage of the automotive semiconductor industry chain, to promote rapid connection between the supply side of chips and the demand side of automobiles.

"The working method is to establish an online platform based on the survey data, and open up information publishing, online editing, information retrieval and other functions for users, so as to facilitate automobile companies and semiconductor companies to exchange information online, and organize mutual visits, docking and other exchanges offline to support the regular updating and release of the "Manual". In addition, an intellectual property sharing platform has been built in the National Innovation Center, and we will rely on this platform to establish an online platform as soon as possible." Zou Guangcai said.