High-end GPU supply is out, is self-developed GPU a quick-acting “life-saving pill” for the auto market?

Recently, the two leading American chip companies, Nvidia and AMD, were asked to stop exporting high-end chips to China, which caused an uproar in the industry.

It is understood that the chips affected by this restriction - Nvidia's A100 chip, H100 chip, and AMD's M1250 chip, are mainly top-level computing chips used for artificial intelligence and data centers.

In fact, in the AI ​​industry, GPUs are not only used in data centers, supercomputers, edge computing, and other fields, but are also widely used in the smart car ecosystem. The automotive industry was also panicked by AMD and Nvidia's restrictions on high-end chip exports, especially a post by He Xiaopeng on WeChat Moments, which brought the issue that should have been a concern for AI back to the automotive industry's attention.

Recently, He Xiaopeng, founder of Xpeng Motors, wrote: The bad news is that this will bring challenges to all autonomous driving cloud training. The good news is that we have just bought back the demand for the next few years in advance.

(Maimai Hot List)

Many industry insiders disagree with He Xiaopeng's statement about stockpiling chips in advance. Wang Yunpeng, vice president of Baidu, even commented that the "pattern is too small." As public opinion ferments, the topic of whether automakers need to develop their own chips has once again become a hot topic on the workplace community platform Maimai. So, is self-development by automakers the best solution to the chip shortage?

01 Automotive chips are still in short supply

Although the chips used in the consumer electronics industry are experiencing a "downturn", the supply of automotive-grade chips is still tight. From the perspective of terminal market demand, compared with the large-scale decline in shipments of mobile phones and computers, the growth of new energy vehicles remains unabated, showing a trend of both production and sales booming.

(Maimai netizens believe that automotive chips are still in short supply)

According to data from the China Association of Automobile Manufacturers, in July 2022, my country's automobile production was 2.455 million vehicles, a year-on-year increase of 31.5%; sales reached 2.42 million vehicles, a year-on-year increase of 29.7%. Among them, the production and sales of new energy vehicles continued to maintain a high growth momentum, with production reaching 617,000 vehicles and sales reaching 593,000 vehicles in July, both of which increased by 1.2 times year-on-year, and the market share reached 24.5%. It is worth mentioning that from January to July this year, the production and sales of new energy vehicles reached 3.279 million and 3.194 million respectively, both of which increased by 1.2 times year-on-year, and the market share reached 22.1%.

In recent years, with the advancement of the "new four modernizations" of automobiles, the demand for chips in the automotive industry has increased significantly. According to Deloitte data, the average number of chips installed in fuel vehicles will reach 934 in 2022, while that in new energy vehicles will be 1,459, resulting in a huge gap between supply and demand.

At the 4th Global New Energy and Intelligent Vehicle Supply Chain Innovation Conference held on September 6, executives of automakers such as BYD and NIO once again mentioned the tight supply of automotive chips.

The butterfly effect caused by the chip shortage is still ongoing. According to the latest data from AutoForecast Solutions (AFS), an automotive industry data forecasting company, as of September 4, the global auto market has reduced production by about 3.1561 million vehicles this year due to chip shortages. AFS predicts that by the end of this year, the cumulative reduction in global auto market production will climb to 3.9951 million vehicles.

Many industry insiders believe that the shortage of automotive chips will be difficult to alleviate in a short period of time. McKinsey Global Director and Partner Guan Mingyu said that rising demand and tight supply are the reasons for the chip shortage in the post-epidemic era. It is undeniable that with supply far less than demand, the prices of many chips in the automotive field remain strong.

02 Self-developed products are not a quick-acting “heart-saving pill”

Faced with the severe situation brought about by chip shortages and price increases, more and more car companies are actively taking corresponding measures to implement self-rescue and enter the "car companies making chips" track.

In fact, automakers including BYD, SAIC, NIO, Leapmotor, and Ideal have already put self-developed chips on the agenda. NIO, which started early, has already entered the tape-out stage, and its R&D process is in a leading position among new domestic car-making forces; in May this year, Sichuan Ideal Intelligent Mobility Co., Ltd., a wholly-owned subsidiary of Ideal, was officially established with a registered capital of 100 million yuan. Its business scope mainly includes integrated circuit chip design, road motor vehicle production, and auto parts and components manufacturing.

Automakers can develop their own chips and master chip technology to arrange their product upgrades more freely and show their differentiated advantages in the market. As a Maimai netizen said, "It is better to have technology in your own hands, just like BYD has its own semiconductor research and development company. It can be used, but it must be there so that it can be used when others are holding it back."

(Maimai netizens support "taking core technology into our own hands")

However, although self-research sounds good, it is extremely difficult to achieve.

As we all know, automotive chips belong to the "three highs" industry - high investment, high risk, and higher barriers. Not every company has the strength to invest special energy and financial resources to make chips. Even Tesla, a representative car company that develops its own chips, only develops its own autonomous driving chips, not all chips.

(More than half of Maimai netizens believe that being wealthy is a necessary condition for self-development)

It is understood that it takes 6-7 years for a mature microcontroller unit (MCU) to go from design and manufacturing, packaging and testing to vehicle installation and mass production, under the premise of close cooperation between automobile manufacturers and chip companies.

If the purpose of car companies' self-development is to solve the current shortage situation, it is obviously unrealistic. Overall, my country's car companies are facing many obstacles in developing their own chips.

03 Automakers actively looking for "Plan B"

On the extremely difficult road of independent research and development, more car companies have chosen to work with semiconductor manufacturers or technology companies to find solutions, including directly reaching strategic cooperation, participating in financing, and establishing joint ventures.

For example, in June last year, Chery signed a strategic cooperation agreement with domestic chip manufacturer Horizon Robotics. According to the agreement, the two parties will rely on their respective advantages in the fields of automobiles and artificial intelligence to focus on intelligent driving, intelligent interaction and other fields to carry out technology research and development and product cooperation.

The 4.5 billion yuan financing completed by wafer foundry Guangdong Xin Semiconductor in June this year included investors from several automakers including GAC, SAIC, and BAIC. Among them, GAC invested in the company in two consecutive rounds.

In addition to strategic cooperation and financing, some car companies will also establish joint ventures with chip suppliers, such as SAIC Infineon, a joint venture between SAIC Group and Infineon Technologies, and Zhixin Semiconductor, jointly established by Dongfeng Motor and CRRC.

In fact, in addition to the car companies seeking solutions on their own, the national level has also actively provided solutions after noticing the problem. In May this year, the Hubei Automotive-Grade Chip Industry Technology Innovation Consortium, led by Dongfeng Motor Corporation, started operation in Wuhan Economic Development Zone. Its purpose is to achieve the complete independent definition, design, manufacturing, packaging and testing of automotive-grade chips and the development and application of controllers.

At the same time, in order to actively respond to the shortage of chips in the automotive industry, the Chinese government has introduced a series of policies to encourage the development of the domestic automotive chip industry. For example, last year the Ministry of Industry and Information Technology organized the compilation of the "Automotive Semiconductor Supply and Demand Matchmaking Manual" to further clear the supply and demand information channels between automobile companies and chip companies and strengthen the precise matching of the automotive semiconductor supply side and demand side.

Whether they are developing their own chips or actively "clinging to others", facing the shortage of automotive chips, automakers need to change their positioning in the supply chain.

As Miao Wei, deputy director of the Economic Committee of the National Committee of the Chinese People's Political Consultative Conference and former Minister of Industry and Information Technology, said, "Now car companies do not necessarily have to make chips, but they must understand chips. Car companies must establish a cross-industry alliance and cooperation between their own development and the development of chips. They must have overall considerations and cannot let things go. This is related to the future development of car companies. This is a big issue, and only when this is established can a good industrial development ecosystem be formed."