How long can car chips last?

Just a few days ago, Infineon's plan to spend 5 billion yuan to expand the production capacity of 12 inches still makes people exclaim that the automotive chip market is still "domineering". After all, it is an indisputable fact that the global semiconductor market is in a downturn. However, Infineon, a major automotive chip manufacturer, still chose to expand production against the trend, and even made a single investment in history, which seems to be a * proof of the strong upward momentum of the automotive chip market.

However, a week later, Damo Securities, a well-known international investment institution, warned that there was an oversupply of auto chips, and pointed out that Renesa and Ansemy had issued a cutting order, which would cut chip test orders in the fourth quarter. At the moment when consumer electronics is weak, the automobile business has once become the "lifeline" for many chip manufacturers. From the beginning of 2020 to the end of 2022, will the past unlimited prosperity come to an end?

Automobile chip trapped in the "excess" storm?

In fact, TSMC and World Advanced have raised the warning of inventory adjustment of vehicle and server chips on the quarterly basis. However, Daimo Securities believes that auto chips will change from shortage to oversupply, mainly due to two reasons: first, TSMC's output of auto semiconductor wafers in the third quarter increased by 82% annually, 140% higher than before the epidemic; Second, the sales volume of electric vehicles in China has weakened (accounting for 50% to 60% of the global electric vehicles), which has led to the full supply of automotive semiconductors, thus leading to the cutting of orders by major automotive chip manufacturers.

Zhan Jiahong, an analyst of DMC semiconductor industry, pointed out that by comparing the revenue trend of global automotive semiconductors with the changes in automotive output, it can be found that in recent years, the CAGR of automotive semiconductors revenue is as high as 20%, while the automotive output is only 10%. From this trend, the oversupply of automotive semiconductors should have occurred at the end of 2020 and the beginning of 2021. However, affected by the spread of the global COVID-19 at that time, transportation was not smooth or even supply was cut off, resulting in an extreme shortage of automotive chips and continued shortage. However, recently, with the gradual easing of the impact of transportation, the increase of chip manufacturers' capacity and the weakening of the demand for automobile terminals, the automobile chips have been produced in full, and the chip shortage problem that has plagued the automobile industry for a long time has officially ended.

In terms of the cycle, there has been a shortage of automotive chips for more than three years. Three years ago, auto manufacturers did not predict the rapid growth of new energy vehicles and smart cars, so they did not place a single chip manufacturer in advance. With the impact of the epidemic, the shortage of auto chips became more and more serious. Three years later, with the global epidemic easing, the semiconductor market also contracted due to high inflation. In addition, the chip manufacturers that have invested in the past few years have gradually released new production capacity. It seems natural that the shortage of automobile chips will be alleviated. However, many automobile manufacturers do not seem to feel the joy of "readily available" automobile chips.

Just a few days ago, Ford CEO Jim Farley said directly: "It's too painful. We need chip engineers." According to the person in charge of Ford, in the past two years, the limited chip supply has caused Ford to lose 1.3 million cars, while the same problem has caused Ford to lose 4 million employee working days this year.

It is obvious that Ford is not the only one whose car production is affected by the lack of cores. Chang'an Automobile also lost 606000 cars in the first nine months of this year. According to auto forecast solutions, the auto industry data forecasting company, as of the end of October, due to the shortage of chips, the global auto market has lost about 3.95 million cars this year. According to the forecast, by the end of this year, the cumulative production reduction in the global automobile market will climb to 4.2785 million vehicles, an increase of about 16200 vehicles compared with the previous estimate.

Judging from the number of cars with reduced production due to lack of cores, the shortage of car chips is far from over. On the other hand, according to the Economic Daily, the unnamed IC designer also said frankly that, compared with the unprecedented shortage of automotive chips before, the supply and demand are indeed more balanced, and the situation of short and long materials in the supply chain has improved, but it is still not to the extent of oversupply.

It is clear that the car core has been missing for 3 years. Why does the shortage still exist? How long can the auto chip market last since the upstream chip cutting has been heard?

There are two main reasons why automotive chips are still lacking: first, the automotive supply chain is long and complex. It will take at least three to five months from a wafer factory to an automobile supply chain processing factory, and then to a supply chain large factory like Bosch that can produce chips. After that, it will take a car assembly factory to obtain automobile chips and then assemble them into a car. During this period, it will take a long time to arrive at the destination through logistics and shipping. According to the Economic Daily, many car manufacturers believe that, based on the current situation of the supply chain, they are afraid that by the middle of next year, the shortage of cars due to the shortage of chips cannot be improved.

Second, there is a serious shortage of mature chips needed for automobiles. Compared with advanced chips, mature chips are a major obstacle to automobile production. For example, Ford's MOSFET chips for windshield wipers cost only $0.40 per chip, but they have affected Ford's production of 40000 vehicles.

In order to continue Moore's Law and consolidate their position in the field of wafer foundry, large semiconductor manufacturers such as TSMC and Samsung have made great efforts to attack the advanced manufacturing process. However, these measures are more like a butcher's knife to cut off the lifeblood for automobile manufacturers eager to mature chips. Although chip manufacturers have realized the market prospect of mature chips and started to expand their investment, driven by the huge demand at present, "far water can't save the near fire". How can the future mature chip capacity fill the current chip gap?

Jeremie Bouchaud, the director of S&P Global Mobility Autonomy and E/E&Semiconductor, believed that the expansion investment of chip manufacturers in the capacity surge of mature process nodes in 2022-2023 could not show the ideal capacity results at any time before the next 18-32 months, which was the average delivery time for the commissioning of new capacity in the semiconductor industry.

Although Mercedes Benz, Hetai, Yuriche and other car manufacturers think that the shortage of car chips will not be solved until next year, from the point of time proposed by Jeremie Bouchaud, it is a very optimistic expectation that car chips will be eased next year. Xu Daquan, Executive Vice President of Bosch China, said that the problem of core shortage has not been solved, and the forecast for next year is not optimistic. Many chip suppliers said that they could not meet the procurement demand next year, At present, there is still a gap in the supply of automotive chips, some of which are large. Ford Farley even thinks that the chip crisis in the automotive industry is unlikely to ease before 2025.

Large storage factory, relying on cars to sound the counter attack horn

At present, there should be no problem for automobile chips to last for another two or three years. However, as a member of the semiconductor industry, periodic fluctuations are inevitable. Even if the supply exceeds demand, there will be a day of oversupply. Damo Securities has taken precautions against the industry in advance. The cut off of orders by Ansemy and Rexa also indicates that there are signs, but the preference of other chip manufacturers for automobile business is still "confident", Even the storage manufacturers who are now facing the impact of the semiconductor downturn market are no exception.

For storage manufacturers, the situation in 2022, especially in the second half of 2022, will be particularly difficult. The storage market will shrink seriously. Affected by this, the revenue of the world's top three storage manufacturers, SK Hynix and Micron Technologies in the third quarter of this year will decline significantly. Samsung's sales in the third quarter will decline by 28.1% month on month. As a result, Intel will take the lead in the semiconductor market, and SK Hynix's sales will decline by more than 26%, Meguiar's sales fell by more than 27%.

Contrary to data centers, personal computers, mobile devices, etc., where demand has decreased significantly, the demand for high-performance chips for electric vehicles is growing rapidly, which may be one of the reasons why storage manufacturers are turning their attention to automotive semiconductors. On the other hand, with the popularity of intelligent cars, the demand for memory of cars is growing. The most common definition of smart cars is "smart phones with four wheels". In the past few years of smart phone development, many people feel that the memory of mobile phones is getting larger and larger. Social software, games, etc. all occupy large memory. From this point of view, the memory capacity of smart cars will only get larger and larger, which is an irreversible trend. According to Meguiar's estimation, DRAM and NAND required by all self driving vehicles are 30 times and 100 times more than those driven by humans alone.

As a global storage manufacturer, Samsung's recent efforts in the field of automotive semiconductors are obvious to all. Samsung Electronics predicts that by 2030, automotive semiconductors, along with chips for servers and mobile devices, will grow into three major chips. Therefore, it has set the goal of occupying * position in the automotive memory market by 2025. It plans to respond to the demand for high-performance automotive semiconductors by providing next-generation memory solutions such as LPDDR5X and GDDR7 chips.

Samsung launched the industry * automotive UFS solution in 2017. At the end of last year, Samsung began mass production of automotive memory. Its product lineup includes 256GB PCIe Gen3 NVMe ball grid array package (BGA) SSD, 2GB GDDR6 DRAM and 2GB DDR4 DRAM dedicated to information and entertainment systems, and 2GB GDDR6 DRAM and 128GB universal flash memory (UFS) dedicated to self driving systems. As for SK Hynix, another large storage factory in South Korea, it set up an automobile team in 2016 to focus on DRAM for automobiles. According to a recent report from businesskorea, like Samsung, SK Hynix also turned its attention to automobile semiconductor.

However, in terms of which car DRAM is better, it should be Micron. Meguiar Technologies has been cultivating special chips for automobiles for more than 30 years. With its geographical advantages, it has long cooperated with Tier one car manufacturers in Europe and the United States, and has a full range of products (the most traditional DDR to DDR4, LPD2 to LPD5 and GDDR6, and NAND, NOR Flash and MCP are available). Its market share in the automotive DRAM field has reached nearly 50%.

As the vehicle storage supplier of *, Micron is very optimistic about the future automobile market. It is estimated that by 2025, the annual growth rate of DRAM in the vehicle market will reach 40% and NAND 49%. At the beginning of last year, Micron launched LPDDR5 memory specially designed for cars, with data access speed increased by 50% and energy efficiency increased by more than 20%. It is a car memory that meets the requirements of ASIL security level D. In November this year, Micron officially released the 1 β Although DRAM, the technology node, currently only sends samples to some smartphone manufacturers and chip platform partners for verification, Micron also emphasizes that it will be mass produced in other applications such as industry and automobile, embedded systems, and data centers in the next year. 1 β Node.

In addition, Taiwan, China Nanya Science and Technology and Huabang Electric have diversified the vehicle market. South Asia Branch has a complete product portfolio from DDR to DDR4, LPSDR to LPDDR4X that can be used, and the yield is still stable. Huabang has been deeply engaged in the automotive field for more than 10 years, and its NOR Flash and niche DRAM have been able to provide stable supply for global first-line car manufacturers. D20 process products have entered the automotive field on a large scale, and it is expected that there will be a series of certification next year.

Chen Peiming, general manager of Huabang Electric, recently stressed that Huabang Electric will actively enter the car market that is more optimistic about the market. According to its disclosure, at present, in the aspect of Nor Flash, Huabang's automotive market including industrial control accounts for about 20%. In the future, it will further develop the automotive DRAM field. Taichung Factory has obtained the certification of relevant customers, and Kaohsiung Factory will actively prepare for the certification. These steps will be very important to seize the automotive electronics market.

And Wanghong Electronics is focusing on auto chips. Since 2009, Wanghong Electronics has begun to expand the auto electronics market. At present, the global shipment has exceeded 440 million coded flash memory. Its auto Nor flash chips have entered many chip manufacturers, including NXP, TI, NVIDIA, Italian Semiconductor and Qualcomm. It is expected that Wanghong's chips will be used in every luxury car in 2023, becoming the leader of car NOR Flash. Although affected by the overall environment, Wanghong's capital expenditure in 2022 will be revised down from the original 16 billion yuan to 10.6 billion yuan, but Wanghong's future capital expenditure will focus on NOR Flash applications, keeping the price stable in the fourth quarter and 2023.

Although many large storage manufacturers have started to turn to automotive semiconductors, it is not easy to do a good job in car specification chips. For example, since the service life of cars often jumps from 10 years, the maintenance and durability requirements of car storage product lines are far higher than those of general commercial products; Or, in order to adapt to different extreme climates in different countries, there should be a higher threshold for temperature tolerance in the vehicle to avoid sudden failures during driving, which will bring challenges of high production difficulty and high production cost to the vehicle DRAM.

Wafer foundry and pure car factory will also be the target?

The auto racetrack can be said to be a new racetrack that the wafer foundry is the first to take the brunt of the shrinking consumer electronics. The most popular event in the near future is that TSMC and Samsung compete for orders.

The cause of the matter is that TSMC's 5 nm wafer factory in Arizona, USA, is about to be built. Foreign media reports that one of the most important customers of this wafer factory is Tesla, the leader of electric vehicles. At the same time, it may be an order from TSMC's US factory. TSMC will contract a new generation of FSD chips for Tesla and produce them in a 4/5 nm process. In 2023, Tesla is expected to become the top 7 customers of TSMC. If the news is true, Tesla will become a pure electric vehicle factory among TSMC's main customers for the first time.

You should know that the top 7 customers of TSMC in the past were mostly brand factories, IC design companies and IDM factories, and the pure car factory was the first one. Although Tesla and TSMC did not respond to this news, they have to admit that TSMC has been aggressive in the automotive field recently. In addition to what Damo Securities pointed out, TSMC's output of automotive semiconductor wafers in the third quarter increased by 82% annually, TSMC's revenue of automotive electronics in the third quarter was also very substantial. The financial report data showed that TSMC's revenue of automotive electronics in the third quarter of this year accounted for about 5%, and the related revenue grew by about 15% quarter on quarter, ranking among the top three applications for quarterly growth. The legal person estimated that TSMC's revenue from automotive electronics exceeded 1 billion dollars in the third quarter of this year.

In the field of MCU, the automotive MCU produced by TSMC has occupied about 70% of the market share, and the main MCU suppliers, such as Infineon, ST, NXP, TI, Rexa Electronics, adopt TSMC as the OEM; In terms of capacity planning, TSMC Nanjing and Japan production lines are likely to be used for vehicle specification wafer production.

In the news that Tesla has placed a single SMT, the former can have more advanced manufacturing technology, while the latter can have expensive orders, and Samsung may be the injured person in this news. As the second largest manufacturer in the world after TSMC, Samsung is the main OEM partner of Tesla's previous generation of fully automated driver assistance chip Hardware 3.0, which mainly adopts the 14nm manufacturing process.

At the end of last year, a source said that Tesla and Samsung Electronics OEM departments started chip design and sample production at the beginning of 2021, and finally Tesla decided to put the HW 4.0 automatic driving core