Global chip shortage crisis changes the automotive industry: learn to share costs and risks with chip manufacturers
Time:2022-08-06
Views:1789
Over the past two years, the shortage of chips has forced global automakers to abandon production plans for millions of cars. This situation is easing, but car companies are paying a new permanent price.
Executives from these two industries said that how to solve the problem of chip shortage has become a point that must be considered in automotive development. This shifts the risk and part of the cost from the chip companies to the automobile manufacturers.
The newly established teams of auto giants such as general motors, Volkswagen and Ford are negotiating directly with chip companies; Nissan and other auto companies are being forced to accept longer order cycles and higher inventories; Major suppliers in the automotive industry, including Bosch and Denso, have also begun to invest in chip production; GM and stellantis also said they would work with chip designers to design components.
Industry executives and analysts believe that in general, these changes represent a fundamental change in the automotive industry: higher costs, more participation in chip development, and more capital investment in exchange for more stable chip supply. For automotive companies that used to rely on suppliers and suppliers to ensure chip supply, this is a 180 degree turn.
For chip manufacturers, the still developing partnership with automotive companies is welcome, and it is long overdue to reshape it. Many chip company executives pointed out that in the recent supply chain crisis, a large part of the reason is that automobile manufacturers lack understanding of the operation mode of the chip industry supply chain, and are unwilling to share costs and risks.
At present, the automotive industry seems to have passed the worst period of the crisis. It is estimated that since the beginning of 2021, the crisis has led to a reduction of 13 million vehicles in the world.
Wei Zhejia, chief executive of TSMC, said that he had never been contacted by senior executives in the auto industry until the chip shortage reached a desperate point. At the recent TSMC partner and customer conference held in Silicon Valley, he said: "in the past two years, they have called me and acted like my best friend." He revealed that an auto manufacturer called and urgently ordered 25 wafer chips, but TSMC often received orders of 25000 wafers. So, "no wonder you don‘t get support".
Thomas Caulfield, CEO of global foundries, another chip foundry giant, said that the auto industry has understood that the risk of building a multi billion dollar chip factory can no longer be left entirely to chip companies. "You can‘t let a factor in the industry provide water for other parts of the industry. We won‘t put in capacity unless customers provide commitments and are willing to take ownership of these capacity."
Ford has announced a partnership with lattice core to ensure chip supply. Mike Hogan, head of the lattice core automotive industry, said he was discussing more such cooperation with other automotive companies.
Thomas sonderman, CEO of Minnesota chip manufacturer skywater technology, said that the company was in talks with auto companies to "get involved" by purchasing equipment or paying research and development costs.
Hassan El Khoury, chief executive officer of ONSEMI, said that closer cooperation with automobile manufacturers and their suppliers has brought the company a long-term cooperation agreement of $4 billion to produce silicon carbide based power management chips. Such new materials are becoming more and more popular. "In order to expand our business, we will invest billions of dollars every year. But we will not build factories just because we see hope," he said
Michael hurlston, CEO of Synaptics, said that the recent more direct cooperation with auto manufacturers may bring new business opportunities and help manage risks. Synaptics‘ chips are used to drive touch screens, and the company‘s shortage of chips is also affecting automotive production.
Helston said that the automotive industry has begun to embrace OLED screens, although such screens are not as durable as LCD screens. Previously, although OLED screens had better contrast and lower power consumption, the durability affected the automotive industry‘s interest in this technology. "However, their views have changed a lot in the past two years. This is the result of our direct dialogue with the automotive industry. For us, the industry paradigm has really changed."
The chief executives of Renesas electronics of Japan and NXP semiconductor of the Netherlands both said that they were arranging engineers to assist the automobile company in designing a new architecture, using a computer to control all functions of the car. Kurt sievers, chief executive of NXP, said: "they have awakened. They understand how much it costs. They began to try to find the right talent. This is a big change."
According to the data of Gartner, a market research company, by 2026, the average chip content of each car will exceed $1000, double that of the first year of the outbreak. For example, the electric version of Porsche taycan currently uses more than 8000 chips, and the Volkswagen Group said that by the end of this decade, this number will double or triple.
Berthold Hellenthal, a senior manager in charge of chip management at Volkswagen Group, said, "we have understood that we are also part of the chip industry. We have now set up personnel for chip strategic management."
Evangelos simoudis, a silicon valley investor and consultant who has cooperation with established automobile manufacturers and start-ups, said that recruiting and retaining chip engineers would be a challenge for automobile manufacturers. They would need to compete with technology companies such as Google, Amazon and apple. "This will lead to acquisitions."
He also pointed out that unlike Tesla, which designs its own core chips, traditional automobile manufacturers have to continue to produce traditional models while making new investments.
Autoforecast solutions estimates that since the beginning of 2021, the shortage of chips has forced automobile manufacturers around the world to cut production plans of more than 13 million vehicles. "This is a very arrogant industry," said Sam fiorani, the company‘s vice president in charge of global auto production forecasts。”
Executives from these two industries said that how to solve the problem of chip shortage has become a point that must be considered in automotive development. This shifts the risk and part of the cost from the chip companies to the automobile manufacturers.
The newly established teams of auto giants such as general motors, Volkswagen and Ford are negotiating directly with chip companies; Nissan and other auto companies are being forced to accept longer order cycles and higher inventories; Major suppliers in the automotive industry, including Bosch and Denso, have also begun to invest in chip production; GM and stellantis also said they would work with chip designers to design components.
Industry executives and analysts believe that in general, these changes represent a fundamental change in the automotive industry: higher costs, more participation in chip development, and more capital investment in exchange for more stable chip supply. For automotive companies that used to rely on suppliers and suppliers to ensure chip supply, this is a 180 degree turn.
For chip manufacturers, the still developing partnership with automotive companies is welcome, and it is long overdue to reshape it. Many chip company executives pointed out that in the recent supply chain crisis, a large part of the reason is that automobile manufacturers lack understanding of the operation mode of the chip industry supply chain, and are unwilling to share costs and risks.
At present, the automotive industry seems to have passed the worst period of the crisis. It is estimated that since the beginning of 2021, the crisis has led to a reduction of 13 million vehicles in the world.
Wei Zhejia, chief executive of TSMC, said that he had never been contacted by senior executives in the auto industry until the chip shortage reached a desperate point. At the recent TSMC partner and customer conference held in Silicon Valley, he said: "in the past two years, they have called me and acted like my best friend." He revealed that an auto manufacturer called and urgently ordered 25 wafer chips, but TSMC often received orders of 25000 wafers. So, "no wonder you don‘t get support".
Thomas Caulfield, CEO of global foundries, another chip foundry giant, said that the auto industry has understood that the risk of building a multi billion dollar chip factory can no longer be left entirely to chip companies. "You can‘t let a factor in the industry provide water for other parts of the industry. We won‘t put in capacity unless customers provide commitments and are willing to take ownership of these capacity."
Ford has announced a partnership with lattice core to ensure chip supply. Mike Hogan, head of the lattice core automotive industry, said he was discussing more such cooperation with other automotive companies.
Thomas sonderman, CEO of Minnesota chip manufacturer skywater technology, said that the company was in talks with auto companies to "get involved" by purchasing equipment or paying research and development costs.
Hassan El Khoury, chief executive officer of ONSEMI, said that closer cooperation with automobile manufacturers and their suppliers has brought the company a long-term cooperation agreement of $4 billion to produce silicon carbide based power management chips. Such new materials are becoming more and more popular. "In order to expand our business, we will invest billions of dollars every year. But we will not build factories just because we see hope," he said
Michael hurlston, CEO of Synaptics, said that the recent more direct cooperation with auto manufacturers may bring new business opportunities and help manage risks. Synaptics‘ chips are used to drive touch screens, and the company‘s shortage of chips is also affecting automotive production.
Helston said that the automotive industry has begun to embrace OLED screens, although such screens are not as durable as LCD screens. Previously, although OLED screens had better contrast and lower power consumption, the durability affected the automotive industry‘s interest in this technology. "However, their views have changed a lot in the past two years. This is the result of our direct dialogue with the automotive industry. For us, the industry paradigm has really changed."
The chief executives of Renesas electronics of Japan and NXP semiconductor of the Netherlands both said that they were arranging engineers to assist the automobile company in designing a new architecture, using a computer to control all functions of the car. Kurt sievers, chief executive of NXP, said: "they have awakened. They understand how much it costs. They began to try to find the right talent. This is a big change."
According to the data of Gartner, a market research company, by 2026, the average chip content of each car will exceed $1000, double that of the first year of the outbreak. For example, the electric version of Porsche taycan currently uses more than 8000 chips, and the Volkswagen Group said that by the end of this decade, this number will double or triple.
Berthold Hellenthal, a senior manager in charge of chip management at Volkswagen Group, said, "we have understood that we are also part of the chip industry. We have now set up personnel for chip strategic management."
Evangelos simoudis, a silicon valley investor and consultant who has cooperation with established automobile manufacturers and start-ups, said that recruiting and retaining chip engineers would be a challenge for automobile manufacturers. They would need to compete with technology companies such as Google, Amazon and apple. "This will lead to acquisitions."
He also pointed out that unlike Tesla, which designs its own core chips, traditional automobile manufacturers have to continue to produce traditional models while making new investments.
Autoforecast solutions estimates that since the beginning of 2021, the shortage of chips has forced automobile manufacturers around the world to cut production plans of more than 13 million vehicles. "This is a very arrogant industry," said Sam fiorani, the company‘s vice president in charge of global auto production forecasts。”
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