If you want to set a keyword for the auto industry in the first half of 2021, “core shortage” will definitely not run. The days of lack of cores seem to be endless, and the “labor pains” of vehicle production are protracted. The lack of cores forces the Chips to be independently controllable, and accelerating the localization of chips has once again become the focus of the industry.
In fact, earlier, ZTE and Huawei’s “core ban” has sounded the alarm for chip autonomy. After that, the government, industry, academia and research institute unanimously proposed to vigorously support the development of semiconductors, and the industry has begun to make efforts. Yang Yuliang, the hardware development manager of Pan-Asia Automotive, proposed that OEMs should take the lead and support key chip companies together with system suppliers to solve the localization of high-threshold technology automotive-grade chips through their endogenous power; Improve the access mechanism of chips and jointly promote the establishment of performance benchmarking platforms; in addition, we must expand the development system framework and ecology. It is necessary to consider chips that support EDA design, instruction sets, compilers and other tools and software, which are convenient for OEMs to use.
“Lack of cores” forces automotive semiconductors to accelerate their autonomy
Under the wave of the new four modernizations, the domestic new energy and smart car markets have risen rapidly, giving birth to new opportunities for the development of automotive semiconductors.
“In the future, the number of semiconductors in a car will reach 6,000-10,000.” Thomas Manfred Müller, executive vice president of Volkswagen Group (China), once said publicly. “If the level of driverless L4 is achieved, the value of semiconductors in a vehicle is expected to triple.”
Under this huge demand, the market size of automotive semiconductors is also rapidly expanding. “It is possible that before 2027, the market size of automotive semiconductors will exceed 100 billion US dollars, and new demands in the fields of ADAS, communications, and electric vehicles will increase semiconductors very quickly.” Recently, the 2021 China Automotive Semiconductors hosted by Gasgoo At the industry conference, Bao Haisen, director of the strategy and business development department (vehicle field) of Shanghai HiSilicon, said so.
However, the share that Chinese local companies can hold in their hands is still very small until now. Ye Shengji, chief engineer and deputy secretary-general of the China Association of Automobile Manufacturers, previously said that as of now, China’s semiconductor self-sufficiency rate is only 15%, of which auto chip self-sufficiency rate is less than 5%, and the local automotive semiconductor supply chain is highly dependent on foreign manufacturers.
In particular, the car-grade MCU control chip with the most serious shortage of cores this time is a market highly monopolized by foreign manufacturers. Data from IHS shows that in the field of automotive-grade MCUs, the world’s seven largest suppliers – Renesas, NXP, Infineon, Cypress, Texas Instruments, Microchip, and STMicroelectronics, account for 98% of the market. The share is close to a monopoly, and the domestic share is almost 0.
“There is also the field of new energy vehicles. At present, the semiconductors involved are still the top ten foreign manufacturers accounting for an absolute share, and China’s share is relatively low. And domestic manufacturers mainly focus on low-end power supplies, discrete devices, logic devices, etc. There is still a long way to go in the field, the industrial chain is completely independent and controllable.” Bao Haisen pointed out.
So the embarrassing status quo is that domestic automotive chips have been highly dependent on imports for a long time in the past, and there has been no significant improvement until now. According to Yang Yuliang, the import value of automobile chips has maintained a growth rate of more than 10% from 2016 to the present.
Because of this, with the spread of overseas epidemics, the production capacity of major semiconductor manufacturers continues to be tight, and the crisis of shutdowns in the automotive industry caused by “chip shortages” is also expanding. According to the forecast of Gasgoo Automotive Research Institute, due to the lack of cores, global car production is expected to decrease by more than 4 million units in 2021, of which the domestic market is expected to reduce production by more than 600,000 units throughout the year.
2021 global car production reduction forecast, source: AFS & Gasgoo passenger car forecast database
Among them, Volkswagen experienced interruptions and production stoppages in key regions in Europe and the United States in the first and second quarters of this year. In China, production disruptions at its joint ventures FAW-Volkswagen and SAIC-Volkswagen have also been severe. In announcing financial results for the first quarter of 2021, CFO Arno Antlitz also reiterated that a semiconductor shortage across the automotive industry is expected to have a higher-than-expected impact on vehicle production in the second quarter.
GM, Honda and Nissan were also considered the most difficult in the second quarter. Among them, General Motors said in announcing its financial results for the first quarter of 2021 that it expects the worst semiconductor shortage in the second quarter of 2021, and the situation will improve in the second half of 2021. Its factories in the U.S., Mexico and Canada have been shutting down for weeks. In China, production at its joint venture SAIC-GM was also affected by limited disruptions in the second quarter.
Among the local car companies, on March 29, the “JAC Weilai” Hefei manufacturing plant suspended production for 5 working days due to the shortage of chips, becoming the first new energy company in China to announce the suspension of production due to the shortage of chips. In addition, NIO also lowered its first-quarter deliveries to 19,500 units. It is reported that due to the continuous shortage of chips in Q2, the company adjusted its production plan again in May.
Kneeling behind the production capacity, why the chips for autonomous vehicles “can’t get up”
The road to chip production begins with design. Although the Electronic design automation (EDA) software and IP supply in the upstream of the industry chain account for a small proportion of the output value of the integrated circuit industry chain, their status is extremely important, and this is precisely the shortcoming of China. China’s chip industry has been stuck from the beginning. stopped the neck.
Taking the EDA industry as an example, in this market, it is mainly controlled by the three giants Synopsys (Synopsys), Cadence (Kaideng Electronics) and Mentor (more than 90%), the localization rate is very low, and the competition pattern is scattered.
According to statistics, as of 2020, the global EDA industry market size will reach 11.5 billion US dollars, while the domestic EDA market size is only around 500 million US dollars. This means that once the United States restricts China’s use of EDA software, the development of Chinese chips will suffer a huge impact. There have been precedents before. In June 2020, affected by the export control of the US Entity List, Harbin Institute of Technology and Harbin Engineering were announced to ban Matlab software, and their normal teaching and research were also affected.
Wafer industry chain, image source: Tianfeng Securities Research Institute
In addition, there are two main objective factors restricting the development of my country’s chips:
1. 56% of wafer manufacturing capacity is concentrated in Taiwan, Japan and South Korea, while packaging and testing are concentrated in Southeast Asia, and domestic production capacity is lacking;
2. There are few domestic testing and certification institutions, and the national standard system is not perfect.
China is a big manufacturing country, but it has not conquered the most upstream “wafer manufacturing” field. Beating the snake and hitting seven inches, wafer manufacturing is the “seven inches” of automotive chips.
In fact, in the past few years, China has been continuously expanding production in chips. In 2020, it has accounted for 15% of the global chip production capacity, ranking third in the world after Taiwan and South Korea.
But at the same time, we must also face up to the composition of this 15% production capacity. Among them, 60% of the production capacity is actually contributed by foreign capital, and the production capacity of Chinese local companies only accounts for less than 40%, that is, 6% of the total global chip production capacity.
Wu Hanming, an academician of the Chinese Academy of Engineering, also pointed out that China needs at least 8 existing SMIC production capacity to improve the current chip supply situation, because the demand for Chinese chips is too high.
Global wafer manufacturing capacity division (region), image source: BCG
In addition, at the product level, most domestic chip companies have not had deep contact with the ISO 26262 standard, and only a few companies have passed the system certification.
According to Chen Dawei of China Electronics Standardization Research Institute, there were only a few domestic automotive chip manufacturers in 2010; in 2015, there were about 10, but most of them were concentrated in the aftermarket; in 2020, there were 40; As of June, there are about 70 automotive-grade chip manufacturers and 250 quasi-auto-grade chips.
Even so, there are still many automotive-grade chips that are actually “unworthy of the name”. “At present, most of the domestic chip companies have just begun to contact the ISO 26262 standard, and there may be only a few companies that have just passed the ISO 26262 system certification, but the chip certification may still be in progress.” Chen Dawei pointed out.
This is reflected in the product, mainly because the relevant testing and certification are very imperfect. According to Chen Dawei, in the automotive electronics innovation product catalog led by the China Integrated Circuit Innovation Design Alliance, only 25 of the 293 products from 73 units provided 38 AEC-Q100 reports, and most of them provided 38 AEC-Q100 reports. The products are not perfect in terms of AEC-Q100 compliance test verification, which obviously does not meet the strict requirements of automotive electronics.
Standard requirements for each stage of the entire automotive chip industry chain, organized by Gasgoo
In addition, there are certain technical barriers in the upstream of the chip industry. Compared with consumer chips and general industrial chips, the development of automotive-grade chips is more difficult and the working environment is more severe. Due to the personal safety involved, it also requires extremely high security. Sexuality and reliability, which also curbed the enthusiasm of some local enterprises from the source.
“Like the usage environment, automotive chips are more severe than traditional industrial and consumer chips, and the design life is quite different. Consumer chips only need to consider a three-year life cycle, and they may be replaced after three years. However, automotive chips must be maintained. With a life cycle of more than ten years and a lifespan of 200,000 kilometers, the temperature and humidity requirements are different from those of traditional consumer electronics, and the product yield rate is even higher.” Bao Haisen pointed out.
On the other hand, automotive chips have a longer payback period than consumer chips. According to Bao Haisen, the current payback period for automotive semiconductors is basically seven or eight years, from R&D investment to tape-out to final verification, and after verification, there is a test of the product, and finally to the offline. This cycle is very long. “So the return on investment of many SoC chips is basically more than 10 million pieces, but it is very difficult to reach 10 million pieces in the car. In fact, due to the high-end and low-end settings, the chip scale is not so fast.”
Because of this, Bao Haisen pointed out that many local suppliers are actually in the dilemma of “carrying automotive cores with consumer electronics cores”.
The breakthrough path of the local semiconductor industry
In the context of the epidemic and Sino-US trade disputes, domestic substitution of chips is no longer a slogan. At present, car companies, Tier 1, and Tier 2 are increasing efforts to introduce local suppliers and product certification, which provides a window opportunity to reshape the domestic automotive semiconductor industry chain.
According to the analysis of Gasgoo Automotive Research Institute, a number of autonomous car companies have signed strategic cooperation agreements with Internet companies and EDA companies to deeply bind joint research and development to achieve the strategic goal of autonomous supply of automotive chips. For example, BAIC and Imagination established Beijing Hexinda Technology Co., Ltd., Dongfeng Group and CRRC jointly established Zhixin Semiconductor, and Geely subsidiary Yigatong also established Siengine through a joint venture with Arm China, laying out chip research and development, improving Chip self-sufficiency.
Especially in subdivisions such as autonomous driving and smart cockpit chips, some independent chip companies have begun to show their heads. “Because with the gradual evolution of automotive electronic and electrical architecture, the types and functional requirements of chips will continue to change, such as autonomous driving, intelligent cockpit domain, and even entering the era of on-board computers, which may require higher concentration, higher performance, Chips with greater computing power and stricter functional safety requirements form a complete ecosystem and supply chain system around the core large computing power chips, which provides opportunities for new chip startups like us.” Chief Market of Black Sesame Intelligence Marketing Officer Yang Yuxin pointed out.
In this regard, Yang Yuliang also agreed, and proposed that “the smart cockpit chip is the outpost, and the autonomous driving chip is the commanding height of the domestic overtaking war.” Technology companies headed by Horizon and Black Sesame have become the main force in high-computing autonomous driving chips, and are gradually improving their product matrix. It is reported that Horizon has reached cooperation with Changan, Ideal, FAW, GAC, BYD, Great Wall, SAIC and other auto companies, and a number of models equipped with Horizon AI chips have been successfully launched.
In addition, domestic traditional chip manufacturers are also smelling development opportunities in the new round of revolution. Taking MCU as an example, obvious progress has been made in recent years. Even in the automotive pre-installation market with high threshold, long cycle and strong safety, 32-bit products have been launched.
For example, at the end of 2018 and the first half of 2020, Jiefa Technology launched the AC781X, the first automotive-grade 32-bit MCU chip independently developed and mass-produced in China, and the AC7801X series of products after functional optimization and cost control. The company’s MCU chips have been incorporated into the supply chain system by a number of automotive electronic components manufacturers.
Product block diagram of Jiefa Technology, picture source: Jiefa Technology
Xinwang Microelectronics and Zhaoyi Innovation have also made breakthroughs in automotive-grade MCUs. Xinwang Microelectronics KF32A15X series MCUs have been initially introduced to domestic car manufacturers. Zhaoyi Innovation expects that its MCU business revenue will increase in 2021. times, and become the main revenue increment.
While their own R&D strength is gradually increasing, some companies also quickly cover production capacity resources through investment and mergers and acquisitions. On the evening of July 5, Wingtech announced that its wholly-owned subsidiary, Nexperia, has completed the acquisition of 100% of NEPTUNE 6. It is reported that NEPTUNE’s main asset is the 8-inch wafer fab Newport Wafer Fab, which is the largest remaining semiconductor factory in the UK. The existing monthly production capacity is 32,000 8-inch wafers, and the maximum monthly production capacity can be expanded to 44,000. The main products are MOSFET and IGBT chips used in the automotive industry, as well as CMOS and analog chips.
Under this development trend, SIA predicts that China is expected to add about 40% of new production capacity in the next 10 years, becoming the world’s largest semiconductor manufacturing base.
The national level also recognizes the importance of a complete industrial chain for national security, and is actively using the policy “Dongfeng” to guide the semiconductor industry. Coinciding with the first year of the 14th Five-Year Plan, Zhejiang, Shanxi and other places have successively released the “14th Five-Year Plan”, focusing on the development of third-generation semiconductors. The country also reiterated the strategy of rejuvenating the country through science and technology and the plan to support semiconductors in the 14th Five-Year Plan. The investment layout of “internal circulation” of chips is in full swing.
Especially worth mentioning is the establishment of the National Integrated Circuit Industry Investment Fund, which promotes the development of this industry in the form of market-oriented investment. It is reported that the first phase of the National Fund has invested in 52 companies from the perspective of “strengthening the strengths and making up for the weaknesses”, taking into account industries such as chip design, packaging and testing, equipment and materials; the second phase of the National Fund further targets the semiconductor industry. Weak link (mature process wafer manufacturing) to make breakthroughs. At present, there are more than 10 public investment projects in the second phase of the large fund, and the total investment amount has exceeded 30 billion yuan.
Not only industrial funds, but private capital is also continuing to support the semiconductor industry. According to data from Yunxiu Capital, in the past year, a total of 534 semiconductor companies have received financing, with a total financing amount of 153.6 billion. It is worth mentioning that most of the funds are driven by private capital, which is very rare in the history of development. According to the analysis of the report, financing is mainly concentrated in the three tracks of data center, automobile and semiconductor manufacturing.
In the past year, the financing trend of semiconductor companies, picture source: Yunxiu Capital
A good show needs a good “stage”. To be sure, domestic automotive semiconductors already have a fertile growth soil, but in the window period when the bubbles follow, we also need to think clearly and think long-term.
Zhou Xiaoying, CEO of Gasgoo, also said bluntly, “This field has a large investment in R&D and a long return period. It also needs the joint promotion of government, industry, academia and research to truly form a local force. Now there is more and more attention, it is a good start for the development of the industry. The road is long and long, but the journey will come.”
It is difficult to break through, but once a breakthrough is made, the huge Chinese market alone is enough to become a super-large enterprise. You see the CATL era.
Copyright statement: This article is an original article by Gasgoo. If you want to reprint, please abide by the relevant provisions of the reprint instructions. Those who violate the reprint instructions, Gasgoo will pursue their legal responsibility according to law!
If you want to set a keyword for the auto industry in the first half of 2021, “core shortage” will definitely not run. The days of lack of cores seem to be endless, and the “labor pains” of vehicle production are protracted. The lack of cores forces the chips to be independently controllable, and accelerating the localization of chips has once again become the focus of the industry.
In fact, earlier, ZTE and Huawei’s “core ban” has sounded the alarm for chip autonomy. After that, the government, industry, academia and research institute unanimously proposed to vigorously support the development of semiconductors, and the industry has begun to make efforts. Yang Yuliang, the hardware development manager of Pan-Asia Automotive, proposed that OEMs should take the lead and support key chip companies together with system suppliers to solve the localization of high-threshold technology automotive-grade chips through their endogenous power; Improve the access mechanism of chips and jointly promote the establishment of performance benchmarking platforms; in addition, we must expand the development system framework and ecology. It is necessary to consider chips that support EDA design, instruction sets, compilers and other tools and software, which are convenient for OEMs to use.
“Lack of cores” forces automotive semiconductors to accelerate their autonomy
Under the wave of the new four modernizations, the domestic new energy and smart car markets have risen rapidly, giving birth to new opportunities for the development of automotive semiconductors.
“In the future, the number of semiconductors in a car will reach 6,000-10,000.” Thomas Manfred Müller, executive vice president of Volkswagen Group (China), once said publicly. “If the level of driverless L4 is achieved, the value of semiconductors in a vehicle is expected to triple.”
Under this huge demand, the market size of automotive semiconductors is also rapidly expanding. “It is possible that before 2027, the market size of automotive semiconductors will exceed 100 billion US dollars, and new demands in the fields of ADAS, communications, and electric vehicles will increase semiconductors very quickly.” Recently, the 2021 China Automotive Semiconductors hosted by Gasgoo At the industry conference, Bao Haisen, director of the strategy and business development department (vehicle field) of Shanghai HiSilicon, said so.
However, the share that Chinese local companies can hold in their hands is still very small until now. Ye Shengji, chief engineer and deputy secretary-general of the China Association of Automobile Manufacturers, previously said that as of now, China’s semiconductor self-sufficiency rate is only 15%, of which auto chip self-sufficiency rate is less than 5%, and the local automotive semiconductor supply chain is highly dependent on foreign manufacturers.
In particular, the car-grade MCU control chip with the most serious shortage of cores this time is a market highly monopolized by foreign manufacturers. Data from IHS shows that in the field of automotive-grade MCUs, the world’s seven largest suppliers – Renesas, NXP, Infineon, Cypress, Texas Instruments, Microchip, and STMicroelectronics, account for 98% of the market. The share is close to a monopoly, and the domestic share is almost 0.
“There is also the field of new energy vehicles. At present, the semiconductors involved are still the top ten foreign manufacturers accounting for an absolute share, and China’s share is relatively low. And domestic manufacturers mainly focus on low-end power supplies, discrete devices, logic devices, etc. There is still a long way to go in the field, the industrial chain is completely independent and controllable.” Bao Haisen pointed out.
So the embarrassing status quo is that domestic automotive chips have been highly dependent on imports for a long time in the past, and there has been no significant improvement until now. According to Yang Yuliang, the import value of automobile chips has maintained a growth rate of more than 10% from 2016 to the present.
Because of this, with the spread of overseas epidemics, the production capacity of major semiconductor manufacturers continues to be tight, and the crisis of shutdowns in the automotive industry caused by “chip shortages” is also expanding. According to the forecast of Gasgoo Automotive Research Institute, due to the lack of cores, global car production is expected to decrease by more than 4 million units in 2021, of which the domestic market is expected to reduce production by more than 600,000 units throughout the year.
2021 global car production reduction forecast, source: AFS & Gasgoo passenger car forecast database
Among them, Volkswagen experienced interruptions and production stoppages in key regions in Europe and the United States in the first and second quarters of this year. In China, production disruptions at its joint ventures FAW-Volkswagen and SAIC-Volkswagen have also been severe. In announcing financial results for the first quarter of 2021, CFO Arno Antlitz also reiterated that a semiconductor shortage across the automotive industry is expected to have a higher-than-expected impact on vehicle production in the second quarter.
GM, Honda and Nissan were also considered the most difficult in the second quarter. Among them, General Motors said in announcing its financial results for the first quarter of 2021 that it expects the worst semiconductor shortage in the second quarter of 2021, and the situation will improve in the second half of 2021. Its factories in the U.S., Mexico and Canada have been shutting down for weeks. In China, production at its joint venture SAIC-GM was also affected by limited disruptions in the second quarter.
Among the local car companies, on March 29, the “JAC Weilai” Hefei manufacturing plant suspended production for 5 working days due to the shortage of chips, becoming the first new energy company in China to announce the suspension of production due to the shortage of chips. In addition, NIO also lowered its first-quarter deliveries to 19,500 units. It is reported that due to the continuous shortage of chips in Q2, the company adjusted its production plan again in May.
Kneeling behind the production capacity, why the chips for autonomous vehicles “can’t get up”
The road to chip production begins with design. Although the Electronic design automation (EDA) software and IP supply in the upstream of the industry chain account for a small proportion of the output value of the integrated circuit industry chain, their status is extremely important, and this is precisely the shortcoming of China. China’s chip industry has been stuck from the beginning. stopped the neck.
Taking the EDA industry as an example, in this market, it is mainly controlled by the three giants Synopsys (Synopsys), Cadence (Kaideng Electronics) and Mentor (more than 90%), the localization rate is very low, and the competition pattern is scattered.
According to statistics, as of 2020, the global EDA industry market size will reach 11.5 billion US dollars, while the domestic EDA market size is only around 500 million US dollars. This means that once the United States restricts China’s use of EDA software, the development of Chinese chips will suffer a huge impact. There have been precedents before. In June 2020, affected by the export control of the US Entity List, Harbin Institute of Technology and Harbin Engineering were announced to ban Matlab software, and their normal teaching and research were also affected.
Wafer industry chain, image source: Tianfeng Securities Research Institute
In addition, there are two main objective factors restricting the development of my country’s chips:
1. 56% of wafer manufacturing capacity is concentrated in Taiwan, Japan and South Korea, while packaging and testing are concentrated in Southeast Asia, and domestic production capacity is lacking;
2. There are few domestic testing and certification institutions, and the national standard system is not perfect.
China is a big manufacturing country, but it has not conquered the most upstream “wafer manufacturing” field. Beating the snake and hitting seven inches, wafer manufacturing is the “seven inches” of automotive chips.
In fact, in the past few years, China has been continuously expanding production in chips. In 2020, it has accounted for 15% of the global chip production capacity, ranking third in the world after Taiwan and South Korea.
But at the same time, we must also face up to the composition of this 15% production capacity. Among them, 60% of the production capacity is actually contributed by foreign capital, and the production capacity of Chinese local companies only accounts for less than 40%, that is, 6% of the total global chip production capacity.
Wu Hanming, an academician of the Chinese Academy of Engineering, also pointed out that China needs at least 8 existing SMIC production capacity to improve the current chip supply situation, because the demand for Chinese chips is too high.
Global wafer manufacturing capacity division (region), image source: BCG
In addition, at the product level, most domestic chip companies have not had deep contact with the ISO 26262 standard, and only a few companies have passed the system certification.
According to Chen Dawei of China Electronics Standardization Research Institute, there were only a few domestic automotive chip manufacturers in 2010; in 2015, there were about 10, but most of them were concentrated in the aftermarket; in 2020, there were 40; As of June, there are about 70 automotive-grade chip manufacturers and 250 quasi-auto-grade chips.
Even so, there are still many automotive-grade chips that are actually “unworthy of the name”. “At present, most of the domestic chip companies have just begun to contact the ISO 26262 standard, and there may be only a few companies that have just passed the ISO 26262 system certification, but the chip certification may still be in progress.” Chen Dawei pointed out.
This is reflected in the product, mainly because the relevant testing and certification are very imperfect. According to Chen Dawei, in the automotive electronics innovation product catalog led by the China Integrated Circuit Innovation Design Alliance, only 25 of the 293 products from 73 units provided 38 AEC-Q100 reports, and most of them provided 38 AEC-Q100 reports. The products are not perfect in terms of AEC-Q100 compliance test verification, which obviously does not meet the strict requirements of automotive electronics.
Standard requirements for each stage of the entire automotive chip industry chain, organized by Gasgoo
In addition, there are certain technical barriers in the upstream of the chip industry. Compared with consumer chips and general industrial chips, the development of automotive-grade chips is more difficult and the working environment is more severe. Due to the personal safety involved, it also requires extremely high security. Sexuality and reliability, which also curbed the enthusiasm of some local enterprises from the source.
“Like the usage environment, automotive chips are more severe than traditional industrial and consumer chips, and the design life is quite different. Consumer chips only need to consider a three-year life cycle, and they may be replaced after three years. However, automotive chips must be maintained. With a life cycle of more than ten years and a lifespan of 200,000 kilometers, the temperature and humidity requirements are different from those of traditional consumer electronics, and the product yield rate is even higher.” Bao Haisen pointed out.
On the other hand, automotive chips have a longer payback period than consumer chips. According to Bao Haisen, the current payback period for automotive semiconductors is basically seven or eight years, from R&D investment to tape-out to final verification, and after verification, there is a test of the product, and finally to the offline. This cycle is very long. “So the return on investment of many SoC chips is basically more than 10 million pieces, but it is very difficult to reach 10 million pieces in the car. In fact, due to the high-end and low-end settings, the chip scale is not so fast.”
Because of this, Bao Haisen pointed out that many local suppliers are actually in the dilemma of “carrying automotive cores with consumer electronics cores”.
The breakthrough path of the local semiconductor industry
In the context of the epidemic and Sino-US trade disputes, domestic substitution of chips is no longer a slogan. At present, car companies, Tier 1, and Tier 2 are increasing efforts to introduce local suppliers and product certification, which provides a window opportunity to reshape the domestic automotive semiconductor industry chain.
According to the analysis of Gasgoo Automotive Research Institute, a number of autonomous car companies have signed strategic cooperation agreements with Internet companies and EDA companies to deeply bind joint research and development to achieve the strategic goal of autonomous supply of automotive chips. For example, BAIC and Imagination established Beijing Hexinda Technology Co., Ltd., Dongfeng Group and CRRC jointly established Zhixin Semiconductor, and Geely subsidiary Yigatong also established Siengine through a joint venture with Arm China, laying out chip research and development, improving Chip self-sufficiency.
Especially in subdivisions such as autonomous driving and smart cockpit chips, some independent chip companies have begun to show their heads. “Because with the gradual evolution of automotive electronic and electrical architecture, the types and functional requirements of chips will continue to change, such as autonomous driving, intelligent cockpit domain, and even entering the era of on-board computers, which may require higher concentration, higher performance, Chips with greater computing power and stricter functional safety requirements form a complete ecosystem and supply chain system around the core large computing power chips, which provides opportunities for new chip startups like us.” Chief Market of Black Sesame Intelligence Marketing Officer Yang Yuxin pointed out.
In this regard, Yang Yuliang also agreed, and proposed that “the smart cockpit chip is the outpost, and the autonomous driving chip is the commanding height of the domestic overtaking war.” Technology companies headed by Horizon and Black Sesame have become the main force in high-computing autonomous driving chips, and are gradually improving their product matrix. It is reported that Horizon has reached cooperation with Changan, Ideal, FAW, GAC, BYD, Great Wall, SAIC and other auto companies, and a number of models equipped with Horizon AI chips have been successfully launched.
In addition, domestic traditional chip manufacturers are also smelling development opportunities in the new round of revolution. Taking MCU as an example, obvious progress has been made in recent years. Even in the automotive pre-installation market with high threshold, long cycle and strong safety, 32-bit products have been launched.
For example, at the end of 2018 and the first half of 2020, Jiefa Technology launched the AC781X, the first automotive-grade 32-bit MCU chip independently developed and mass-produced in China, and the AC7801X series of products after functional optimization and cost control. The company’s MCU chips have been incorporated into the supply chain system by a number of automotive electronic components manufacturers.
Product block diagram of Jiefa Technology, picture source: Jiefa Technology
Xinwang Microelectronics and Zhaoyi Innovation have also made breakthroughs in automotive-grade MCUs. Xinwang Microelectronics KF32A15X series MCUs have been initially introduced to domestic car manufacturers. Zhaoyi Innovation expects that its MCU business revenue will increase in 2021. times, and become the main revenue increment.
While their own R&D strength is gradually increasing, some companies also quickly cover production capacity resources through investment and mergers and acquisitions. On the evening of July 5, Wingtech announced that its wholly-owned subsidiary, Nexperia, has completed the acquisition of 100% of NEPTUNE 6. It is reported that NEPTUNE’s main asset is the 8-inch wafer fab Newport Wafer Fab, which is the largest remaining semiconductor factory in the UK. The existing monthly production capacity is 32,000 8-inch wafers, and the maximum monthly production capacity can be expanded to 44,000. The main products are MOSFET and IGBT chips used in the automotive industry, as well as CMOS and analog chips.
Under this development trend, SIA predicts that China is expected to add about 40% of new production capacity in the next 10 years, becoming the world’s largest semiconductor manufacturing base.
The national level also recognizes the importance of a complete industrial chain for national security, and is actively using the policy “Dongfeng” to guide the semiconductor industry. Coinciding with the first year of the 14th Five-Year Plan, Zhejiang, Shanxi and other places have successively released the “14th Five-Year Plan”, focusing on the development of third-generation semiconductors. The country also reiterated the strategy of rejuvenating the country through science and technology and the plan to support semiconductors in the 14th Five-Year Plan. The investment layout of “internal circulation” of chips is in full swing.
Especially worth mentioning is the establishment of the National Integrated Circuit Industry Investment Fund, which promotes the development of this industry in the form of market-oriented investment. It is reported that the first phase of the National Fund has invested in 52 companies from the perspective of “strengthening the strengths and making up for the weaknesses”, taking into account industries such as chip design, packaging and testing, equipment and materials; the second phase of the National Fund further targets the semiconductor industry. Weak link (mature process wafer manufacturing) to make breakthroughs. At present, there are more than 10 public investment projects in the second phase of the large fund, and the total investment amount has exceeded 30 billion yuan.
Not only industrial funds, but private capital is also continuing to support the semiconductor industry. According to data from Yunxiu Capital, in the past year, a total of 534 semiconductor companies have received financing, with a total financing amount of 153.6 billion. It is worth mentioning that most of the funds are driven by private capital, which is very rare in the history of development. According to the analysis of the report, financing is mainly concentrated in the three tracks of data center, automobile and semiconductor manufacturing.
In the past year, the financing trend of semiconductor companies, picture source: Yunxiu Capital
A good show needs a good “stage”. To be sure, domestic automotive semiconductors already have a fertile growth soil, but in the window period when the bubbles follow, we also need to think clearly and think long-term.
Zhou Xiaoying, CEO of Gasgoo, also said bluntly, “This field has a large investment in R&D and a long return period. It also needs the joint promotion of government, industry, academia and research to truly form a local force. Now there is more and more attention, it is a good start for the development of the industry. The road is long and long, but the journey will come.”
It is difficult to break through, but once a breakthrough is made, the huge Chinese market alone is enough to become a super-large enterprise. You see the CATL era.
Copyright statement: This article is an original article by Gasgoo. If you want to reprint, please abide by the relevant provisions of the reprint instructions. Those who violate the reprint instructions, Gasgoo will pursue their legal responsibility according to law!
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