The development of future motor vehicles and automotive semiconductors
Automotive electronic systems accounted for only 1% of the cost of a vehicle in 1950 and are expected to reach 50% by 2030.
Needless to say, the invention of Metal oxide semiconductor integrated circuit (MOS IC) chips and microprocessors in the 1970s led to the rapid growth of the automotive semiconductor industry. Today, automotive semiconductor applications can be broadly divided into six categories: main control chips, Micro-controller (MCU) function chips, power chips, storage chips, communication chips and other chips (mainly sensing chips).
Changes in the demand for automotive semiconductor components
According to data provided by Strategy Analytics, in conventional fuel vehicles, the MCU has the highest cost share of 23%, followed by power semiconductors at 21%, and sensors are third, accounting for 13%.
In pure electric vehicles, the use of power semiconductors has increased significantly, reaching 55%, followed by MCUs, accounting for 11%, and sensors accounting for 7%.
The proportion of semiconductors used in automobiles has been increasing, and the penetration of electric vehicles (EV) will further drive the growth in demand for automotive semiconductors, as the EV’s electric powertrain architecture needs to rely on semiconductor chips to implement key system functions such as power management. Sensors and sensing systems for driver assistance and autonomous driving further increase the amount of semiconductors used per vehicle.
Market forecast for automotive semiconductors
According to KPMG, automotive semiconductors are expected to reach $200 billion in 2040, with a CAGR of 7.7%.
The growth in demand for automotive semiconductors comes from three powerful forces in the automotive industry：
Autonomous driving: Level 4 vehicles are expected to appear in commercial fleets within the next two to three years. vehicles with Level 4 or 5 autonomous driving capabilities will account for more than 10% of total global vehicle sales in 2030, and the value of semiconductors in these vehicles will be eight to 10 times greater than in vehicles without automation.
Electric Vehicles: Semiconductor use per vehicle doubles as vehicle powertrain shift from traditional internal combustion engine vehicles to electric vehicles.
Connected cars: Intel estimates that a connected car can generate at least 4tb of data per day, including navigation, navigational, infotainment and other information. This data must be stored, protected, transmitted and analyzed with maximum reliability to guide the car’s safe driving. All these functions are driving the demand for automotive semiconductors.
With the rise of electric vehicles, New Energy Vehicles, including Battery Electric Vehicles (BEV), Extended Range Electric Vehicle (EREV), Hybrid Electric Vehicle ( HEV), Fuel Cell Electric Vehicle (FCEV), and Hydrogen Powered Vehicle (HPV) will dominate the future of the automotive industry and the future of automotive semiconductors.
The powertrain of a new energy vehicle consists of three major components: the battery, the motor and the motor controller. The motors in electric and hybrid vehicles operate over a wide range of revolutions, and the inverter, which is critical to the motor, needs to be able to precisely control the speed of the motor. The switch that makes this possible is the Insulated Gate Bipolar Transistor (IGBT), which is indispensable for electric vehicle inverters because of its ultra-fast switching speed and high breakdown voltage. IGBT module is one of the core technologies of electric vehicles, and the performance of IGBT directly affects the power release rate of electric vehicles. The IGBT market for electric vehicle powertrain is expected to grow strongly.
Automotive semiconductor market, NXP, Infineon, Renesas Electronics, STMicroelectronics and Texas Instruments has long occupied the top 5 positions in the global automotive MCU market. With the rise of ADAS, autonomous driving technology, Qualcomm, Intel, Nvidia, AMD, etc. have also joined the battle for the future of the automotive market. Tesla is the first to start independent research and development of self-driving chip. The battle of arithmetic power has already begun. The current artificial intelligence and intelligent driving algorithms have not yet been finalized, GPU chips will remain the mainstream of the main control chip of the car, Field-programmable gate array (FPGA) is used as an effective complement to GPU, and ASIC solutions will become the ultimate direction.
Power semiconductors using silicon carbide (SiC) or gallium nitride (GaN) as substrate materials have also emerged as a new technology that can operate at higher temperatures than silicon semiconductors (such as IGBTs and MOSFETs) and can also contribute to reducing the size and weight of application devices. The demand for these semiconductors is also expected to increase in the future. Hon Hai has announced that it will invest in the development of third generation semiconductor technologies (SiC silicon carbide components, etc.).
Conclusion
The supply chain disruption during the COVID epidemic led to a semiconductor “chip shortage”, with power management chips (PMICs) and microcontrollers (MCUs) having the largest shortage of all automotive chips. The main reasons for this are the impact of factory production cuts or shutdowns, the growth in demand generated by new energy vehicles, and manufacturers’ preference for allocating capacity to higher-margin consumer electronics products. It is expected that by mid-2022, the supply and demand for automotive chips will gradually return to balance.
New energy vehicles will lead the development of future vehicles, and new energy vehicles will reshape the value of power semiconductors. Therefore, investing in the research and manufacturing of new semiconductor materials provides more room to further enhance the electric power performance of new energy vehicles. In terms of semiconductor usage per vehicle, the continued growth of market penetration of new energy vehicles brings attractive relative growth for related investments. However, the semiconductor industry has historically experienced not only periods of supply shortage, but also periods of oversupply. We need to carefully assess the current development of the automotive industry, focus on the long-term growth prospects of automotive semiconductors, and carefully plan investments to prevent oversupply.