The 2022 car chip battle has begun!

The author | West Four

| Motor Home

The tide of "lack of core" that began at the end of 2020 has not completely subsided, and a small chip has become the biggest "black swan" event affecting the automotive industry in 2021. This year, due to the shortage of chips, the industry chaos frequently occurred, production stoppage, production reduction, hoarding, price gouging, delayed delivery, allocation reduction delivery...

In the wave of core shortage for more than a year, almost none of the vehicles to parts companies, to dealers and consumers, have been affected to varying degrees. The "chip famine" began with accidents, was burdened by man-made disasters, and finally ran through the whole year of 2021.

01 Impact: What is the impact of the lack of core tide?

As early as the second half of 2020, the lack of core in the automotive industry has been on the horizon, and it has continued until the second half of 2021 before it began to explode in full swing, and the average global chip supply cycle was extended from 13 weeks in November 2020 to 22.3 weeks in November 2021. A chipmaker revealed that when supply was at its tightest in July last year, it could only meet about 20% of customer orders.

"Lack of core" has become the biggest problem facing the entire automotive industry. A scene that is still fresh in people's minds is that a group of car company CEOs squatted at the Bosch China headquarters in Shanghai to wait for chips to be snapped up, forcing Bosch China executives to meet to "jump off the building". Although it is only a joke, it can also reflect a difficult situation that is difficult to find from the side.

Why is the automotive industry so "missing core"?

As for the reasons for the shortage of chips, various experts have had many analyses. Some say that chip production has been affected by the epidemic, some say that it is caused by middlemen hoarding goods, and some say that the surge in sales of smart new energy vehicles has brought about a rise in chip demand... Indeed, the combination of these three factors has created a protracted chip famine.

The impact of the chip famine is numerous, and the most direct result is to reduce production and sales of car companies. Entering 2021, first the Volkswagen Group announced that due to the lack of core production of 100,000 vehicles, the annual sales will fall to less than 9 million vehicles; subsequently, Toyota also announced that many of the company's car factories in Japan and the United States have entered a shutdown period, directly causing the loss of production capacity of hundreds of thousands of vehicles.

Even auto giants such as Volkswagen and Toyota are also deeply disturbed, not to mention other car companies. Since last year, first-line manufacturers including GM, Ford, Honda, Great Wall, etc. have been affected by the lack of cores, many car companies have successively reduced production or suspended the production of some models, and some automobile factories have even stopped working because of this, and the delivery time of hot-selling models of individual car brands has been extended by 2-3 months.

According to the forecast data of AutoForecast Solutions, due to the chip shortage, the cumulative production reduction of the global automobile market in 2021 may reach 11.324 million units, of which the cumulative production reduction of the Chinese automobile market is expected to be 2.148 million units. Chip shortages have caused the global auto industry to lose more than $200 billion in revenue in 2021.

The continuous shortage of chips is like dominoes, which has triggered a series of chain reactions and reflected the industry, the most impressive of which is the "price increase tide" that appears with the core shortage.

Due to the shortage of chips, the enthusiasm of the downstream industrial chain for hoarding goods has prompted the supply of upstream fabs to exceed demand, and many large wafer foundries, including UMC, TSMC, and Samsung, have repeatedly announced the increase in chip foundry prices, of which the highest increase has reached 30%.

In addition, the raw materials for making chips, such as silicon and resin, have also ushered in a sharp rise, and the prices of related components have risen all the way, and the prices of many special components have risen by more than 40%, which together have led to a sharp rise in chip prices. As of now, the price increase tide is still continuing.

In August 2021, an agent in Shenzhen was investigated by the regulatory authorities for controlling goods and inflating prices. The agent sold a few yuan of car chips to a few hundred yuan, and the price increase was more than a hundred times. Finally, these dealers who disrupted the market and hoarded their curiosity were "severely punished" by the State Administration for Market Regulation.

The heavy blow of the regulatory authorities has also eased the problem of tight chip supply in a short period of time.

02 Change: Independent core manufacturing into a trend

The chip industry in 2021 can be described as a dangerous year, but it is also a year of hidden vitality and hope.

While the tide of "lack of core" has impacted the domestic automobile industry, it has also exposed its "card neck" weakness. In the face of the severe situation brought about by the lack of cores and price increases, industry enterprises will naturally not sit still and always take corresponding measures to implement self-help, which also leads to another key word in the automobile industry in 2021, "independent core manufacturing tide".

Chip shortage and sharp price increases have made many Chinese car companies realize that the supply chain can not rely too much on foreign countries, but should find suitable chip suppliers in China, or independently develop chips, which is a rare opportunity for independent chip manufacturers.

In fact, before the lack of core tide, some car companies have already been involved in some chip fields, and the arrival of this crisis has made car companies build cores on a large scale. In the past year, domestic car companies such as Great Wall, Wuling, BAIC, Geely, BYD, SAIC, Xiaopeng, Weilai, and Zero Run have joined the army of independent core manufacturing.

Among them, some car companies have adopted self-research methods, such as Xiaopeng Automobile's self-developed chip plan has been launched for nearly a year; Li Bin, the founder of Weilai, is also working with the ideal car founder Li Xiang and other components to build core alliances; zero-run cars even said after developing their own intelligent driving chips that car companies that do not make chips are not a good technology company.

However, it is worth noting that the self-developed chips of car companies have higher technical and cost requirements, and most of the domestic independent chips have the problem of high power consumption to a certain extent, and in order to create high-quality car chips, they also need to invest more capital and time costs.

Unlike a small number of car companies that are completely self-developed chips, more car companies still choose to cooperate with semiconductor manufacturers or start-up car chip companies to make cores.

For example, BAIC Production and Investment and Imagination jointly established Beijing Core Technology Co., Ltd.; SAIC and Infineon jointly established IGBT enterprise SAIC Infineon Automotive Power Semiconductor (Shanghai) Co., Ltd.; Geely Group-controlled Yijiatong Technology and Arm China joint ventured to establish Hubei Core Qing Technology... Other car companies have also begun to actively interact with domestic chip companies.

Whether it is cooperation with chip factories or independent core manufacturing, it shows that being able to get more chips as soon as possible is the first priority of current car companies.

The lack of core production is a great test for car companies, especially for Chinese car companies that rely too much on imported chips, and the safety of the supply chain has become an important proposition that they have to face. The tide of "lack of core" is a reshaping of the automotive industry chain, and in the face of the industry test, many car companies have made their own choices.

03 turnaround: lack of core tide or stop this year

Many people are asking, when will the lack of cores end?

China Automobile Center previously expected that by the third quarter of this year, the supply of chips will be greatly alleviated. JPMorgan also said that chip supply could improve fundamentally in the second half of 2022. Although small missing cores may become the norm in the automotive industry in the future, the tide of large-scale core shortages is likely to end in the second half of 2022. At that time, the potential vitality of the mainland automobile market will be basically released.

Although the forecasts of all parties are consistent and good, they do not deny that supply is still tight, and maintaining the balance between supply and demand also requires the joint efforts of all parties. From the current situation, in the face of strong market demand for automotive chips, the heat of industrial investment is also continuing to rise. In order to meet the supply of chips, a number of major international chip manufacturers have started plans to build new factories and expand the capacity of existing factories.

Among them, Samsung spent tens of billions of dollars to build factories in the United States; DENSO also invested 160 million yuan to expand its core production capacity in Malaysia; SMIC has invested 15.3 billion yuan to build a factory in Shenzhen, which will increase production capacity by 25%, which is a staggering amount; TSMC has added 2.8 billion US dollars to automotive chip production... In addition, international chip manufacturers such as UMC, Grofond, and SK Hynix have also announced expansion plans, and the expansion tide of chip companies is in full swing around the world.

Not only are industry enterprises seeking changes, but various countries and regions are also changing.

The chip shortage has put forward higher manufacturing needs for the development of chip industries in various countries, which in turn has triggered a shift in the focus of chip competition: from the past design field to the manufacturing field. In this context, countries and regions, including China, the United States, Japan, South Korea and Europe, have introduced a new chip development strategy.

For example, the United States plans to invest $37 billion to strengthen chip manufacturing; The European Union plans to establish a semiconductor alliance; Japan plans a national chip program; South Korea plans to provide tax incentives and subsidies for chip manufacturers; China is also increasing investment in chip manufacturing, and the "14th Five-Year Plan" released in the first half of last year has clearly stated that high-end chips are "the urgent needs and long-term needs of the country...

In addition, multi-party data show that as the epidemic situation in Southeast Asia, which is responsible for chip packaging and testing, stabilizes, the global supply of automotive chips has recovered from the fourth quarter of 2021.

On January 12, Wang Weiming, director of the First Department of Equipment Industry of the Ministry of Industry and Information Technology, said at a press conference of the Ministry of Industry and Information Technology that with the improvement of the epidemic situation and the continuous expansion of chip companies, chip production capacity will be released in the second half of this year, and it is expected that the shortage of automotive chip supply will gradually ease in 2022.

Fu Bingfeng, executive vice president and secretary general of the China Association of Automobile Manufacturers, also said that with the gradual role of the chip market regulation mechanism and the joint efforts of all parties, the chip shortage problem will be alleviated this year.

However, there are also views that the chip shortage will not be fundamentally improved in 2022, after all, the chip industry is a high-investment, long-term industry, and it is impossible to reverse the situation in the short term.

To fundamentally solve the lack of cores, on the one hand, it is necessary to expand the supply, but as a high-tech product, the vehicle-grade chip needs to go through a long cycle process of research and development, design, production and so on before it is listed, which is by no means achieved overnight.

On the other hand, in the short and medium term, the state and the industry still have to play the role of the visible hand to dig out the bad behavior of hoarding and price gouging in the corners of the chip market. Only in this way can the problem of missing cores be substantially improved.

2021 is an extraordinary year in the history of the development of the mainland automobile industry. The impact of the epidemic, the shortage of chips, the continued high price of raw materials... Under many unfavorable factors, China's total automobile production and sales this year still ranked first in the world, contributing to the sustained recovery and development of China's industrial economy and stable macroeconomic growth.

2021 has passed, and the field of automotive chips has left a chicken feather. Entering 2022, when the bigwigs of various car companies imagine the future, their words still reveal their desire for chips. Where will the automotive chip industry go this year? Let's wait and see.

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Article from: Tencent

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