What’s driving the automotive revolution? In an industry where innovation accelerates at breakneck speeds, the answer lies in the heart of semiconductor car technology. The integration of semiconductors is redefining the capabilities of vehicles, from enhancing performance and safety to enabling the transition to autonomy. But this transformative wave is not without its challenges. Semiconductor shortages have hit production lines hard, posing a complex puzzle for automakers worldwide. This article explores the pivotal role semiconductor car chips play in modern cars and how they’re shaping the path forward, despite supply chain hurdles.
Key Takeaways
- Semiconductor chips are vital to modern vehicles, significantly enhancing safety, performance, and comfort, and are anticipated to increase the average value of semiconductors in cars from US$500 in 2020 to US$1,400 by 2028.
- The automotive industry has faced semiconductor supply chain challenges, leading to lost production and strategic shifts towards high-margin vehicles, while also navigating geopolitical risks and material scarcity.
- Automakers are mitigating chip shortage impacts by forming strategic partnerships, reevaluating inventory strategies, and aligning production with semiconductor availability, highlighting a shift toward prioritizing resilience in supply chain management.
The Semiconductor Revolution in Modern Vehicles
Semiconductor chips, once reserved for modest roles within electronic devices, have now taken center stage in the automotive industry. Their presence in modern vehicles is nothing short of transformative, enhancing safety, performance, and comfort with each microchip. Today, a single car can be a sophisticated habitat for between 1,000 and 3,000 semiconductor chips, each serving a distinct purpose, including:
- Optimizing engine control
- Enabling advanced safety features
- Enhancing navigation systems
- Improving fuel efficiency
- Enhancing entertainment systems
Automotive semiconductors, in the form of semiconductor chips, have revolutionized the automotive industry and continue to drive innovation in vehicle technology.
These chips don’t just enhance functionality; they also have a significant economic impact. The average value of semiconductors in cars is projected to leap from US$500 in 2020 to US$1,400 by 2028. This upsurge heralds a significant shift in the auto industry’s growth trajectory, propelling automotive sales and reshaping the automotive sector from an automotive industry perspective.
From Engine Efficiency to Enhanced Safety
Semiconductor chips offer more to the automotive industry than just engine control units. They are the lifeline of critical systems that ensure our safety on the road. Some key applications of semiconductor chips in the automotive industry include:
- Deployment of airbags
- Precision of anti-lock braking systems and stability control
- Driver assistance systems
- Electric power steering
These chips play a crucial role in processing data and making real-time decisions, significantly advancing improved vehicle safety and accident avoidance.
The semiconductor’s influence extends to automotive lighting, with adaptive lighting and automatic high beam control enhancing nighttime visibility and safety. Beyond safety, these chips also refine transmission and suspension systems, thereby optimizing engine performance to adapt to various driving conditions, marking a milestone in engine efficiency.
The Heart of Connectivity and Autonomy
Semiconductor chips guide us through the dense intersections of connectivity and autonomy. They are responsible for a plethora of in-car features, from the melodies of audio systems to the precision of GPS navigation and the convenience of smartphone connectivity. With the rise of infotainment and the complex pathways of autonomous driving, the demand for these chips surges, even as the industry begins to recover from the semiconductor crisis.
Centralized computing and domain controllers in modern vehicles require more robust and powerful chips to manage these intricate systems. It’s the advancements in semiconductor technology that will propel us into a new realm of AI-based autonomous vehicle systems and Vehicle-to-Everything communication, setting the stage for a safer and more efficient driving experience.
Semiconductor Supply and Demand Dynamics
The automotive industry, also known as the auto industry, has weathered the storm of semiconductor supply chain challenges. The semiconductor crisis has left an indelible mark, with over 12.5 million units of global light-vehicle production lost in the span of two years. This disruption has extended the auto industry’s timeline to reach the 100 million units production milestone by a decade.
Yet, it’s within these trials that the industry’s resilience shines. Car manufacturers are not just passively enduring the storm; they’re actively forging closer relationships with semiconductor suppliers and developing specialized strategies to secure a consistent semiconductor supply.
Balancing Inventory Versus Demand
Automakers must recalibrate their strategies when the semiconductor supply outpaces demand. They’re shifting gears, focusing on manufacturing high-margin, feature-rich vehicles that demand a higher number of semiconductor chips, thereby maintaining profitability amid constraints. This strategic shift requires a delicate dance with inventory management, as companies establish control rooms that sync procurement, supply chain, and sales to safeguard a steady flow of semiconductors.
It’s a challenge that demands agility and foresight, as the scales of demand and supply teeter in an unpredictable market.
Geopolitical Trade Risks and Material Scarcity
Geopolitics and material scarcity also affect the semiconductor supply chain, leading to supply chain issues. Tensions and export control measures, particularly between China and the US, cast long shadows over the stability and availability of semiconductor supplies. The scarcity of key semiconductor materials, accentuated by events like Russia’s invasion of Ukraine, puts additional pressure on supply chains.
Amidst these challenges, structural shortages in mature semiconductor nodes add another layer of complexity to the automotive sector’s chip supply demands. In response, the industry is shifting its strategy, fostering strategic partnerships, and leveraging legislative measures to bolster domestic manufacturing capabilities, as seen with the US CHIPS Act.
Navigating Chip Shortage Challenges
Shortages of automotive chips have resulted in revenue losses and the removal of some vehicle features, such as heated seats. Companies like General Motors have taken decisive action, forming strategic partnerships, such as with GlobalFoundries, to secure a dedicated chip manufacturing process. While the industry begins to recover, it still grapples with threats of supply interruptions and the ongoing imbalance between supply and demand.
Automakers are staying ahead by:
- Increasing semiconductor orders
- Reevaluating their ‘just in time’ strategies to keep a buffer inventory
- Making necessary adjustments to production volumes.
Production Planning Volumes and Readiness
The semiconductor landscape is improving in 2023, providing a more precise roadmap for vehicle production plans. Manufacturers have had to navigate through a labyrinth of challenges, tweaking vehicle features, and pushing back product launches to align with the ebb and flow of semiconductor availability. They are not just surviving but thriving by working closely with Tier 1 suppliers to ensure semiconductor demand is met with precision, targeting support for 22 million units of global light-vehicle production each quarter.
This collaborative approach has been a game-changer, establishing a more predictable and stable production environment.
Consumer Grade Components Versus Automotive Chips
Automotive chips are in a class of their own. They are designed to meet stringent safety requirements and endure exhaustive validation procedures, distinguishing them from their consumer-grade counterparts. This ongoing shortage has particularly affected nodes larger than 90 nanometers, revealing structural issues within the industry.
The low profit margins associated with these older technologies have a direct impact on the pace of manufacturing and investment decisions, underlining the unique challenges faced by the automotive sector and its influence on the auto industry’s growth trajectory.
The Road Ahead: Semiconductor Tech in Tomorrow’s Cars
Looking ahead, advancements in semiconductor technology for electric and hybrid vehicles promise to boost battery efficiency, enhance vehicle safety, and reduce emissions. Given the projected 8.1% compound annual growth rate of the global automotive semiconductor market from 2023 to 2030, the future appears electrifying. This increasing automotive semiconductor demand is not only maximizing energy efficiency but also enhancing vehicle performance in ways we’ve only begun to imagine.
As electronic power steering systems become increasingly integrated with semiconductor technology, we can expect improved steering responsiveness, reduced maintenance, and heightened fuel efficiency.
Advanced System on Chip (SoC) Developments
The formation of the Advanced SoC Research for Automotive (ASRA) consortium demonstrates the industry’s dedication to innovation. This coalition of automotive manufacturers and semiconductor companies is on a quest to develop high-performance SoCs designed for the unique demands of vehicles. By harnessing chiplet technology, these SoCs promise to deliver exceptional performance and adaptability, setting a new bar for safety and reliability by 2028.
The development of SoCs is a complex symphony of microcontrollers, digital signal processors, and sensors, which together, are set to supercharge vehicle attributes across the board.
Manufacturing and Supply Chain Evolution
Semiconductor chip shortages have sparked a transformation in manufacturing and supply chain processes. As a global mobility supplier, GlobalFoundries’ direct-to-source model is a pioneering approach that forges a direct link between foundries and automotive OEMs, enabling tailored semiconductor production and increased wafer and packaging capacity. This model, coupled with data-driven processes, is refining the end-to-end planning within the supply chain.
Toyota’s record global annual output, achieved amidst these shortages, is a resounding demonstration of the automotive industry’s resilience and adaptability.
Summary
From the streets to the circuit boards, semiconductors are revving the engines of innovation in the automotive industry. As we’ve navigated through the complexities of supply and demand, the intricacies of chip technology, and the projections for the future, one thing is crystal clear: the semiconductor revolution is fueling an exciting new chapter in global mobility. With the industry’s pedal to the metal, the journey toward smarter, safer, and more sustainable vehicles is well on its way.
Frequently Asked Questions
Is there still a semiconductor shortage for cars?
No, the semiconductor shortage for cars is no longer a major obstacle for vehicle production. Supply levels have improved, allowing for the production of 22 million units of light vehicles each quarter.
What are the components of a semiconductor in a car?
In a car, the components of a semiconductor include power supply, microcontrollers, half-bridge drivers, MOSFETs, CAN transceivers, and sensors, particularly for Electric Power Steering (EPS) systems. This technology is constantly being updated to enhance automotive performance.
Who is the largest automotive semiconductor?
Infineon Technologies AG is the largest automotive semiconductor manufacturer, with a market share of around 12.7 percent in 2021. They achieved sales of €16.309 billion in 2023.
What is a semiconductor on a car?
Semiconductor chips in cars, especially electric and hybrid vehicles, are crucial for battery management, motor control, and power distribution, ultimately contributing to energy efficiency and driving performance.
What factors have caused the semiconductor shortage in the automotive industry?
The semiconductor shortage in the automotive industry has been caused by a surge in demand across industries, supply chain disruptions from the COVID-19 pandemic, geopolitical tensions, material scarcities, and structural issues within the semiconductor manufacturing industry.