Consolidation will change the automotive chip industry says Yole

September 16, 2021 // By Christoph Hammerschmidt
Consolidation will change the automotive chip industry says Yole
A technology analysis firm Yole Développement sees major challenges ahead for the car industry as semiconductors become even more important.

The automotive chip industry will face some key challenges in the next ten years a semiconductor become more important for production, says a report by Yole Développement.

The value of semiconductor content per car will increase, and significantly, due to concepts such as software-defined car, automated driving and connected vehicle. For the period up to 2026, Yole analysts forecast a CAGR of 14.75 percent. "The value of semiconductors, at the chip level, in cars will grow from US$34.4 billion in 2020 to US$78.5 billion in 2026,” said Eric Mounier, PhD, Director of Market Research at Yole Développement (Yole). The largest growth will be in EVs due to the major shift to electrification.

As analyzed by Yole’s team in the new Automotive Semiconductor Trends 2021 report, wafer shipments will grow from 20 million to more than 45 million, with 8’’ being the most used wafer size. The 20nm node and below will be driven by ADAS and infotainment applications.

"Today, most of the wafer production for automotive is for 130/180 nm and more, and leading-edge technology is very scarce. But 40nm and 28nm are used for the Mobileye EyeQ3 and EyeQ4 for ADAS and autonomy. Memory for infotainment and ADAS use 10-14 nm. In the future, 7nm could be used for ADAS. The current chip shortage mainly affects nodes in the 40-180nm range,” said Mounier.

The Covid-19 crisis has also emphasized the increasing importance of semiconductors in cars. Companies coming from the semiconductor and software sides have strong financial power and could acquire some Tier-1s or Tier-2s’ companies. This could reshape the automotive landscape in the coming years, say the Yole analysts.

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According to the market researchers, a car has today, on average, US$450 worth of semiconductors. In 2026, it will be US$700. Automotive developments are driven by technological developments for C.A.S.E. (Connectivity, ADAS, Sharing, and Electrification) that will grow to $318bn by 2035.

Connectivity will grow from almost US$33 billion in 2020 to almost US$55 billion in 2026, with 14.55% CAGR2020-2026 while ADAS will reach more than US$60 billion in 2026 with 6.50% CAGR2020-2026. Sharing will reach about US$3 billion in 2026 with 10.39% CAGR2020-2026 while electrification will reach US$28,804 million in 2026, with 53.45% CAGR2020-2026

In this context, the Yole analysts have identified a number of technology trends for each of these segments. In the area of connectivity, the market watchers believe that future V2X communication platforms for 5G implementation are being designed today, and solutions are expected for 2024. In the meantime, initial solutions are starting to appear with dual-4G and forward-compatible 5G capabilities.

For the ADAS segment (which includes the somewhat more wider term “automation of driving”), Cole expects that radars and cameras are the main sensors used by OEMs as they are quite performant and relatively cheap. For a few years, lidar sensors have been slowly entering the automotive industry to provide more automated driving functions.

Sharing vehicles also creates new use cases and calls for new technological equipment for these cars. In this segment, Yole sees that new habits related to cars are emerging and “Gen Y” now desire connectivity, convenience and the possibility to choose from different range of transportation. They are shaping an industry in which in-demand car service providers are growing.

The most visible segment in this transformation process is electrification. Here, OEMs have announced their investment plans for the next 5 years which exceed US$250 billion worldwide. The timeline for cars electrification is very aggressive, as in 15 years OEMs will have to develop an entire car portfolio that will be fully electric.

All these trends are greatly affecting the automotive supply chain. The current chips shortage, an increasing semiconductor content and electrification will cause the supply chain management to change: OEM s have to negotiate directly with chip manufacturers, learn from the consumer industry and keep “buffer stock”.

The development of electric vehicles and self-driving technologies naturally attracts OEMs and Tier-1 component suppliers. Therefore, new OEMs like Nio, Xpeng, and Lucid Motors, among others, have recently entered the industry. Other players coming from the semiconductor or the consumer industries will enter the field as well. In this race to full autonomy, large OEMs with many resources - like Volkswagen – are developing the necessary software by themselves or will partner with or acquire robotic vehicle companies. Generalist OEMs with few resources are expected to rely on Tier-1s to develop basic automated driving features. These Tier-1s will have to master camera, radar, lidar sensors, and computing platforms.

Companies from the semiconductor side, like Qualcomm, Nvidia, and Intel-Mobileye, are positioning themselves, sometimes through acquisitions, at the center of automated driving systems, highlights Pierrick Boulay, Technology & Market Analyst, Solid-state Lighting at Yole. “For example, Qualcomm is in talk to acquire Veoneer to reinforce its position in the automotive industry”.

Companies coming from the consumer industry, like Apple, Huawei, or Xiaomi, are also entering the market. Depending on their strategy, they could develop only the self-driving part or the entire electric car, like Huawei is doing. Foxconn, known for its assembly role in the Apple supply chain, is partnering with several companies such as Apple and Stellantis and is increasing its automotive-related business. This new role of subcontractor, like Foxconn, is growing, and a recent partnership between Fisker and Magna showed that Magna will assemble the car. In the future, it could be possible to see new automotive OEMs being fabless and relying on the experience of subcontractors.

These predictions are avaiable in the study by Yole here.

www.yole.fr

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