Electronics eats the car industry

February 05, 2021 // By Nick Flaherty
Electronics eats the car industry
Several trends have come together to highlight a fundamental shift in the global car industry that is accelerating.

The Covid-19 pandemic has highlighted the essential role that semiconductors play in the car industry, from sensors to AI. Switching off the supply of chips was easy, but the pandemic showed that the chip business cannot work to ‘just in time principles’ and switching back on supply takes time.

Car makers around the world, from Ford and General Motors to Volkswagen, have all had to scale back production as a result of the chip shortages. This has led to heated calls from politicians to foundries in Taiwan, and calls for dramatic increases in funding for European chip makers.

This comes on top of increasing electrification of cars and a move to more autonomy, both of which increase the semiconductor content in a vehicle. Some automotive chip makers such as STMicroelectronics and Texas Instruments managed to avoid the downturn caused by the pandemic, while others such as NXP, On Semiconductor and Bosch have struggled.

This trend was apparent ahead of the pandemic. The world’s largest electronic equipment maker, Foxconn, has turned its sights on the car industry. It has spent the last three years developing a horizontal platform that global brands can use to deliver their own cars. These brands are taking on the struggling vertical model of car makers that is highlighted by the consolidation of Fiat Chrysler and Citroen Peugeot into Stellantis last month.

Foxconn already has a strong track record as a supplier to BMW and to Apple, says Malcom Penn of market analyst Future Horizons looking at the key trends for the industry.

“Electric Vehicles are really upending the automotive market and who is creeping into the EV spectrum? Apple and Foxconn. Once it’s in a horizontal manufacturing model that will change the automotive world,” he said. “Cars are already a platform

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