As Xiaomi officially announced that its first smart car SU7 will use NVIDIA's self-driving chip Drive Orin, it sparked heated discussions in the chip circle. NVIDIA also used CES 2024 to announce that it has won self-driving chip cooperation orders from four Chinese car companies (three except Xiaomi). They are Ideal, Great Wall, and Extreme Krypton respectively). At the CES conference, major domestic and foreign manufacturers such as Qualcomm, Intel, AMD, NXP, Texas Instruments, Black Sesame Intelligence, and VeriSilicon demonstrated many new products and solutions for intelligent driving systems.

As the core component of smart cars, autonomous driving chips have become the focus of competition between technology giants and enterprises. High-end automotive-grade chips have higher technical difficulty and entry barriers, and have lower localization rates. They are becoming a new battlefield for top-notch technology battles between domestic and foreign manufacturers. In this fight, who can seize the opportunity and break through the siege?

01 Structural core defect

Beginning in 2021, the automotive industry is facing an overall chip shortage. During this special period, domestic automotive-grade chips have accelerated their introduction into vehicles, completing the replacement of foreign products and making gratifying progress. As overseas manufacturers expand production or build new production capacity, the supply of overseas automotive-grade chips gradually resumes, and domestic manufacturers are once again facing competition from overseas manufacturers. Many chip agents revealed that there is basically no shortage of domestic chips, and the prices of imported car-sized chips are also falling, but the supply of some imported car-sized chips is still tight.

Behind the uneven supply of automotive chips, domestic and foreign manufacturers face very different situations: 50% of the global automotive chip market is occupied by five giants (Infineon, NXP, Renesas, Texas Instruments and STMicroelectronics) , the product coverage and high-endization process of domestic car-grade chips are not as good as those of major overseas car-grade chip manufacturers.

The "White Paper on China's Automotive Grade Chip Industry" shows that the overall localization rate of my country's automotive grade chips is still around 5% to 15%. In particular, progress in areas such as power semiconductors and computing control chips is more difficult, and overall it is still difficult to make progress. It faces outstanding problems such as incomplete product line coverage, insufficient process capabilities, and manufacturing shortcomings.

For example, an Infineon automotive chip agent once said that domestically produced power supplies, switches and other chips are already on the market, but overall they are mid- to low-end, and chips with higher integration requirements such as MCUs and IGBTs are still imported. host. It can be seen that the domestic car-grade chip product line is still imperfect, and it is difficult for domestic car-grade chip manufacturers to provide alternatives for some chips that are in tight supply.

At the same time, domestic and foreign car-grade chip manufacturers are facing the same problem: structural shortage of chips. Smart trams iterate quickly and have many functional requirements, and car-grade chips are known to have a long development and manufacturing cycle. It takes 2 to 3 years from design to launch of the first version, so chip supply cannot fully keep up with the pace.

02 Seize the market for high-end automotive grade chips

As the electrification and intelligence process of the automobile industry continues, the overall demand for automotive-grade chips continues to increase. According to data from Gasgoo, the automotive electronic chip market is expected to exceed US$110 billion in 2030, of which China is expected to be close to US$30 billion. In response to the increased demand for automotive chips, major automotive chip manufacturers at home and abroad are promoting research and development and production expansion. According to a report from the International Semiconductor Industry Association, suppliers such as Bosch, Infineon, and STMicroelectronics are accelerating the construction of 8-inch production capacity. It is estimated that from 2023 to 2026, the number of 8-inch wafer fabs will increase by 12 globally, and the number of automotive and power semiconductors will increase. The 8-inch factory production capacity will increase by 34%.

Among them, power semiconductors such as IGBT and MOSFET are the focus of the layout. According to data from Strategic Analytics, in traditional fuel vehicles, the semiconductor devices with the highest value are functional chips, accounting for 23%, while power semiconductors and sensors account for 21% and 13% respectively. In pure electric vehicles, the value proportion of power semiconductors has increased significantly to 55%, while the value proportions of MCU and sensors have dropped to 11% and 7% respectively. The IGBT module in power semiconductors is a core component, accounting for up to 7% of the total vehicle cost. Not only are overseas manufacturers such as Infineon making plans, but domestic manufacturers are also promoting localization. Domestic IGBT and MOSFET manufacturers have also caught up with the trend of replacing silicon-based third-generation semiconductors with silicon carbide.

03 The process of localization is difficult and dangerous

The process of localization is difficult and dangerous, but the popularity remains unabated and efforts are still being made to expand. 

Currently, the semiconductor field is affected by the wave of anti-globalization and trade protectionism, and is full of increasing uncertainties. Domestic car companies want to achieve independent control of core technologies.

However, our country is too dependent on external parties in terms of EDA software and IP core, the essential tools for chip design. In terms of testing, high-end key testing equipment is still a weak link. In terms of standards, my country currently does not have its own standards, nor does it have an authoritative organization corresponding to international standards. This is an important link that restricts the development of automotive chips and the globalization of automotive products. In addition, my country lacks an application system to verify chip adaptability at the actual vehicle level, making it impossible to achieve rapid iterative verification. "One of the biggest pain points in the entire industry is that the automotive semiconductor Tier 2 (lower-level suppliers or service providers in the supply chain) is monopolized by foreign companies. Foreign companies account for about 50% of the market among the top five Tier 2 companies. , the top ten account for 70%. The best power semiconductor in China has less than 10% share."

The difficulties of the current situation have not extinguished the fire of localization. On the contrary, domestic manufacturers still have the motivation to expand.

• On the one hand, domestic car-grade chips seized the opportunity to enter the market during the core shortage period. "Domestic car-grade chips are on the car table, which is equivalent to being on the poker table." Car-grade chips are a field with high technical barriers, related to human life, and important to reliability. Safety, safety and other requirements are extremely stringent, and car manufacturers will not easily replace suppliers.

• On the other hand, the domestic automobile industry has paid more attention to the stability of the supply chain after experiencing the core shortage crisis, and hopes that the domestic supply chain can also provide similar or substitute products.

In addition to market drivers, my country's top-level guidance on automotive-grade chips is also unswerving. On December 31, 2023, the Ministry of Industry and Information Technology issued the "Guidelines for the Construction of the National Automotive Chip Standard System", proposing to formulate more than 30 key automotive chip standards by 2025; and formulate more than 70 automotive chip-related standards by 2030. On January 19, the Vice Minister of the Ministry of Industry and Information Technology stated at a press conference of the State Council that it is necessary to increase technological research on high-level autonomous driving and further enhance product market competitiveness.

At the same time, foreign manufacturers face more severe challenges, both to meet domestic car companies' demand for powerful chips and to comply with their countries' stricter controls on China's advanced semiconductor exports. "Seeking opportunities amid changes", participants in China's automotive chip industry must seize this opportunity, dare to overcome difficulties, strengthen independent research and development and innovation, and jointly promote the implementation of domestic high-end automotive chips.

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