In Liu Cixin's science fiction novel *Ball Lightning*, Earth's semiconductor chips are destroyed by a mysterious force, triggering a massive catastrophe, leaving one-third of the country's population living in an agricultural society predating electricity. Readers have wondered: what kind of impact would contemporary society have if Earth were to suffer a similar attack that destroyed all silicon-based chips? It's likely that the book's predictions of internet paralysis and complete communication blackouts would come true.
Indeed, in this modern era, chips are seen as a barometer of technological product iteration and a key to unlocking the future. The impact of a chip shortage would be extremely severe.
This crisis is now ravaging the automotive industry.
According to Auto Forecast Solutions, as of August 9th this year, global car production cuts due to chip shortages have reached 5.85 million vehicles. Of these, 1.122 million were produced in the Chinese market. Global car production cuts are projected to exceed 7 million vehicles in 2021, and this impact is expected to continue until next spring.
Automotive chips have never been more important.
Why is this happening? What exactly is the role of chips in the automotive industry? What specific systems and functions in vehicles will be unable to be manufactured or realized due to their absence?
How many chips does a car actually need?
Based on their functions, automotive chips can be roughly divided into three categories: The first category is responsible for computing power and processing, such as AI chips used for autonomous driving perception and fusion, and traditional MCUs used for engine/chassis/body control; the second category is responsible for power conversion, such as power devices like IGBTs; and the third category is sensor chips, used for various radars for autonomous driving, as well as airbags, tire pressure detection, and so on.
A more detailed classification can be divided into eight categories: high-performance computing chips (AI chips/GPUs), microcontrollers (MCUs), memory chips (DRAM/Flash), CMOS image sensor chips, display driver chips, analog chips (including power amplifiers, audio amplifiers, sensors, etc. for wireless communication), power components, and sensor chips (pressure, flow, inertia, humidity, infrared, etc.).
It is estimated that each vehicle carries an average of about 1,600 semiconductors. These semiconductor devices are distributed in various equipment and systems of the car, and the automotive chips, such as logic computing chips, memory chips, and microcontrollers (MCUs), are what drive their collaborative work.
From an application perspective, automobiles rely heavily on various chips, from small components like tire pressure monitoring systems (TMPS) and cameras to larger systems like vehicle controllers and autonomous driving domain controllers. In essence, automotive intelligence is about chip intelligence.
Traditional cars typically have around 500 to 600 chips, but with the addition of features like autonomous driving and new energy vehicles, the number has increased to around 1,000 to 1,200. Models that emphasize intelligence require even more chips.
XPeng Motors founder He Xiaopeng previously stated that they are collaborating with companies both in China and overseas, and that a single vehicle currently contains approximately 1,700 chips.
According to Strategy Analytics, the number of functional chips in vehicles of all levels is increasing year by year. Currently, the average car uses about 25 functional chips, and some high-end models have exceeded 100. According to Bosch's 2019 forecast, the higher the level of automation in cars, the more sensors are needed. It is estimated that in the next five years or so, the average number of sensors used in each car may reach 40-60.
What exactly is being lacking in this chip shortage crisis?
The chip shortage began to emerge in 2020 and has only worsened since then. What exactly is being lacking?
Zhu Yulong, a senior engineer specializing in electric vehicle battery, motor, and electronic control systems and automotive electronics, told reporters that the chip shortage has actually gone through three stages.
The first phase occurred in December 2020, when Volkswagen Group, Continental, and Bosch first reported on the automotive industry's chip shortage from the perspective of supply chain scarcity. The main argument at the time was that the pandemic had created a supply-demand mismatch, leading to a shortage of automotive chips needed for car production, especially core components like engine ECUs and ESPs, directly impacting global automotive and parts manufacturing.
The second phase is the shortage of MCU (microcontroller unit) chips, which is reflected in the survey reports of various companies in February.
Microcontrollers (MCUs) are widely used in various aspects of automotive electronics. Due to the demands for IC miniaturization and high frequency, MCUs require manufacturing processes below 40nm. Most integrated device manufacturers (IDMs) outsource chip production to foundries such as TSMC, which accounts for approximately 70% of the total automotive MCU market share. The automotive MCU chip market is also highly concentrated, with the top seven MCU suppliers accounting for about 98% of demand.
The bottleneck at the time was TSMC, as its automotive business only accounted for 3% of its total revenue, and this bottleneck could not be resolved in the short term. With the intervention of governments and automakers around the world, TSMC gradually overcame this bottleneck.
At this stage, automakers even began preparing for and switching across MCU platforms. This is not only a business process of moving from one supplier to another, but also requires adjusting the technical aspects of software and hardware at the same time, which is very difficult. Even so, automakers overcame the difficulties and completed the task.
We are currently experiencing the third phase. Due to the worsening pandemic in Southeast Asia, a car chip supplier centered in Malaysia, after several weeks of factory shutdowns, has been again ordered by the local government to close some production lines until August 21. This has directly led to a deterioration in chip supply, with shortages extending from MCUs to core chips.
The shutdown of chip manufacturers has led to supply difficulties for Bosch's ESP/IPB, VCU, TCU and other products. As the world's largest automotive parts supplier, the supply gap of chassis and safety components has dealt a major blow to all car manufacturers around the world.
On August 17, Xu Daquan, Vice President of Bosch China, posted a message on his WeChat Moments, saying that they were under great pressure due to the "chip shortage" and even joked that he wanted to jump off a building with his boss.
