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Increased functionality, NEV growth drive automotive chip demand

Nuying Huang, Taipei; Eifeh Strom, DIGITIMES Asia 0

Credit: AFP

Increased functionality and the emergence of new energy vehicles (NEVs) are intensifying the automotive chip shortage, according to supply chain companies.

While global automotive sales remained flat in 2021, the chip shortage continued to be a problem. Supply chain companies expect the chip shortage to continue in 2022.

One of the main reasons for the chip shortage is the increase in electrical/electronic architecture (EEA). This includes increases in functional requirements. The popularity of high-level advanced driver assistance systems (ADASs) and Level 2 self-driving has increased the chip requirements in individual vehicles. Level 2 self-driving vehicles will continue to increase in 2022, and functions such as the lane departure warning system (LDWS) and adaptive cruise control (ACC) have almost become standard. These functions are suitable for various types of vehicles, including fuel-powered cars and NEVs.

The chip shortage is also attributed to the fact that the number of chips required by NEVs is higher than that of traditional fuel vehicles. In 2021, on average, a single electric vehicle (EV) required 220 chips. Furthermore, the sale of NEVs continues to grow as countries promote carbon emission reduction policies and incentives, which have also gradually increased their proportion in the overall vehicle market.

According to supply chain companies, the chips used in Level 2 vehicles are made by the 12-inch semiconductor process. Although the required amount is small and there is no shortage of 12-inch wafers, there continues to be a shortage of sensors used in imaging and radar. The shortage is mostly in the 8-inch wafer sector, therefore chip supply is expected to remain tight in 2022.

IC Insights pointed out the surge in chip demand was the main cause of the shortage in 2021, with annual shipment rates increasing 30% compared to 27% in 2019 before the pandemic. Additionally, chip demand growth has not been gradual, which is another major reason for the shortage.

As the semiconductor industry expands production in 2022, the car chip shortage will impact various links within the automotive supply chain differently. The endpoint for the shortage may not be for another six months or even one or two years. It is also important to remember that as long as a key chip is missing, the makeup of the entire vehicle is affected.

In addition, design plans currently dominate future development for automakers. The majority of semiconductor production expansion is for 12-inch wafers, although there continues to be a shortage of 8-inch wafers. While some demand will move from 8-inch to 12-inch, not all can easily make the jump. The main considerations will be cost and security issues.

While the designs from traditional car manufacturers are relatively conservative, products from companies such as Tesla, Xpeng, NIO, and Li Auto can be designed more flexibly to adapt to changes in the supply chain.

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