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Industry watch: New EV opportunities for the supply chain

Colley Hwang, DIGITIMES, Taipei 0

MIH. Credit: DIGITIMES

In the first half of 2021, global sales of EVs reached 2.6 million units, up 160% from the first half of 2020. EVs promise a lot of business opportunities, giving rise to diverse demand for related services, products and facilities. Foxconn (Hon Hai) projects that not only traditional carmakers and new American participants from the tech community but other cross-industry players are joining the EV race. Other Asian countries are also eager to capitalize on the new business opportunities.

Without sophisticated EV manufacturing concepts, no single company can do the whole nine yards to develop the whole EV system. Moreover, China's ambitious EV industry is on the rise. Foxconn asserted that other potential participants or EV new forces can accelerate development of EV from four years to two, and save costs by one-third to half through the MIH platform.

Asia's supply chain and EV new forces can tap into the ubiquitous business opportunities such as battery industry, charging piles, energy storage, SiC power semiconductors and autopilot systems.

Demand for lithium ore is expected to grow at an average annual rate of 13.5% over the next decade. According to IEA, the number of charging piles is to increase from 10.7 million in 2020 to 215 million in 2030, implying an enourmous business opportunity with average annual growth rate of 35%.

From the components supply side, the rapid growth momentum from EV shipments will drive the development of SiC and other emerging industries. The EV related systems are to bring huge component business opportunities. Power semiconductors are particularly valued by the industry. According to the US Department of Energy, the conversion rate of gasoline engines (power-to-force) is 16-25%, while the conversion rate of EVs is as high as 69-73% and reach 86-90% with the additional recoverable forces of 17%. Wide band gap semiconductors are the key to activating power-to-force conversion. Fueled vehicles need more than 40 kinds of semiconductors, while EVs need more than 150 kinds. East Asian countries control three-fourth of semiconductor supply.

Take Tesla's Model 3 and Model Y with combined shipments of 443,000 vehicles in 2020 as an example. Tesla used a total of 60,000 pieces of 6-inch SiC wafers and the amount is expected to reach 80,000 pieces by 2024. Tesla currently uses power semiconductors on inverters alone. It is expected to be more than three times the business opportunity if the use of power semiconductors extends to all power modules. We expect more and more EVs will adopt SiC semiconductors. Their uses are getting diverse and extensive.

Taiwan has formed an industrial chain of SiC semiconductors. GlobalWafers, Hermes, Huahsu and Win Semi develop substrates. Win Semi, Huahsu and Episil Precision also develop epitaxy technology. Episil Technology, Taiwan Semiconductor, OSE and Raytek are specialized in manufacturing and packaging/testing. Advanced Power, Taiwan Silicon, Pan Jit, Sinopower and Prostek develop circuit designs and control modules. As Taiwan has a very solid foundation in the semiconductor industry, it is promising to integrate upstream and downstream to accumulate unique advantages for the industry. Through the process of modulization, Taiwan's ICT industry has developed a successful model and demonstrated the world's most efficient industrial development experience. With industrial advantages and experiences in PC & communication, Taiwan's well-structured ICT industry is to demonstrate another success story in EV industry.

Foxconn positions MIH as an open platform, demonstrating its intention to create a synergy with others of similar business nature. Foxconn is fully aware that because of possible rivalry among the ICT community, Taiwan enterprises won't join the platform unless MIH is an open architecture. MIH is Foxconn's maneuver in response to drastic changes of the local ICT ecosystem and global situation. The industry is watching how many Taiwan enterprises in the Asian supply chain will come on board.

(Editor's note: This is part of a series of analysis of Taiwan's role in the global ICT industry.)

Colley Hwang, president of DIGITIMES Asia, is a tech industry analyst with more than three decades of experience under his belt. He has written several books about the trends and developments of the tech industry, including Asian Edge: On the Frontline of the ICT World published in 2019, and Disconnected ICT Supply Chain: New Power Plays Unfolding published in 2020.
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