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Automotive OEMs Continue to Increase Semiconductor Investment
Published: 12.4.2024
Original equipment manufacturers (OEMs) are increasing their investments in automotive semiconductors as they move deeper into the supply chain to gain competitiveness and ensure they have the components needed for electrification and advanced driving systems.
According to the latest automotive report, Automotive Semiconductor Trends, the automotive market will show strong growth by the end of the decade, growing from $52 billion in 2023 to $97 billion in 2029, a compound annual growth rate of 11%. And OEMs are preparing to seize this opportunity.
OEM involvement in the automotive semiconductor space is a recent development, with COVID-19 pandemic accelerating the shift, as supply chain disruptions have caused some automakers to reduce production or produce cars without certain chips. They are now more focused on supply chain resilience and developing chips in-house to replace third-party products.
Chinese Automakers Invest to Accelerate Technology Development
Driven by the rapid electrification of the industry, Chinese OEMs are focusing more on semiconductors, both in breadth (automotive metrics) and depth (chip metrics). These investments allow them to develop faster. Chinese OEMs tend to be more deeply involved in the semiconductor supply chain and cover more technologies than their competitors in other countries.
Conversely, Japanese and European OEMs have opted for a more conservative transformation strategy, relying on their existing supply chain networks. Many of these OEMs are accumulating knowledge and insights, but their investment levels are comparatively lower. Toyota, however, is a notable outlier with its fully integrated approach.
US automakers have pursued varied approaches to semiconductor strategy. Ford has opted for a traditional strategy, while Tesla has adopted a more selective approach. GM, on the other hand, is benefiting from Cruise's efforts to develop fully autonomous vehicles, which require advanced semiconductor technologies.
Technology Selection is Key
The three most popular chip areas for OEM investment are: power devices, SoCs, and MCUs.
Power devices are a key component in automotive electrification as they are used in inverters, converters, and onboard chargers. MCUs were used in traditional applications but are now essential to the evolving electrical and electronic (E/E) architectures in today's cars. The use of SoCs in cars is relatively new as they have become key to ADAS and cockpit features.
As automakers add more displays to each car, GPU content for infotainment systems is also increasing. Newer vehicles receive large amounts of raw data from satellites, further increasing the use of sensors.
Depending on the vehicle design, OEMs can identify opportunities and determine who to work with to develop their own semiconductors. For example, Chinese electric vehicle leader BYD, through its dedicated semiconductor spin-off, has been working with chipmakers TSMC and MediaTek to build central vehicle controller chips and 4nm smart cockpit chips for ADAS.
China's NIO has also developed its own ADAS SoC, and other automakers are also preparing to produce their own chips. In addition, American electric vehicle pioneer Tesla has developed its own chip for its Full Self-Driving (FSD) system, which allows the company to customize its architecture to specific requirements.
In addition, OEMs have clearly avoided the memory market with high entry barriers and RF devices mainly used in smartphones.
