Chip companies accelerate “getting on the road” and race for the 400 trillion new energy vehicle market
In the current semiconductor recession cycle, automotive chips are becoming one of the important opportunities for industry development.
The era of fuel vehicles has quietly passed away, and now new energy vehicles are penetrating the automobile market "moisturizing things silently".
On July 27, a new energy vehicle report released by Bloomberg BNEF showed that global new energy vehicle sales will exceed 10 million units in 2022.
Among them, pure electric vehicles account for more than 70%, and global sales of fuel vehicles have reached a peak in 2017.
Last year, China’s new energy vehicle sales reached 6.1 million;
It is expected that by 2026, global new energy vehicle sales will exceed 26.6 million units, with a penetration rate exceeding 30%, and China will sell approximately 13 million units.
The report also shows that the cumulative scale of the global new energy vehicle market is expected to reach US$9 trillion (approximately RMB 64.36 trillion) by 2030, and the global market size will reach US$56.7 trillion (approximately RMB 405.31 trillion) in 2050. Yuan) - This is almost 2.5 times the GDP (gross domestic product) of the United States in 2021, and more than 8 times the current scale of China's digital economy industry (50 trillion).
Such a huge market scale is not only conducive to the development of new energy vehicle industry chains such as power batteries and vehicle manufacturers, but also as a key underlying basic product of smart cars, each electric vehicle uses an average of about 1,500-3,000 chips. The chip industry chain Businesses will also benefit from this.
Recently, TMTpost Media App has noticed that many chip companies are actively turning to the new energy vehicle track, especially in the downward cycle of the global semiconductor industry, such as NXP, ON Semiconductor, Infineon, STMicroelectronics, BYD, Wingtech Technology, etc. Related companies at home and abroad are growing against the trend.
In February this year, Miao Wei, former Minister of Industry and Information Technology of China, said that China's new energy vehicle production will reach 7.058 million units in 2022, an increase of 96.9% over the previous year, accounting for approximately 60% of global new energy vehicle production. above. The rapid growth of China's new energy vehicles can make up for the decline in consumer electronics and will become a new force supporting the global chip market.
But on the other hand, the previous over 150 billion electric vehicle subsidies have caused China's electric vehicle industry to face a "puffy constitution." Moreover, under the influence of chip decoupling, AI large computing power chips related to autonomous driving are facing supply constraints, making China's new energy vehicle market face challenges and opportunities at the same time, especially the need to develop a safe and controllable automotive chip industry chain.
Trina Watt, vice president of product marketing at Imagination, the world’s fourth largest chip IP company, recently told TMTpost App that the automotive market is in a renaissance stage of investment and innovation driven by increasing automation and electrification, which is bringing great benefits to the entire semiconductor industry. Come more opportunities. In particular, China's automobile market is becoming more and more innovative, and the domestic transformation of autonomous driving and electric vehicles is accelerating, giving Chinese automobile manufacturers new development opportunities.
From the perspective of the Chinese market, in the first quarter of 2023, China exported 1.07 million vehicles, surpassing Japan's 954,000 vehicles, becoming the world's largest automobile exporter for the first time. Among them, new energy vehicles contributed 1/4 (25%), with a year-on-year growth of more than 100%.
In just five years, China has transformed from the world's largest automobile importer to the largest exporter. Domestic sales of new energy vehicles have also continued to increase. In the first half of this year, China's new energy vehicle production and sales completed 3.788 million units and 3.747 million units respectively, year-on-year. Increases of 42.4% and 44.1% respectively.
Obviously, China has become a major player on the global new energy vehicle “table”.
But turning to side B, the new energy vehicle track also faces challenges, showing a "puffy physique".
From the perspective of the Chinese market, the above-mentioned Chinese automobile exports are calculated in terms of quantity. If we look at revenue, Germany ranks first in the world, an established automobile country, and China is not among the top ten.
At the same time, among the new energy vehicle export market share in the first quarter of this year, nearly 40%, or 91,900 units (according to the Passenger Car Association), were Tesla Model series electric vehicles made in Shanghai exported overseas. Among domestic brands, the most exported Chinese electric car brand BYD only accounts for 17%, and the rest are almost all entry-level models.
This almost repeats the scene of the mobile phone industry back then: it seems to be prosperous, but domestic car companies seem to have very limited profits - from Apple, which accounts for 86% of the market profits, to "eating meat", Xiaomi, vivo, and OPPO are eating soup; to Tesla In terms of "eating meat", BYD, Ideal and NIO are closely following the competition. In particular, the market has seen that even if Tesla lowers its price, it will not only gain market share but also gain a certain profit margin, while Chinese electric vehicle companies are in a state of "losing money on each sale".
At the same time, China has supported the domestic new energy vehicle industry since 2010, not only providing car purchase subsidies and reducing purchase taxes, but also in Beijing and Shanghai, there were no purchase or travel restrictions on electric vehicles. According to data from the Ministry of Industry and Information Technology, in the past 13 years, China's new energy vehicle subsidies have exceeded 152.1 billion yuan, covering at least 3.17 million vehicles. According to statistics from BYD's annual report, from 2011 to 2018, the total government subsidies included in BYD's profits and losses were approximately 6.968 billion yuan.
But this subsidy model ended up paying another price: In 2016, the Ministry of Finance disclosed that an official inspection found that 72 companies had defrauded new energy vehicles of more than 9 billion yuan in fiscal subsidies, while the total subsidy at that time was only 33 billion yuan. Yuan, equivalent to nearly one-third of the subsidy funds, has been "wasted"; public data shows that from 2020 to August 2022, 17 domestic new energy vehicle manufacturing companies went bankrupt. The latest example is Byton and Reading. The former once cooperated with Foxconn to build cars, but they spent 8.4 billion but could not build a car. The latter once dominated the field of low-speed electric vehicles, with annual sales exceeding 10 billion, but they are in the rapidly advancing new energy vehicle industry. "Falled" in the tide.
Judging from world data, at present, the Federal Reserve is raising interest rates and inflation, the global economy is in recession, and per capita interest in large-scale consumption is declining, all of which are exacerbating the shortage of upstream metal resources for new energy vehicles and the surge in battery prices.
Moreover, during the previous COVID-19 epidemic, the "shortage of chips" in automobiles attracted great attention from governments around the world. Various regions invested a large amount of money to support the development of the local automobile chip industry. The globalization of the automobile industry is gradually disappearing.
According to statistics from the automotive industry research organization AFS, in 2022 due to chip shortages, the global automotive industry's new car production will decrease by approximately 4.5 million vehicles, and in 2021, production will be reduced by as much as 10.5 million vehicles. According to AFS data forecast, the chip shortage is still continuing and may lead to a reduction of approximately 3 million vehicles in 2023.
Not only that. Under the decoupling of chips, China's new energy vehicles have to face the constraints of "chip restrictions" issued by the United States, the Netherlands, Japan and other countries. For example, Chinese electric vehicle manufacturers need NVIDIA A100/H100 and other AI chips to train autonomous driving algorithms, but many technologies and products are missing from the new core restriction regulations. The person in charge of a smart car chip company recently told TMTpost App that they are very worried about AI computing power car chips being restricted by the United States, which may lead to disruption of the industrial chain.
Under various factors, automotive chip companies are facing difficulties.
As cars enter the era of electrification + intelligent networking, trends in new energy, intelligence, autonomous driving and other fields make automotive chips more and more important. In the downward cycle of global semiconductors, chip companies entering the automotive track have become " Required questions."
Generally speaking, automotive chips refer to semiconductor products used in car body automotive electronic control devices and vehicle-mounted automotive electronic control devices. They can be divided into five categories: main control chips, power chips, memory chips, communication chips and sensor chips, such as intelligent Key SoC chip products such as cockpit and autonomous driving are main control chips, while navigation, CIS and radar are sensor chips.
At the same time, in order to make the chips more safe and reliable, some automotive chips need to pass the automotive grade certification standards and pass the three steps of reliability test certification, functional safety process certification, and functional safety product certification before they can be considered as "car grade chips" that meet the standards. At present, the degree of autonomy and control of automotive-grade chips and operating systems is not high. Among them, China's automotive-grade chip self-sufficiency rate is less than 5%, and most of them are low-end products, and key chips are controlled by foreign countries.
Miao Wei once pointed out that car-grade chips have higher requirements than consumer-grade and industrial-grade chips, require longer certification times, and the threshold for getting into a car is also higher than consumer-grade chips.
Data released by the China Association of Automobile Manufacturers shows that the number of automotive chips required for traditional fuel vehicles is 600-700, and the number of automotive chips required for electric vehicles will increase to 1,600 per vehicle, while the demand for chips for more advanced smart cars is It is expected to increase to 3,000 pieces/vehicle.
Therefore, whether it is the potential market opportunity of 400 trillion yuan in new energy vehicles or the strategic layout of the entire chip industry chain, automotive chips have become a key direction for the development of the industry.
Li Xiaohe, NXP’s global vice president and general manager of the new energy and drive system product line, previously told TMTpost App that the automotive chip industry has undergone great changes in the past 20 years. In particular, electric vehicles plus L2-L4 autonomous driving functions, as well as technologies such as domain controllers, connected cars, and informatization and intelligence, have led to a 3-4 times or even higher growth in demand for automotive chips (electronics).
According to statistics from the World Semiconductor Trade Organization, the automotive industry is the fastest growing field of semiconductor applications in 2022, accounting for 14.1% of global semiconductor sales. AskCI Consulting reports that China's automotive chip production has continued to increase in the past few years and is expected to reach US$17.2 billion in 2022, an increase of 55% from 2018.
The above-mentioned report pointed out that the Asia-Pacific region, including China, is expected to become the fastest growing market for automotive chips.
Accelerate "get on the bus"
During the oil crisis in the 1970s, large-displacement cars from European and American car companies became uneconomical. Japanese car companies began to push small-displacement economical cars to seize the market, becoming one of the world's major car manufacturers. In the new round of energy transformation, the automobile industry has undergone tremendous changes, and the advantages of traditional giants have been re-evaluated. China is hoping to achieve global "leadership" in the new energy automobile industry chain.
BYD President Wang Chuanfu once analyzed that 70% of China's oil is imported, 70% of which passes through the Strait of Malacca, and 70% of the oil is used in the automobile industry. These three 70% are strategic weaknesses of the industry, and one of them solves The solution is to develop new energy vehicles.
Therefore, Wang Chuanfu believes that it is more urgent for China to develop electric vehicles than any other country.
Among them, automotive chips are the key base for new energy vehicles, so it is more urgent for China to develop the automotive chip industry chain. In particular, cars usually use chips with mature processes (28nm and above), which are not subject to U.S. export rules. One of the new opportunities for China's chip industry.
In the field of autonomous driving chips, Horizon was once the largest unicorn in the country, and it was unparalleled in the limelight. Horizon once set a record of raising one round of financing every month for seven consecutive months from December 2020 to June 2021. To date, Horizon has completed Series C financing of up to US$1.5 billion, with a valuation of US$5 billion.
According to data from the China Automotive Chip Industry Innovation Strategic Alliance, based on the annual increase of 18 million vehicles, the new market size of autonomous driving chips will be around 36 million pieces. At present, there are more than 100 domestic companies engaged in the development and production of automotive chips, and more than 50 listed chip companies claim to have automotive-grade products or mass production applications.
At the Semicon China conference held in Shanghai at the end of June, Liu Weiping, founder and chairman of BGI Jiutian, a domestic chip EDA company, said that the company is accelerating the creation of electronic design automation (EDA) solutions for Chinese automotive electronics to capture some market opportunities. The smart car market is growing rapidly.
"There are more and more electronic components in cars, especially new energy vehicles, which require a large number of chips, displays, lidar and other components. The design of all these components requires the support of EDA software." Liu Weiping said that the electronic components used in cars Chips need to have a long life cycle of at least 30 years and be able to operate in harsh environments including high temperatures.
"From the perspective of the field of autonomous driving chips, foreign brands such as NVIDIA and Intel control the main market. For Chinese companies, they need to overcome the chip hurdle." Zhang Yongwei, vice chairman and secretary-general of the China Electric Vehicles Association of 100, said that domestic The supply rate of automotive chips is about 10%, and 90% of the chips are imported or in the hands of foreign companies. He emphasized that China needs to increase the production capacity supply of automotive chips because the development of smart vehicles is very important to China.
Danny Perng, President of Siemens EDA Asia Pacific, also believes that the automotive industry is increasingly important to chip design. "The automotive electronics ecosystem is changing all the time. Tier 1 (automotive) companies like BYD fully integrate chip design and manufacturing and build their own factories."
Zheng Kui, Vice President of Product Marketing of Imagination China, believes that automobiles have developed very rapidly in the past two years, and there have been great changes from automobile functions to the entire computing architecture. Functions such as "integrated driving and parking" have become the standard for mid- to low-end models. match". From the perspective of chip design IP, this brings great challenges to the entire computing architecture. For example, "the computing architecture requires stronger scalability, higher computing efficiency, and greater flexibility."
It is reported that Imagination was founded in 1985 and is headquartered in the UK. It started with GPU (graphics processor) IP products. Currently, the company regards the automotive industry as one of its main focus markets and is investing heavily in the development of ADAS (Advanced Assisted Driving Systems) and autonomous driving scenarios, ASIL-B level GPUs that perform parallel computing tasks, and more GPU IP and RISC-V CPU IP core products.
Trina Watt told TMTpost App that there are currently two main trends in the demand for GPUs in the automotive industry: First, in terms of in-vehicle infotainment (IVI) and human-machine interface (HMI), that is, the central control and rear seats of the car are larger and more precise. The demand for multiple displays continues to increase, and these displays can be controlled by a single GPU or by dividing the GPU into multiple chips. The second is ADAS computing. Algorithm developers are accustomed to developing applications on desktop GPUs and seek superior performance, Flexible parallel programming engine with low power consumption and small area.
She emphasized that software and modeling play a vital role in enabling a software-defined automotive approach, including models that can be used for training and validation and software that simplifies air deployment.
Trina Watt revealed that in the next few months, Imagination will release more IP core products in the automotive field.
At present, smart cars are profoundly changing the attributes and definitions of traditional cars. When the industry is ushering in a new round of changes, how to better use the strategic resource of chips to achieve "corner overtaking" in China's new energy vehicle track is becoming key issues.
Miao Wei said in February this year that when China develops the new energy vehicle chip industry, it must not engage in innovation and localization behind closed doors. It needs to create a good development environment for domestic and foreign semiconductor companies to develop in China without discrimination.
“I believe that China, as the world’s largest semiconductor market, has the characteristics of active innovation, diverse needs, and high acceptance of new technologies. Especially the characteristics of our large market, it is fully capable of providing a good technological innovation and market for global semiconductor companies. Good soil and environment for development." Miao Wei said.
