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Automotive Chip Shortage Explained

Sep 1, 2023News

Introduction

Intensifying Competition in the Automotive Semiconductor Market

Global Impacts on Automotive Chip Supply

Rising Demand and Complexity in Automotive Semiconductors

Challenges in Meeting Automotive Chip Demand

Forecast for Automotive Chip Shortage

Introduction

The automotive industry is undergoing a significant transformation fueled by advancements in electronics-based vehicle technologies. One of the crucial aspects of this transformation is the development and supply of automotive semiconductors.

Intensifying Competition in the Automotive Semiconductor Market

The competition within the automotive semiconductor market, particularly for chips below the 10nm threshold, is intensifying. Companies are shifting their focus towards producing high-performance chips integrated with CPUs to meet the demands of evolving vehicle technologies such as autonomous driving and in-car entertainment systems.

Global Impacts on Automotive Chip Supply

Global factors play a crucial role in shaping the supply of automotive chips. The sluggish recovery of the German chip supply chain has prompted companies like Intel and TSMC to announce plans for establishing manufacturing facilities in Germany. This strategic move is aimed at addressing the anticipated growth in future automotive semiconductor needs.

Rising Demand and Complexity in Automotive Semiconductors

The demand for automotive semiconductors is on the rise, fueled by the rapid evolution of smart vehicles. Previously, a conventional car contained an average of 500 chips, but with the advent of smart technologies, this number has surged to around 1,400 chips, with some advanced vehicles incorporating up to 5,000 chips per vehicle.

Challenges in Meeting Automotive Chip Demand

Meeting the escalating demand for automotive chips poses several challenges. The projected drop in mobile phone shipments, coupled with the increasing complexity of automotive semiconductors, adds pressure to the supply chain. Additionally, stringent safety standards further complicate the production process, necessitating longer development cycles for new chips.

Forecast for Automotive Chip Shortage

Despite efforts to ramp up production capacity, the shortage of automotive chips is expected to persist in the medium term. Factors such as the majority of the world's production capacity remaining above 10nm and the need to meet stringent safety standards contribute to this forecast. The automotive chip shortage presents a complex challenge for the industry. However, it also catalyzes efforts to accelerate technology deployment and enhance production capacity. Despite the uncertainties surrounding the future of automotive chip development, industry stakeholders are actively working towards addressing the shortage and fostering industry evolution.

FAQ

Q: Why is there a shortage of automotive chips?
A: The shortage is due to intensifying competition, increased demand driven by smart vehicle evolution, and challenges in meeting stringent safety standards.
Q: How are global factors impacting automotive chip supply?
A: The sluggish recovery of the German chip supply chain and the establishment of manufacturing facilities in Germany by companies like Intel and TSMC are key factors influencing global automotive chip supply.
Q: What challenges are associated with meeting automotive chip demand?
A: Challenges include a projected drop in mobile phone shipments affecting chip demand, the increasing complexity of automotive semiconductors, and the need to meet stringent safety standards.
Q: What is the forecast for the automotive chip shortage?
A: The shortage is expected to persist in the medium term due to various factors such as the majority of the world's production capacity remaining above 10nm and the complexity of meeting functional safety standards.

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