The rapid development of new energy vehicle companies in China

How serious is the “chip shortage”? September sales in four major auto markets including China, Japan, the U.S. and Europe fell 26 percent from a year earlier. In the face of this crisis, human beings seem so weak and powerless, and many scholars have come forward to say that the “chip shortage” may continue for a long time, and we will have to continue to endure this situation in the short term. Why is the global “chip” suddenly not enough? Going back to the source, this is entirely due to the imbalance between supply and demand. On the supply side, European and American companies have almost monopolized the entire chip industry chain, suppressing the development of Chinese chip companies through technology blockade and customer binding. China is almost the country with the highest number of chip applications in the world, but the domestic substitution rate is only single digits, and the bitterness is needless to say. In the original industrial structure, each chain developed in an orderly manner, and there was no such thing as “lack of cores”. However, with the outbreak of the global epidemic, the United States suffered a severe cold wave, Japan’s Renesas Electronics suffered a fire, and the global “sealing and testing center” Malaysia rebounded in the epidemic, and the release of global chip production capacity encountered a great test. On the demand side, new energy vehicles are advancing rapidly, and the proportion of Electronic products in a vehicle has increased significantly, which has led to an unprecedented increase in the application of global chips. Coupled with the development of the Internet of Things and the photovoltaic energy industry, the demand for chips will be further amplified. On the one hand, demand is bursting, and on the other hand, production capacity is constrained. The arrival of “lack of cores” is inevitable. Essentially, the lack of cores is due to the irreconcilable contradiction between global technological development and monopoly productivity. The protection of “chip” technology by European and American countries is the root cause of this crisis. To solve the “chip crisis”, what is needed is not a slogan, but a practical increase in production capacity. Looking at the world, China is undoubtedly the best choice for solving chip production. From this point of view, this “chip shortage” is very likely to accelerate the catch-up speed of Chinese chip manufacturers, which is conducive to gaining a firm foothold in the global market of Chinese chip companies.

/ 01 /

Changes brought about by new energy

Although the epidemic, blizzard and fire have weakened the global chip production capacity, the core factor of “lack of cores” is still due to the sudden release of the demand side.

In 2020, the global penetration rate of new energy vehicles was only 3.7%, but this figure soared to 6% in the first half of this year, an increase of 2.3 percentage points. Specifically, the cumulative sales of new energy vehicles in the world in 2021H1 reached 2.41 million, an increase of 170% over the same period last year. Although there is a low base due to the epidemic last year, the growth in sales of new energy vehicles is solid.

As we all know, the biggest difference between new energy vehicles and traditional vehicles lies in the way of power, which is different from the fuel system. New energy vehicles use a three-electric system to provide power. The so-called three-electrical system refers to the system composed of battery, motor and electronic control.

The biggest change brought about by the three-electric system is the significant increase in the number of automotive-grade semiconductors. In the long run, the three major directions of electrification, automation and digitalization have led to essential changes in the cost structure of new energy vehicles.

At this stage, the demand for chips for new energy vehicles is mainly driven by electrification.

In traditional cars, the fuel engine accounts for about 30% of the total cost of the car, which is the highest proportion; also in the new energy vehicle, the electronic control system is also the part with the highest cost, and only the battery accounts for 35% of the total cost of the car. %, the motor and electronic control account for the remaining 30% of the cost.

The battery system controls the conversion of chemical energy into electrical energy; the motor system converts it into kinetic energy after receiving electrical energy to drive the car forward; the electronic control system is the Controller of the motor, which consists of an inverter and a controller. It is responsible for converting direct current into alternating current, and the controller realizes the functions of acceleration and deceleration by controlling the rise and fall of the frequency of the inverter.

In the entire three-electrical system, multiple power conversions are involved, which need to be realized through a large number of power semiconductors. According to the calculation of Roland Berger, an international consulting agency, the change of power system will make the demand for electronic components in automobiles soar by 3.5 times, from US$640 to US$2,875 per vehicle.

Specifically, while the internal combustion engine is replaced, the car will lose $395 in electronic components, but the battery control and electric powertrain will increase the cost of electronic components by $770 and $1,860, respectively.

Looking at the overall picture, the demand for power devices such as IGBTs and MOSFETs has increased significantly with the progress of vehicle electrification. For micro-hybrid vehicles with very low electrification, the number of IGBT components is only 2-3, and with the deepening of electrification, the number of IGBT components for electric vehicles with motor power above 120kW may reach 150 .

This is only the increase in the number of automotive-grade semiconductors brought about by the power system. Under the trend of automotive automation and intelligence, the demand for radar systems, sensing systems, and computing system chips will increase.

In fuel vehicles, the number of automotive-grade semiconductor applications was very small, and the differences between cars at that time were mainly in fuel consumption and quality. With the development of science and technology, automobiles have gotten rid of the fate of mere delivery vehicles and become the core part of the mobile travel ecosystem.

At this level, the rapid growth in demand for automotive chips will become an inevitable trend.

/ 02 /

sticky gadfly

In nature, there is an insect called the gadfly, which feeds on the blood of livestock, endangering the health of livestock. Nowadays, the development of our new energy vehicles is hot, but in fact, a lot of “gadflies” have already been attached to them.

Under the trend of “carbon neutrality”, new energy vehicles are expected to become the fastest growing track, and it is also the direction of my country’s key development industry.

According to data from the International Institute of Obstetrics of the Industrial Technology Research Institute, since 2018, China has surpassed Japan to become the country with the largest sales of new energy vehicles in the world. The latest 2021 data shows that China, Japan, the United States, Germany, and the United Kingdom are the top five countries in the sales of new energy vehicles. Among them, China has a market share of 32.5%, far ahead of Japan’s 17.9% and the United States’ 16.3%.

In the next five years, China’s electric vehicle sales are expected to increase from about 1 million in 2020 to 4.2 million in 2025, which will exceed the combined sales of electric vehicles in the United States and Europe, and will maintain an industry growth rate of more than 20% for a long time.

In the era of traditional fuel vehicles, the engine has always restricted the development of my country’s auto industry. After the electric vehicle abandoned the engine, in fact, Chinese car companies have already stood on the same starting line with the world’s top players, so we will see the development of new energy car companies in China. develop rapidly.

However, while the bottleneck of the engine has disappeared, we have fallen into the new dilemma of automotive-grade semiconductors.

In a new energy vehicle, the autonomy rate of power semiconductors is only 8%, the proportion of storage chips is also 8%, the autonomy rate of signal chain chips and sensors is less than 5%, and the autonomy rate of control chips is even less than 1%. Overall, the autonomy rate of China’s automotive-grade semiconductors is below 8%.

my country is not only the world’s largest producer of new energy vehicles, but also the largest importer of automotive semiconductors.

Customs import and export data show that in 2019, China’s integrated circuit imports amounted to US$304 billion, surpassing crude oil to become the most import-dependent product, while the export value of integrated circuits was only US$110 billion, and the trade deficit reached an astonishing US$194 billion.

With the outbreak of new energy vehicles, automotive-grade semiconductors are undoubtedly the most beneficial part, but most of my country’s automotive-grade semiconductors are purchased from overseas. It is precisely because of the lack of independent substitution capabilities that my country’s automobile industry chain will also suffer from “lack of cores” when overseas epidemics occur.

Overseas semiconductor companies are like gadflies on cattle, sucking the profits of China’s new energy industry chain.

/ 03 /

“Lack of cores” is a good opportunity for Chinese companies to catch up

Semiconductors were invented by Americans and have always held control of this field.

In the 1980s, a number of Japanese companies such as Nikon and Canon successfully drove American lithography machines out of the market by relying on cost performance. After losing the right to speak on the chip manufacturing side, the United States has attacked its opponents by supporting the Dutch company ASML, which is why the ASML EUV lithography machine is unparalleled.

Chinese companies have also been blocked by European and American countries, and Huawei and SMIC have not been treated equally. In the process of chip development, the obstacles encountered by Chinese enterprises are far greater than imagined.

Frankly speaking, we are currently lagging behind in the semiconductor industry in all aspects, not only can’t buy lithography machines, but also in many aspects such as electronic special gas, CMP polishing materials, wet chemicals, photoresist, EDA software and so on. There are gaps. The weakness of the industrial chain has led to a weak market position of domestic automotive chip companies, and the proportion of high value-added products is extremely low.

Although automotive-grade chips are not as complex as computer chips, they are a test of product stability, and Chinese companies are also facing considerable difficulties. The working environment of the automotive chip is relatively harsh, and it needs to adapt to a large temperature difference. At the same time, it must overcome the problems of high vibration, dust, oil stains, and electromagnetic interference.

Auto suppliers have always had great selection inertia. If a company can successfully enter the supplier list of auto companies, it will usually get a steady stream of orders, and the same is true for automotive chips.

If a company wants to become a world-renowned automotive supplier, it needs to pass the component certification of the AEC organization. Although nominally this certification is not mandatory, automakers and suppliers often recognize this standard.

AEC is the abbreviation of the American Automotive Electronics Council, led by the three major North American car companies Chrysler, Ford and General Motors. Under the circumstance that the foundation is very weak, it is extremely difficult for Chinese automotive chip companies to gain recognition against the trend. From this, it is not difficult to see that it is difficult for chip manufacturing to rely on a single technology to break through, and the strength of enterprises often relies on the strong industrial chain group behind them.

In the absence of industrial chain support, blind research and development of automotive-grade chips is not economical for Chinese companies, so for a long time we have been doing basic products with low technical added value.

In the past, there were two pain points for domestic auto-gauge chips. On the one hand, the industrial foundation was weak, and the entire industry chain started relatively late; on the other hand, there was a lack of profit-making effect. Suppliers, lack of opportunities for continuous iteration.

The “chip shortage” caused by the epidemic actually gave Chinese chip companies an opportunity. Since new energy vehicles use a new power system, the gap between global players has actually narrowed, and everyone has almost returned to the same starting line.

All along, Chinese companies have not lacked the willingness to manufacture chips, nor have they lacked the help of capital. However, due to the technical blockade, the entire semiconductor industry chain is relatively backward. Nowadays, “lack of cores” is no longer a problem that can be solved in a short period of time. Under the circumstance of increasing demand, new production capacity is bound to be needed to solve the problem, which gives us an opportunity for development.

In September last year, the “China Automotive Chip Industry Innovation Strategic Alliance”, led by the Ministry of Science and Technology and the Ministry of Industry and Information Technology, was formally established by more than 70 enterprises and institutions, which shows that the developing country attaches great importance to the development of automotive chips.

At this stage, the “lack of cores” is mainly caused by the electrification of automobiles, and electrification is only the first step of new energy vehicles. With the advent of subsequent digitalization and intelligence, the “silicon content” of automobiles will further increase.

Especially in autonomous driving technology, from the L3 to L5 stage, the amount of computing will increase exponentially, and the requirements for chip computing power will be hundreds of times higher than today. Radar chips, sensors, storage chips, and computing chips are all likely to have huge gaps.

Technological development is the result of the efforts of all mankind, and technological blockade will only create trouble and hinder technological progress. “Lack of cores” will most likely become the driving force for the development of Chinese automotive chip companies, from independent replacement to globalization, perhaps in the not-too-distant future.

The Links:   CM100DUS-12F NLB150XG02L-01BA

Related Posts