With the acceleration of electrification, networking, and intelligence, the level of automotive informatization has unprecedentedly improved, and chip applications are rapidly increasing. At the beginning, all the equipment on the car was mechanical; With the development of the electronic industry, some control systems in automobiles have begun to transition from mechanization to electronics. At present, automotive chips have been widely used in various fields such as powertrain, body, cockpit, chassis, and safety.

In the past two years, the global shortage of chips has caught everyone off guard, with automotive chips being the most affected, causing major automakers to fall into a state of "production halt and chip waiting" and releasing reports of production cuts. Recently, the demand for consumer electronics chips has significantly decreased, leading to production cuts and order cuts. Major chip manufacturers have also shifted their production capacity to more popular automotive chips, and more manufacturers have also joined the production line of automotive chips.

1. Why is the prosperity of automotive chips high?

One is due to the impact of the "lack of core tide". According to reports, industry insiders say that the main reason why car manufacturers' procurement volume has not weakened is the supply chain congestion in the past two years, which has led to a significant change in the attitude of car manufacturers towards inventory. The previous practice of maintaining low inventory levels has caused car manufacturers to face serious issues of core shortage and chain breakage. Therefore, car manufacturers now hope to increase their inventory levels to ensure stable delivery of cars.

Secondly, the car factory has been experiencing a structural shortage. Although the demand in the consumer electronics market has declined and more production capacity is being vacated, many car manufacturers still have insufficient production capacity. According to data, the longest delivery time for automotive MCU is 52 weeks, and IGBT is also around 50 weeks. Therefore, taking advantage of the loose production capacity, car factory customers are expected to increase their procurement efforts and alleviate the structural shortage problem at least by 2024.

How long can the prosperity continue? According to a report by Taiwan Electronic Times, industry insiders unanimously believe that demand for automotive chips will remain strong for at least the second half of 2022, and car manufacturers still have many outstanding orders to digest. Driven by the development of new energy vehicles, the likelihood of automotive chips maintaining a high prosperity in 2023 is very high.

Founder Securities pointed out that the current import rate of domestic automotive chips is as high as 95%, and Chinese cars are the market with the largest demand for automotive grade chips. Taking MCU chips as an example, it is expected that the market size of China's automotive grade MCU from 2022 to 2025 will be 33.63 billion US dollars, 37.53 billion US dollars, 4.166 billion US dollars, and 4.593 billion US dollars respectively; The CAGR from 2021 to 2025 is 11.22%.

2. High demand, difficult to expand production, and long cycle vehicle IGBT shortage

It is understood that although the production and sales of automobiles have decreased year-on-year, new energy vehicles have seen a significant increase year-on-year. For the demand for chips, new energy vehicles use much more than traditional fuel vehicles, which is also one of the reasons for the mismatch between the demand for automotive chips and the trend of automotive production.

Compared with consumer grade and industrial grade products, automotive grade chips have high requirements for safety and stability, long research and development cycles, high technical barriers, and large capital investment. Therefore, the development of automotive grade chips faces more challenges. Automotive chips can be divided into various types such as MCU, AI chip, IGBT, analog chip, sensor, memory, etc. Previously, the most scarce MCU has been alleviated with the active expansion of production by major manufacturers, and now the protagonist of the chip shortage has been replaced with IGBT. Bu Rixin, General Manager of Chuangdao Investment Consulting, stated in an interview with China Electronics News that the electrical characteristics of new energy vehicles are more obvious and require more power devices, represented by IGBT and silicon carbide power devices, playing a very core role.

IGBT refers to the insulated gate bipolar transistor chip, which is currently the most mature and widely used power device in high-power switching components. It combines the advantages of high input impedance of MOSFET and low conduction voltage drop of GTR, with low driving power and reduced saturation voltage. It is the core device for energy conversion and transmission, known as the "CPU of electronic power devices", and has great development potential.

Chi Xiannian, a senior consultant at the Integrated Circuit Center of CCID Consulting, stated that due to the development of new energy vehicles and automobiles towards intelligence, the automotive chip market has maintained a strong demand in the past two years, with IGBT, as the core component of new energy vehicles, being one of the most scarce products.

Even before, some car companies stated that the number of cars they can produce mainly depends on the supply of IGBT power chips. Some IGBT power chips have a delivery cycle of over 50 weeks.

ere are potential shortages. Supply and demand conflicts may erupt in the future.