After self-developed software, the industrial chain pattern of deeply bundled chip suppliers may change from this.

On the one hand, the vehicle industry suffers from chip shortage; on the other hand, in the face of intelligent electrification transformation, the number of vehicle semiconductor chips is increasing day by day. After car companies have come off the market to develop their own software and deeply bundle power battery suppliers, in the face of the global increasingly booming tide of intelligent electrification, mainframe manufacturers have turned their attention to the chip field.

"the chip crisis, coupled with electrification and self-driving technology, will cause half of the world's top 10 auto giants to design and manufacture their own chips internally, rather than relying on other suppliers." In the latest research report, Gartner, a research company, said that uncertainty in the supply of chips and a large increase in its own demand for chips have led car companies to tighten their ties with the chip supply chain.

Path one: go out in person

On December 10th, core technology, an automotive chip design company owned by Geely Holdings, officially released the first domestic specification-level 7nm intelligent cockpit chip "Dragon Eagle 1" designed by it. Prior to this, on December 6, Yijiatong Technology, Core support Technology and Desai Xiwei, Neusoft Group, Beidou Zhaopin respectively signed strategic cooperation agreements. The parties will begin to lay out the digital cockpit platform around the Eagle 1 and ECARX Automotive Service Core common operating system-level software framework. According to the plan, the Eagle-1 will complete mass production and vehicle testing in 2022, while the new generation of smart cockpit products based on this solution is expected to be mass-produced and loaded in 2023.

In China, Geely has been in the chip market for a long time. In 2016, Li Shufu, chairman of Geely holding Group, co-founded Yijiatong Technology with Chairman and CEO of Yijiatong Technology and Shen Ziyu, Chairman of Core Technology. In 2018, Yijiatong Technology joined hands with Amou China to establish Core Technology. In October this year, the first domestic car gauge class 7 nm intelligent cockpit chip Miaoying 1, independently designed by Core engine Technology, was successfully released.

Even earlier, the car companies that began to lay out the car specification-level chips also included BYD. BYD Electronics, owned by BYD, has made technological breakthroughs in the areas of car specification-level IGBT devices and automotive specification-level MCU chips, so BYD is particularly leisurely in chips under the crisis of chip shortage in the whole industry. From January to November this year, BYD's cumulative sales reached 641000 vehicles, an increase of 72.94% over the same period last year, which is closely related to the self-sufficiency of its chips.

Path 2: joint R & D

In addition to laying out the chips in person, another path for the mainframe factory to deeply bundle the gauge-level chips is to develop jointly with technology companies. On December 7th, Stellantis and Foxconn Group signed a non-binding memorandum of understanding on cooperation. According to Stellantis's vision, the two sides will work together to reduce the complexity of semiconductor products and design a new series of specialty semiconductors to support the semiconductor needs of vehicles owned by the Stellantis Group.

"by working with Hon Hai Group, our goal is to develop four new series of chips." Tang Weishi, chief executive of Stellantis Group, said, "these chips will meet more than 80 per cent of our semiconductor needs."

According to the MOU, the Stellantis partnership will take advantage of Hon Hai's key technologies and development capabilities in its areas of expertise, as well as its supply chain in the semiconductor industry, and extend these experiences and advantages to the automotive sector.

In 2019, before the global chip shortage broke out, Toyota reached a partnership with Japan's Denso in December of that year to set up a 49 per cent joint venture with 50 million yen, with the goal of developing the next generation of on-board semiconductors.

In China, Horizon, an automotive smart chip startup, completed a $1.5 billion C7 round of financing in June this year, with a post-investment valuation of $5 billion. Earlier, it was reported that Horizon was considering going to the United States to raise IPO, funds that could reach 1 billion US dollars. In more than a dozen rounds of financing on the horizon, there is no lack of SAIC, Great Wall Motor and other mainframe factories.

Path 3: upgrade the supply chain

With the continuing shortage of chip supply and the large demand for chips in the smart electric era, car companies, which used to rarely deal directly with third-and fourth-tier suppliers such as chip manufacturers, began to bypass first-tier suppliers and extend up the industrial chain. Among them, including the industry giant BMW.

On Dec. 8, BMW said it signed an agreement with INOVA Semiconductor and Grid Core to guarantee the supply of "millions" of chips a year. These components will provide control over the ambient lighting system and will first be used in BMW iX electric sport utility vehicles.

"We are deepening our partnership with suppliers at key points in our supplier network to ensure our long-term needs." Said Andreas Wendt, a board member of BMW Group, who is in charge of procurement and supplier network.

Whether in person, or in conjunction with other partners, or deeply bound to chip manufacturers, most car companies have increased their attention to the supply chain because of this "difficulty".

"We have to re-examine our relationship with the supply chain." After the outbreak of the "chip crisis", Ford Global CEO Jim Farley made such a judgment, on November 8 this year, Ford and GE Core also announced that the two sides signed a non-binding strategic cooperation agreement, the purpose of which is to increase the supply of chips from GE Core to Ford. The two sides said the partnership could eventually produce new chips designed specifically for Ford and boost domestic chip production and supply across the automotive industry.

According to the latest AutoForecast Solutions (AFS) data, as of December 5, due to a shortage of chips, the global car market has reduced production by a total of 10.122 million vehicles. According to Deloitte statistics, the number of chips in traditional fuel vehicles is 438 in 2012 and 567 in new energy vehicles. By 2022, the number of chips in traditional fuel vehicles will reach 934, and the number of new energy vehicles will surge to 1459.

Volkswagen recently said that the tight supply of chips will continue to pose a challenge for at least the first half of 2022, and the whole should improve slightly next year. "Volkswagen Group is still doing its utmost to minimize the impact of structural semiconductor supply shortages on production and is actively working with semiconductor manufacturers and suppliers to alleviate supply shortages," Volkswagen said.