Electronics Update

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The Semiconductor Shortage in Automotive: An Overview

The COVID-pandemic has an ambivalent effect on the electronics industry, especially the automotive branch.
First, it diminished the demand for automobiles through a global economic shock, causing OEMs to stop or limit production.

Now we see a similar effect, but with a different cause. The demand for automotive-qualified components has recovered a lot faster than expected, as manufacturers ramped up production. Which meets a global supply shortage in semiconductor components.
So once again, car production figures are limited – but not because of missing demand from the customer side.

Semiconductor Automotive
Image from Pexels

But that is just one part of the story. A lot of semiconductor infrastructure is based on 200mm silicon wafers.

The production technology for these wafer sizes is mature and more cost-effectively than 300mm wafers. A lot of IoT, 5G, Automotive and other component infrastructure is based on 200mm wafers, simply because they are cheaper to manufacture. The production technology for these wafer sizes is mature and more cost effectly than 300mm wafers. A lot of IoT, 5G, Automotive and other component infrastructure is based on 200mm wafers, simply because they are cheaper to manufacture.

“It’s an interesting situation this year. Not only is 200mm in demand, but there is also demand in general for trailing-edge and specialty products. It’s power, CMOS image sensors, RF, and those kind of products. There is also a division in the marketplace.

If you are IDMs like TI, NXP, or the standard analog guys, 2020 has been tough. The industrial, automotive, and power markets have been in a tough place that’s been impacted by the coronavirus. But at the same time, foundries are booming. The foundries are addressing what I would call the consumer markets.”

Risto Puhakka, president of VLSI Research, told SemiEngineering

But investments in these wafer sizes have decreased, to increase 300mm wafer production. This means, that part of the global wafer manufacturing equipment needs refurbishing, and supply cannot meet the rapidly increased demand from the industry.
Overall, we see a tight supply in consumer electronics, such as laptops, PC-hardware, and many other industries that rely on semiconductors. Including the automotive industry.

There has been great media coverage on this topic in the last couple of days, as to how automobile manufacturers needed to stop production of certain models. So we took the time to collect statements, and put those together in an overview, including the source for further reading.

Image by Counterpoint Research

Tier 1 Suppliers

The German-based supplier Continental the high demand for semiconductor components causes a bottleneck, that could expand until next year.

“Although semiconductor manufacturers have already responded to the unexpected demand with capacity expansions, the required additional volumes will only be available in six to nine months. Therefore, the potential delivery bottlenecks may last into 2021.”

Source: https://www.reuters.com/article/continental-semiconductors-shortage-idUSKBN28E291

Bosch, which is the largest Tier 1 supplier globally, adds:

“Currently there is a shortage of certain semiconductor components in global procurement markets, including the automotive sector. No supplier can elude this market development. We are in close contact with our suppliers and customers to maintain the supply chains as much as possible despite the tense market situation.“

Source: https://europe.autonews.com/suppliers/vw-bosch-continental-say-chip-shortages-will-cause-supply-bottlenecks

Automobile Manufacturers

Volkswagen corporation, which produces a broad spectrum of vehicles like Audi, SEAT, ŠKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen, and utility vehicles MAN and Scania, sees part of their production lines affected. Especially the “MQB-Platform”, used in SEAT, ŠKODA, and parts of the Audi models. According to a company statement, production capacities have been reduced in several production sites in North-America, Europe and China. In total, a drop in vehicle output of around 100,000 units is estimated.

„We have come through the crisis well so far, thanks to excellent procurement and production management. However, we are now feeling the effects of the global bottlenecks in semiconductors. We are doing everything we can to keep production downtime to a minimum so that we can supply our customers as quickly as possible.“

Source: https://www.volkswagenag.com/de/news/2020/12/Rapid-recovery-of-automobile-markets-leads-to-semiconductor-bottleneck-Volkswagen-Group-has-to-adjust-production.html

Ford is idling their Louisville, Kentucky Plant. This affects the production of Ford Escape and Lincoln Corsair models.

“We are working closely with suppliers to address potential production constraints tied to the global semiconductor shortage.”

Kelli Felker, Global Manufacturing & Labor Communications Manager at Ford Motor Company
Source: https://www.reuters.com/article/us-honda-output/chip-shortage-forces-ford-toyota-nissan-fca-to-cut-vehicle-production-idUSKBN29D1NF

Fiat Chrysler Automobiles currently idles 2 plants in Ontario, Canada and Mexico.

“We are working closely with our global supply chain network to manage any manufacturing impact caused by the global microchip shortage. As a result, we have taken the decision to delay the restart of our Toluca, Mexico plant which builds the Jeep Compass and schedule down time at our Canadian plant in Brampton, Ont., which builds the Chrysler 300 and Dodge Charger and Challenger. This will minimize the impact of the current semiconductor shortage while ensuring we maintain production at our other North American plants.”

FCA Canada spokeswoman LouAnn Gosselin
Source: https://www.autonews.com/automakers-suppliers/fca-idling-two-plants-until-end-jan-microchip-shortage-spreads

Honda will reduce production output of their “Fit” model by 4,000 units in January, according to “Nikkei” News.

“The spread of the coronavirus has impacted procurement in semiconductors and related parts. We will address this issue by adjusting production and replacing car models”

Source: https://asia.nikkei.com/Business/Automobiles/Honda-cuts-car-production-on-massive-chip-shortage

Toyota sees their Pick-Up production affected by the situation. The US-Production of their largest model in that category, the “Tundra” has been lowered by 40 per cent. The smaller “Tacoma” however will be produced as planned.

“This is absolutely an industry issue. We are evaluating the supply constraint of semiconductors and developing countermeasures to minimize the impact to production.”

Toyota spokesman Scott Vazin
Source: https://apnews.com/article/coronavirus-pandemic-bb12adb6106019a618440d85fd91f77e

Nissan reduces production of their “Note” by 5,000 units.

“A global shortage of semiconductors has affected parts procurement in the auto sector. As a result of this shortage, the Oppama Plant in Japan will adjust production in January, reducing production of the Nissan NOTE.”

Source: https://www.reuters.com/article/us-honda-output/chip-shortage-forces-ford-toyota-nissan-fca-to-cut-vehicle-production-idUSKBN29D1NF

Semiconductor Manufacturers

Infineon Technologies will be increasing its investments to start a new chip factory based in Austria.

“We have already factored in certain growth for car production in 2021. Accordingly, we will adjust our global manufacturing capacities.”

Source: https://europe.autonews.com/suppliers/vw-bosch-continental-say-chip-shortages-will-cause-supply-bottlenecks

NXP names increased material costs and severe component shortages as a reason, and informed customers about rising prices in a company statement.

“To address the unforeseen increase in costs from our suppliers, we reluctantly must raise pricing on all products.”

Source: https://europe.autonews.com/suppliers/vw-bosch-continental-say-chip-shortages-will-cause-supply-bottlenecks

In an interview during CES, NVidia spokesperson Colette Kress stated:

“In order to talk about supply, we first have to discuss the demand. We did have an exceptional overall holiday season. Gaming demand is off the charts. Our overall Ampere architecture and ray tracing are really a true success. This demand has remained stronger for longer. Okay? So, supply does remain tight at this time. We expect the overall channel inventories, meaning the inventories that are with our AIC partners as well as in our e-tail and retail channels will likely remain lean throughout Q1.

Our overall capacity has not been able to keep up with that overall strong demand that we have seen. We’ve seen in terms of constraints, constraints really from the overall global surge of compute and the overall capacity, capacity that may be necessary for assembly and test and/or sub trades as well. But again, we remain focused on this and working each day to improve our overall supply situation.”

Source: https://seekingalpha.com/article/4398578-nvidia-corporation-nvda-presents-19th-annual-j-p-morgan-tech-auto-forum-conference-transcript

California-based Xilinx Inc. supplies field programmable gate array (FPGA) chips made with 28nm and 16nm processes for the automobive industry. According to a statement, the company shipped 19.6 million units so far since 2006.

During a press conference in Seoul, South-Korea, Yousef Khalilollahi, vice president of sales, Asia-Pacific region for Xilinx Inc. said:

“Innovation speed in the automobile market has exceeded that of semiconductor design life cycles. This requires a flexible solution from chip companies to meet the quickly evolving standard, which Xilinx has.”

Source: http://www.thelec.net/news/articleView.html?idxno=1995