[Chiptalk] "Can't Relax Even If Supply Shortage Eases"... Strengthening Cooperation in Automotive Semiconductor Supply

Honda-TSMC, GM-GlobalFoundries Contracts Follow One After Another
Preparing for Increased Semiconductor Demand Amid Electric and Autonomous Vehicle Supply Acceleration

As the global semiconductor supply shortage for vehicles, which shook the global supply chain during the COVID-19 pandemic, has mostly been resolved this year, automobile manufacturers are starting to breathe easier and are rushing to strengthen their semiconductor supply chains. This is interpreted as an effort to prevent a recurrence of semiconductor supply shortages and minimize damages such as production delays and reductions.

At the same time, with the acceleration of the transition to electric vehicles and autonomous vehicles, which require up to four times more semiconductors than conventional internal combustion engine vehicles, the demand for vehicle semiconductors is expected to increase exponentially. As securing and maintaining semiconductor supply chains has become a top priority, major vehicle manufacturers are directly strengthening cooperation with semiconductor companies.

According to foreign media including Japan's Nihon Keizai Shimbun on the 8th, Japan's Honda recently announced that it will cooperate directly with Taiwan's TSMC, the world's leading foundry (semiconductor contract manufacturer), regarding the procurement of vehicle semiconductors. Until now, Honda had procured vehicle semiconductors through parts suppliers and other vendors without separate contracts with semiconductor companies. However, after experiencing production setbacks due to global supply chain disruptions, Honda recognized the need for long-term and stable semiconductor supply and has taken action. Through collaboration with TSMC, Honda plans to introduce semiconductors procured from TSMC into Honda vehicle systems after 2025 and is also considering cooperation in advanced semiconductor development. It is reported that negotiations with other semiconductor companies are also underway.

In the United States, General Motors (GM) signed a long-term contract with GlobalFoundries in February. GlobalFoundries owns a semiconductor factory in northern New York, and all semiconductors produced there will be exclusively provided to GM's production lines. Doug Parks, GM's Vice President, emphasized, "This contract is the first of its kind in the industry," adding, "It will help build a strong supply chain for core technologies in the U.S. and meet demand."

Cooperation for stable vehicle semiconductor production is also taking place within the semiconductor industry. In March, Infineon, a German semiconductor company and the market leader in vehicle semiconductors, formed a strategic alliance with Taiwan foundry company UMC. Both are semiconductor manufacturers, but Infineon partnered with UMC to increase the production capacity of vehicle microcontrollers (MCUs) it produces. MCUs are key components that act as the brain in electronic devices and were the most problematic parts during the supply shortage. UMC uses Infineon's eNVM (embedded non-volatile memory) technology to manufacture MCUs using a 40-nanometer (nm; 1 nm is one billionth of a meter) process at its fab in Singapore.

The reason why the automotive and semiconductor industries are focusing on and cooperating in vehicle semiconductor production is primarily to prevent a recurrence of the semiconductor supply shortage experienced during the COVID-19 pandemic. At that time, supply chain issues made it difficult to procure parts, forcing automobile manufacturers to repeatedly halt production, so they aim to avoid semiconductor supply issues. Since the beginning of this year, automakers such as Hyundai have seen vehicle semiconductor supply normalize, enabling smooth production and supply and accelerating growth.

Especially with the transition to electric and autonomous vehicles, vehicle semiconductor demand is expected to surge. While internal combustion engine vehicles contain about 200 to 300 semiconductors, electric vehicles have 500 to 1,000, and autonomous vehicles are equipped with more than 2,000. Toshihiro Mibe, President of Honda, said when announcing the contract, "As mobility electrification and digitalization progress, the importance of stable semiconductor procurement is increasing." GM Vice President Parks also mentioned, "GM's semiconductor usage will more than double in the coming years."

Accordingly, the vehicle semiconductor market is expected to expand rapidly. According to global credit rating agency S&P, the global vehicle semiconductor market exceeded $69.9 billion (about 92.5 trillion KRW) in 2022 and is expected to grow to $148 billion by 2029. Calculated by the average semiconductor value per vehicle, it is expected to increase from $854 in 2022 to $1,542 in 2029.

Although the global semiconductor market is expected to plunge into its worst condition this year due to a sharp drop in demand, vehicle semiconductors are expected to continue growing. Market research firm Gartner forecasts that global semiconductor sales will decrease by 11.2% this year, but vehicle semiconductor sales are estimated to increase by 13.8% during the same period.

This content was produced with the assistance of AI translation services.