The automotive and semiconductor shortages are coming to an end, with supply and demand balancing out in the second half of 2023, according to Techinsights.

Analysts expect automotive semiconductor supplier revenues to grow 27.4% in 2022, from $46.6 billion in 2021 to $59.4 billion in 2022.

"Supply pressures on automotive-specific semiconductor technologies, particularly those based on older process nodes (e.g., 28 nm, 40 nm, etc.) are easing," Techinsights said.

Analysts believe there is a better understanding of the requirements of electric vehicle platforms, particularly in terms of power electronics and processing needs.

The key is the newly established relationship between automakers and semiconductor suppliers.

Semiconductor suppliers now have a better understanding of demand and can plan capital expenditures without the risk of overbuilding capacity.

The trend toward ADAS/autonomous driving, advanced infotainment, telematics, and connectivity will continue to drive the growth of semi-content per vehicle, which is the foundation for growing demand.

Techinsights said, "Semiconductor suppliers with the best mix of processors, power supplies, analog devices, memory and other semiconductor products are best positioned to capitalize on strategic relationships with OEMs, which will help capitalize on growth opportunities in 2023 and beyond."

TSMC: Recommends shift to advanced nodes for automotive chips

The automotive industry is becoming increasingly complex in terms of both chips and the way they are sourced, said Paul de Bot, TSMC's general manager for Europe, speaking at the 27th Automotive Electronics Conference in Ludwigsburg, Germany, this week.

The automotive industry has long been considered a technological laggard, focusing only on outdated processes, de Bot said, but in reality, the automotive industry is starting to use the 5nm process in 2022 - just two years before 5nm enters mass production.

According to All-Electronics, de Bot recommends that automakers start planning to move to advanced nodes as soon as possible.

"It is not possible to reserve idle capacity for the automotive industry," de Bot emphasized -- noting that the IC industry's high capital requirements mean it must maintain high capacity utilization. Therefore, if an order is canceled, the foundry must immediately find a replacement to keep utilization high.

It can take up to six months to manufacture, package, test and deliver ICs, de Bot told the automakers, which affects flexibility and makes planning order quantities very important.

The importance of the automotive industry to the chip industry is still quite low. In the first quarter, only 7% of TSMC's revenue and 10% of global chip industry output came from automotive.

By 2030, automotive ICs are expected to account for 15% of the semiconductor industry's total production.

But the shift to advanced processes for automotive chips will not be easy.

McKinsey estimates that 90nm and above automotive chips will still account for 67% of total automotive chip demand by 2030, and that their global supply will grow at a compound annual growth rate of 5% between 2021-2026, suggesting that such chips will remain in tight supply for years to come.

Automotive supply chain players are integrating chips from advanced processes into new models, which involves comprehensive new design, certification, and volume production, thus improving the situation of severe shortage of automotive chips.

Typically, it takes mainstream automakers in the U.S., Europe, Japan, and South Korea 3-5 years to design, test, and validate new chips for legacy models, and they will gradually be on the road to adopting new process chips for both legacy models and new electric vehicles. For example: electric car makers like Tesla have more flexibility in designing new EV chips and are more willing to adopt more advanced process nodes.

So what are the difficulties automakers need to overcome if they adopt advanced process nodes?

Soaring costs. Cell phones use advanced processes for better performance, in terms of ensuring that power consumption and heat generation are within the allowable performance limits. But the use of the car scene is relatively fixed, basically simply display vehicle information, settings, maps, music, video and other scenes, the chip performance requirements are relatively low, and the car has a wide internal space, the chip area is not too restrictive, the chip heat also do not have to worry about, the vehicle has enough space to the chip to add higher specifications of the heat dissipation components to control the chip temperature; power consumption is not a problem, the chip that little power consumption in the chip temperature, the power consumption is not a problem. Power consumption is naturally not a problem, the power consumption of the chip can be said to be insignificant in front of the energy consumption of the car itself.

Adopting advanced process technologies involves risk and cost pressures. In addition to manufacturing costs, both 5nm and 3nm add new reliability challenges, and the soaring costs are really too much for automotive applications to bear.

Automotive-grade certification is long and difficult. The challenge is compounded in applications like automotive where stresses due to heat, vibration and other physical effects cannot be fully predicted. In a server rack, individual servers can shift the load to other servers if the internal temperature gets too high. Similarly, if a smartphone is placed in a hot car, above a certain temperature it will shut down and not restart until the temperature drops below a preset limit. Heat in a car can have a big impact on everything from memory latency to accelerated circuit aging, requiring automotive-grade certification of chips.

From product design, wafer flow, packaging and testing, automotive certification and building algorithmic toolchains, to functional safety certification, development of self-driving software packages, and refinement to support the industry ecosystem, this is the completed process that an automotive-grade chip needs to go through.

In the chip design stage, a vehicle specification chip in the beginning of the design to meet many of the corresponding process certification. For example, the design phase should be through the design process certification, personnel certification, including servers are more stringent requirements. In the prototype to mass production, but also through the complexity of the certification, including functional safety experts certified, functional safety process certification and product certification, this cycle may also take two years.

Early failure rate test requires more than eight hundred chips, and the overall test process is about half a year, if there is a failure may need to start from scratch, a certification in the case of a smooth at least one year, if the middle of some of the problems may have to re-do the test. Now the automotive industry chip to pursue the failure rate is zero, one million chip failure rate is zero, which is quite harsh conditions. The failure rate of consumer or industrial chips is hundreds or thousands of indicators. But through the car regulations to verify the chip to get on the car, this cycle can not be skipped.

Of course, this is not all that car companies do not chase the new, because sometimes they can not chase the new.

Supplier constraints. Most of the car chips are not produced by the car companies themselves, but are provided by suppliers, which is part of the car companies can not control. For example, in 2020 this time node, nvidia can provide mass production of the best high-performance autonomous driving chip is the use of TSMC 12nm process to build the Xavier, and this time the computer graphics card, cell phone processors are basically popular 7nm process. 12nm belongs to the relatively backward process technology. In addition, from the supplier to deliver samples to the car companies to do matching to the actual launch also need a certain amount of time, and car companies to develop new models also need to prepare in advance. If the development of new models when the new process chip is not available, it is also possible to miss the first batch of new process chip.

However, despite the challenges, in the lack of core period, in the way of mature process automotive chips are still in short supply, a number of global automakers are embarking on the use of advanced process nodes to manufacture chips, especially for new models and electric vehicles.

From the results, the current 5nm process chips are in R&D or released, and gradually began to enter the mass production stage; however, 7nm chips, there have been Orin, FSD, EyeQ5, 8155 and other chips to achieve mass production, and other chips in the next few years in succession to achieve mass production, which signals the start of the advanced process automotive chips into the mass production of accelerated period.

At the same time, TSMC, Samsung, two mastery of cutting-edge advanced wafer manufacturing process foundry will benefit from, especially TSMC, in the statistics of 14 chips, 11 have been used or planned by TSMC foundry, only a few companies such as Amperex and Tesla choose to be foundry by Samsung.