Cover story
Automotive Semiconductor Market Challenges – The EV Revolution
The impact on repair networks and supply chain longevity I
n this article, Rochester Electronics explores the challenges in the automotive semiconductor market, including supply chain issues, rising demand, and the complexities of automotive-grade components. The piece emphasises the need for strategic partnerships and innovative solutions to ensure a stable supply of semiconductors in the industry.
The increasing semiconductor value in the overall vehicle cost. Allied Market Research estimated the total automotive semiconductor market to be roughly $38 billion in 2020. It is expected to grow to $114 billion by the end of 2030, implying a compound annual growth of 11.8 per cent, much of this due to the switch to Electric Vehicles (EVs). For example, the drivetrain in an internal combustion car uses approximately $100 of semiconductors, while its EV equivalent uses over $1,000/car (McKinsey).
After-market support. The overall value of the automotive aftermarket is set to rise 33 per cent by 2030 from its existing value of $900 billion. The conversion to electric vehicles (EVs) will require new after-market skill sets and structures, leading to a redistribution of aftermarket profi ts along the value chain. In numerous countries, legislation around the ‘Right to Repair’ will infl uence sub-system designs.
Balancing semiconductor supply chains across the Petrol and EV changeover. Managing supply longevity and semiconductor obsolescence to cover up to 10 years of production and 15 years after sales is vital to determining future success.
Factors driving automotive semiconductor obsolescence Moore’s law predicts that the number of transistors on a microchip or a computer processor will double every two years - with a consequential reduction in the cost per transistor. Its prediction has been accurate since 1975. Constant technological evolution and the exponential rise in the cost of new fab investments means that older and less efficient technologies are starved of investment and eventually discontinued. As process nodes shrink, maximizing the number of die on
a given wafer and improving the device speed, performance, and cost, older geometries and fabs are closed, and Original Component Manufacturers’ (OCMs) resources are re-targeted.
06 September 2024
www.electronicsworld.co.uk
The dominant position of third-party fabs in the worldwide semiconductor supply chain means that the decision to discontinue a fab process is often outside the control of the OCM. Small die sizes and signifi cant fab capital investments mean
that production Minimum Order Quantities (MOQs) to justify the process become so large that only the largest consumer OEMs and applications will dictate the longevity of the fab process in the future. Consumer electronics accounts for 80 per cent of the worldwide semiconductor market, while automotive electronics accounts for just 8 per cent. As die sizes reduce, overall IC package sizes shrink, reducing unit cost. Assembly becomes increasingly automated, and material and investment-heavy piece parts such as lead frames can be replaced with direct die-attach assembly, further improving performance and reducing cost. Older semiconductor package styles such as PDIP, PLCC, TSSOP, and small outline SO packages are less economical and are therefore pruned. Third-party assembly houses also control a signifi cant portion of the semiconductor packaging market, and like 3rd party fabs, they often control component End-of-Life (EOL) dates.
Semiconductor Obsolescence – Changes Post-Allocation Semiconductor allocation hit automotive manufacturers hard. COVID-19 worries reduced confi dence in future demand. Semiconductor production capacity reserved for automotive manufacturers was released and driven by homeworking; consumer and communication applications immediately swallowed the spare capacity. When automotive demand returned sooner than expected, semiconductor production capacity was taken, and automotive manufacturers suddenly faced 52-week+ lead times. By their nature, the industry-wide ‘just-in-time’ supply chain models had little built-in security, and automotive production worldwide suffered 12-18 months of production stops and delays. A period of exceptional demand over and above the capacity
to supply always encourages all parts of the supply chain to focus their limited resources on the most profi table products. As the market eventually returns to over-supply, less profi table lines are pruned. Third-party assemblers and fab houses make their own profi t/loss calculations and add a discontinuation node outside the direct control of the OCM. Z2Data reports: • A 30 per cent increase in overall component discontinuations pre- and post-allocation.
https://www.rocelec.com?utm_medium=FrontCover&utm_source=ElectronicsWorld&utm_campaign=SEPT24EWFrontCoverAutomotive&utm_content=EV_PrintFrontCover
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