How far is the gap between Chinese electric vehicles and Tesla? Not far, just one chip away

One year after the 516 Entity List, Huawei did not fall. Instead, it used a beautiful annual report to fend off all kinds of overt and covert attacks from the other side of the ocean.

However, this chip war without gunpowder is far from over.

2020 is destined to be an extraordinary year for my country's semiconductor industry. The US embargo on Huawei has made more and more Chinese high-tech companies realize the importance of "chips". This year also coincides with the first year of the booming development of my country's smart cars. Automotive chips will inevitably be cast with more concerned or malicious eyes.

Smart car chips are not just a matter for the automotive industry. The development of smart cars involves the integration of cars, networks, roads and clouds. In February this year, many Chinese ministries and commissions jointly issued the "Smart Car Innovation and Development Strategy". This "Strategy" clearly states that the development of smart cars is not only a need for the transformation and upgrading of the automotive industry, but also an important part of a strong country in science and technology. It is the result of joint support from the information and communication field, network scale, 5G communication, and infrastructure.

The future of the electronics industry may depend on automotive electronics.

Indeed, the automotive electronics market is becoming increasingly large, gradually shifting from traditional audio and display screens to entertainment information systems, safety systems, power systems and other fields. Market research firm IC Insights predicts that by 2021, automotive semiconductors will become the strongest terminal market in the chip industry, and the annual compound growth rate of automotive electronic system product sales will achieve a 5.4% increase.

It has to be said that automotive electronics will become the main growth point of semiconductor applications, with chips being the top priority. This is also the throat fortress for my country to achieve innovation. However, my country is still far behind Europe and the United States in the research and development and manufacturing of automotive electronic chips. NXP, Infineon, STMicroelectronics and others occupy nearly 70% of the global market.

A war that is less popular than Huawei phones but equally important is quietly spreading: where are the Chinese chips in smart cars?

The heart of a car is the future of a country

Following mobile phone chips, automotive chips have become a battleground.

Automotive semiconductors can be divided into functional chips MCU, power semiconductors (IGBT, MOSFET, etc.), sensors and others. Despite the cold winter of the auto market, automobiles are still the largest user market for automotive semiconductor microcontrollers (MCU) (also known as "functional chips"), providing critical performance in an increasingly wide range of automotive applications, from motor control to infotainment systems and body control. In traditional fuel vehicles, MCUs account for the highest value of 23%; in pure electric vehicles, MCUs account for 11%, second only to power semiconductors.

The importance of chips to automobiles is obvious. It not only has industrial significance, but is also the throat of my country's scientific and technological development.

In general, domestic MCUs cannot compare with foreign companies in terms of market share or technological advancement. For Chinese companies, the current mainstream market is still 8-bit MCUs, which account for about 50%. 16/32-bit MCUs account for about 20% respectively. This means that domestic MCU application areas are mostly concentrated in low-end electronic products, and the mid-to-high-end electronic product market is still in the hands of foreign companies.

At the belated two sessions, chips were once again hotly discussed, especially automotive-grade chips. Recently, according to central media reports, the Central Committee of the Revolutionary Committee of the Chinese Kuomintang plans to submit a proposal this year to accelerate the development of automotive-grade chips and promote the development of new energy vehicles and energy storage in my country. It is worth noting that automotive-grade chips can be used not only for new energy vehicles, but also for energy storage. Although one-third of the world's cars are currently manufactured in China, it is embarrassing that automotive-grade chips are almost firmly controlled by others, and the safety of the chips themselves has become a major hidden danger.

The game between the front wave and the back wave

This is a market dominated by old players, with NXP, Infineon, STMicroelectronics and others firmly occupying the market share.

According to Strategy Analytics' "Automotive Semiconductor Manufacturer Market Share 2019" report, NXP, Infineon, Renesas, Texas Instruments and STMicroelectronics still maintain their top five market share positions. Currently, Texas Instruments has 50 mass-produced automotive chips, covering car chips, gateways and computing chips, and SoCs for ADAS functions. NXP's products cover a wider range, including car chips, in-car networks, media processing, power management, sensors and other categories.

However, there are always people who like to break the deadlock. Tesla is a new player who refuses to admit defeat. After all, Musk’s dream is to build a "closed empire."

In May, Tesla's FSD chip came with great momentum. This car company, which is on par with Apple, is changing the perspective of the capital market in examining car companies. The focus of Tesla's self-developed chips is the in-vehicle computing platform, which is the basis for the realization of all intelligent driving functions. However, this field is full of strong new players. At present, the supply chain of in-vehicle computing platforms is monopolized by a few Tier 2 manufacturers, such as Mobileye, Horizon Robotics, Nvidia and Qualcomm.

Among them, the big boss behind the ADAS giant Mobileye is Intel, which has not let go of both car chips and autonomous driving chips. Intel is eyeing the prospects of Mobileye's autonomous driving and wants to rely on this acquisition to reshape the industry landscape. According to Intel, Mobileye's chips have provided EyeQ series chips for 300 models of 25 car companies, and are installed in more than 50 million cars worldwide. Tesla, BMW, Volkswagen, Audi, Nissan, Cadillac, etc. are all its guests. Last year, the cumulative shipments of EyeQ series chips reached more than 54 million.

Horizon Robotics is similar to Intel. This Chinese chip manufacturer is a new player in the automotive chip market in the past two years. Its Journey chip and MATRIX autonomous driving computing platform are both its classics. Now, it has started the road to mass production of self-developed chips. Changan UNI-T and Ideal ONE are both supported by Horizon Robotics chips.

These new players in the automotive chip field that focus on "magic calculations" are surpassing their predecessors. However, the old players have not let down their guard and have launched chips in the fields of car computers and autonomous driving.

At the same time, although the "new three giants" in automotive chips have surpassed the old players in computing performance, the old players have already launched chips in the field of car computers and autonomous driving. Infineon is a typical example. On April 16, Infineon Technologies AG announced the completion of its acquisition of Cypress Semiconductor, which means that Infineon has become the world's number one automotive semiconductor supplier, that is, no car can be without Infineon's chips.

After the merger, Infineon's automotive-grade chips have covered the entire vehicle, including door control modules, touch screen controls for entertainment and communication systems, braking systems, steering systems, domain controllers, engines, gearboxes, inverters, and radars and sensors in ADAS systems.

Ginger is still more experienced. The automotive chip giant Infineon was spun off from Siemens as early as 1999, and it already had a deep accumulation of technology. It is difficult for new ecological enterprises to reach its level in the short term, not to mention Chinese peers with weak foundations and late start.

The collision of cores, the game between the East and the West

No matter how difficult this round of game is, our peers on the other side of the ocean will not be absent.

Judging from the current development status of MCU and IGBT chip technology, our peers in the industry are indeed facing difficulties.

MCU is booming, but the investment is very small. The research and development of MCU is a combination of digital circuits, analog circuits, communication technology, embedded software and development tools, and it is not something that can be accomplished overnight. At present, most companies are constrained by the long investment cycle and the long return, and are unwilling to rashly increase investment in research and development. As a result, the technical content of my country's MCU products is still at a relatively low level. 8-bit MCU is the mainstream of the market, but 32-bit is the current industry direction, and 32-bit high-end chips are mostly in Europe, the United States and Japan. 8-bit is usually not used in operating systems, and most of them are used in electric meters, motor controllers, variable frequency air conditioners, telephone recorders, CRT monitors, keyboards and USB, etc.

Star and BYD, the largest domestic IGBT chip manufacturers, also started late and had a weak foundation. Most of them started in 2005, while the global IGBT chip technology has developed to the 6th generation. Infineon, one of the automotive chip giants, had Siemens' technology foundation in 1999, which gave it an inherent advantage over its Chinese counterparts. This is indeed the case. Currently, more than 95% of the global IGBT chip market is occupied by multinational companies, and the share of domestic IGBT products is less than 5%.

In short, IGBT is a wall that automotive chips cannot avoid.

The gap between Chinese automakers and Tesla will eventually be reflected in this small chip. Even so, facing the challenges of the "collective cross-border" of consumer electronics giants and Tesla's self-developed chips, BYD, Huawei and other companies still choose to rise to the challenge, continue to increase investment, and strive to fill the gap in automotive chips.

Among them, Huawei has already entered the automotive chip field in a high-profile manner, with IGBT chips being its main direction. Even though Huawei is now facing the extension of the 5.16 ban and the red line that foreign companies using US chip manufacturing equipment must obtain export licenses, its hardware and software foundation for building a smart car ecosystem is still gradually taking shape. The Balong, Kirin series chips and Hongmeng operating system are all Huawei's cross-border "car-making" masterpieces. Ren Zhengfei bluntly said: "Huawei chips are manufactured in accordance with L4 autonomous driving standards."

In addition, BYD, which is breaking the vertical closed system, is also "running into the market". On April 14, BYD's wholly-owned subsidiary Shenzhen BYD Microelectronics Co., Ltd. completed its reorganization, officially changed its name to BYD Semiconductor Co., Ltd., and is preparing for listing.

In 2020, the acceleration of domestic chip substitution has become a general trend, and the US ban will only accelerate the upgrading of this process. Only by making up our minds to achieve independent innovation can China's electric vehicles truly achieve sustainable development.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.