At the 27th Automotive Electronics Congress in Ludwigsburg, Germany, Paul de Bot, General Manager of TSMC Europe, shared how the world's most advanced foundry views the automotive chip sector.
As reported by German media All-Electronics, the TSMC general manager indicated that different laws apply in the semiconductor industry compared to the automotive sector. Noting the capital-intensive nature of the chip industry and the necessity to maintain high fab utilization rates, de Bot explained that in the event of order cancellations, foundries will immediately seek replacement orders from other customers to keep production facilities utilized. "It is not possible to reserve idle capacity for the auto industry," said the TSMC general manager.
He also pointed to the long time taken to manufacture, package, and test the chips which complicate the process to adjust order quantities in a timely and flexible manner. It can take up to six months from the start of production to delivery to the car manufacturer's assembly line. Therefore, proactive planning and control of order quantities are essential.
In the speech titled "A foundry perspective on the fast-growing automotive semiconductor market", de Bot highlighted the 7nm-based Automotive Design Enablement Platform (ADEP) introduced by TSMC in 2020. ADEP assists in evaluating semiconductor and manufacturing technology, design flow, and the actual manufacturing process. The platform also includes an ecosystem of relevant IPs for automotive applications to ensure various specific standards.
"Automotive means learning," said the TSMC Europe general manager. Before a chip manufacturer ventures into the production of automotive ICs, they must master every detail of their technology. "We only start with automotive chips after processing about a million wafers," de Bot said.
Automotive chips alone do not fill semiconductor fabs. One aspect that customers from the automotive industry should keep in mind is the revenue structure of semiconductor manufacturers. TSMC generates the majority of its revenue from advanced technology nodes. While automotive ICs used to be manufactured in mature process nodes, nowadays there are some auto chips moving toward advanced process nodes close to those used for smartphone chips.
At TSMC's first-quarter 2023 earnings call, the foundry indicated that automotive application accounted for 7% of its Q1 revenue, noting that automotive demand is steady, despite showing signs of softening into the second half of 2023.
In terms of process nodes, the TSMC general manager observed that the gap between automotive chips and high-end consumer-grade chips has increasingly shortened. For instance, the auto industry introduced 5nm node back in 2022, just two years after 5nm entered volume production. By the end of this decade, the automotive industry will consume 15% of global semiconductor production, compared to the current 10%.
"The semiconductor industry requires stable, long-term sales planning," said de Bot, who suggested the automotive industry to switch to more advanced process nodes as early as possible in light of the shifting manufacturing capacities. To do so, de Bot suggested companies in the auto supply chain to find ways and opportunities to adopt more advanced nodes faster.
Finally, the TSMC general manager also recommended the creation of stockpiles as buffers against supply chain fluctuations.
