The global semiconductor market is suffering from a supply shortage this year. In particular, automotive semiconductors are facing a situation where governments are trying to persuade the foundry industry to alleviate the supply shortage. The same is true of Samsung Electronics, the world’s second-largest foundry company. While the quantity of orders received from major customers is already overflowing, it is receiving love calls from many automakers.
■ Due to shortage of automotive semiconductors, the finished car industry suffers from production disruption
On the 4th, GM, a US automaker, announced plans to suspend operations at three factories in the US due to a shortage of semiconductors for vehicles, and to cut production in Korea by 50%. Major automakers such as Volkswagen, Audi, Ford, Toyota, and Honda have also cut production for the same reason.
In the semiconductor industry, production cuts by automakers are expected to continue until the third quarter of this year due to such shortage of semiconductors. This is because TSMC, the world’s number one foundry, and even UMC (the world’s fourth largest in the world), which has a high proportion of automotive semiconductor production, have difficulty in increasing the production of automotive semiconductors due to lack of free space.
The governments of the United States, Germany, and Japan are requesting these companies to increase production through the Taiwanese government, but TSMC and UMC are known to have expressed their position that it is difficult to convert capacity and invest in capacity expansion due to poor profitability.
A senior official in the semiconductor industry said, “As the problem becomes serious, automakers are in direct contact with semiconductor companies to secure stock. However, as production is concentrated mainly on PC semiconductors, which have improved profitability due to the massive spread of Corona 19, they will be producing semiconductors for vehicles. There is no room to be able to,” he said.
“Moreover, major automotive semiconductor manufacturers such as NXP, Infineon, and ST are demanding price increases from automakers.” “He added.
■ Samsung is faced with a’cross-border opportunity’ with automakers
Samsung Electronics has been challenging to enter the automotive semiconductor market several times, but it has not made much of it. This is because the traditional powers of the automotive semiconductor market such as NXP Semiconductors, ST Microelectronics, Texas Instruments and Renesas were so strong.
However, the industry is analyzing that Samsung Electronics will gain an opportunity to expand its presence in the automotive semiconductor market due to the recent semiconductor supply and demand shortage, and to strengthen the partnership with automakers.
The reason is that electric self-driving cars, which automakers are paying attention to as a future food, need a high-performance’processor’ that can process vast amounts of information faster and more accurately than before.
Samsung Electronics currently possesses the technology that can stand shoulder to shoulder with TSMC in ultra-fine process technology. At the end of last year, after TSMC, the world began producing application processors (AP) based on the 5 nanometer (1 nanometer = 1/10 billion meters) process, the second in the world, and research and development of 5 nanometer processors for electric autonomous vehicles. (R&D) is also in progress.
An official in the semiconductor industry said, “Semiconductors that are currently in short supply are mainly legacy (analog, MCU, etc.) products, but due to the overall supply and demand shortage in the market, automakers have begun to worry about high-performance processors for electric vehicles.” “It is the only company in the world with TSMC that can mass-produce 5 nanometers, but also has the ability to design and manufacture high-performance processors based on this.”
Furthermore, “In the related market, traditional strong players such as NXP are taking the lead, but in the recent situation, Samsung Electronics can establish a cooperative system with automakers to take a glimpse of new opportunities.” We know that we are seeking various strategies as much as we see it as a food for the future,” he added.
■ Considerable Samsung Electronics… the key is strategy
Samsung Electronics is struggling with new investments in domestic and overseas production facilities in relation to the semiconductor shortage phenomenon. The reason is that it is difficult to digest the amount of semiconductors entrusted by automakers at the foundry line in operation right away.
The problem is when and where to invest. This is because even a simple expansion investment requires at least one year to be effective, and the Austin plant, which has excellent market access, has risks such as shutting down due to a power shortage caused by the recent cold wave.
Moreover, it is also burdensome that the scarcity of automotive semiconductors is causing inventory issues even in the mobile semiconductor market.
In this regard, Qualcomm recently held a conference call for 4Q 2020 results, saying, “In the fourth quarter of last year, Honor spun off from Huawei started to accumulate (semiconductor) inventory, and the supply of 8-12 inches for the foundries of Oppo, Vivo and Xiaomi is tight. We are in a hurry to raise the stock level as it closes,” he said.
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In response to the continuing shortage of semiconductor supply, major smartphone makers began preemptively stockpiling inventory.
An official from a market research firm said, “The most realistic way in the current situation is to support the supply of semiconductors for vehicles by cooperating with automakers, even small-scale, while Samsung Electronics produces the quantity of existing customers first.” In Texas, where there is a power outage caused by a cold wave, shortage of semiconductors for vehicles is expected to intensify in the future, so it is a good strategy to make an investment decision quickly.”