In recent years, the rapid development of intelligent connected vehicles has driven a surge in chip demand. However, due to factors such as the pandemic, the chip supply chain has been repeatedly impacted, and the "chip shortage" has become one of the important factors constraining the development of the automotive industry.

　　In September this year, two US chip manufacturing giants, NVIDIA and AMD, were restricted from exporting GPU computing chips A100, H100 and MI250AI to China. Commenting on the reason, Yu Kai, founder and CEO of Horizon Robotics, said that GPU chips are crucial for training AI systems, which is why they are targeted at this critical point.

　　In fact, the supply-cut alarm for GPU chips has been sounded at least three times. As a result, a race among domestic chip companies for supply assurance and substitution has quietly begun.

　　All-Category Shortage Comes to an End

　　Structural Shortage Persists

　　Recalling how automotive chips were in short supply in 2021, Wang Shengyang, chairman of Novosense Microelectronics, said in an interview with Securities Daily, "A chip shortage of this scale has not occurred for a very long time."

　　Wang Shengyang said the severe supply-demand imbalance in 2021 mainly stemmed from three reasons: first, the chip industry chain underwent a process transition from 12-inch to 8-inch wafers over the past two years, during which structural shortages appeared; second, geopolitical tensions and recurring pandemic waves impacted the chip industry; third, the rapidly growing demand from the new energy industry far exceeded expectations.

　　Indeed, as Wang Shengyang said, under the trends of electrification and intelligence, chip demand has increased substantially. The automotive chip demand brought by electrification is about twice that of traditional fuel vehicles. In the future, as L4 and L5 autonomous driving technologies are deployed, the additional semiconductor demand could be 8 to 10 times that of traditional non-intelligent vehicles.

　　When discussing the current automotive chip supply situation, Wang Shengyang noted that last year's "chip shortage" was an across-the-board shortage, with all categories and supply chain links under-supplied. This year, however, the shortage has shown structural differentiation, with situations in areas such as consumer electronics and industrial communications largely improved. Currently, high-voltage BCD and power devices remain relatively scarce.

　　Zhang Qiang, chairman of SemiDrive Technology, agreed: "The automotive chip shortage began in August 2020 and is currently gradually easing. However, MCUs, power chips and SerDes interface chips remain in short supply, while SoC system-level chips are tight but still available."

　　This year, vehicle production cuts have improved significantly. According to statistics from automotive industry data forecasting firm AFS, global vehicle production was cut by 10 million units in 2021, with China accounting for nearly 2 million. According to the latest data, cumulative global vehicle production cuts are expected to reach about 4 million units by the end of this year.

　　The automotive industry chain is closely interlinked, and recurring structural shortages affect vehicle production no less than an all-category shortage. "The current shortage of MCUs, power chips and interface chips will leave the entire industry chain incomplete," Zhang Qiang said.

　　Supply-Cut Pressure Persists

　　Domestic Chips Rise Strongly

　　Although demand and conflicts coexist, so do challenges and opportunities. Under the "chip shortage", the domestic chip field has become a rich mine to be tapped.

　　"The chip business requires a very large team, and automakers can hardly afford to build a complete chip product chain. Therefore, chip companies and automakers will form cooperative partnerships rather than pure supply chain relationships. Deep collaborative R&D will also enable rapid improvement of certain technologies." Zhang Qiang believes that with the wide variety of automotive chips, the industry needs more specialized chip companies.

　　Regarding the impact of this supply cut, Zhang Qiang said it will have some impact on servers and L4/L5 autonomous driving, but limited impact on the overall automotive industry.

　　2015 marked the first year of domestic smart vehicle development, when smart vehicle components began to be mass-installed, raising vehicles' demand for chip computing power. Later, Qualcomm, through its merger with NXP, transplanted its advantages in mobile phone chips to the automotive sector. Leveraging brand effects, marketing efforts and design-win projects, it gradually established and consolidated its dominant position in the automotive field. Today, the Qualcomm 8155 chip needed for smart cockpits and the NVIDIA Orin platform needed for autonomous driving have become the go-to choices for domestic automakers.

　　Zhang Qiang believes that in the future there cannot be only one oligarchic enterprise in the automotive chip field. China is actively promoting chip development, and domestic chips have greater advantages in information security. Meanwhile, automakers will also have local supply chain needs, so domestic chip companies will inevitably develop rapidly and gradually catch up.

　　According to Tianyancha data, in the first half of 2022, China added 30,800 new chip-related enterprises.

　　If the rapid rise of new energy vehicles can be called "changing lanes to overtake", then the growth of domestic chips can be described as "flourishing toward the sun". "Domestic substitution has developed well in the past two years. In this relatively favorable industrial environment over the past two years, many chip companies seized the opportunity to enter the automotive industry chain," Wang Shengyang said.

　　In Wang Shengyang's view, while domestic chips are rapidly entering the automotive industry chain, they also face many challenges, concentrated on product reliability. "Chip makers that previously focused mainly on consumer electronics and industrial applications, upon entering the automotive field, are required to quickly build a complete product development and quality assurance system that meets automotive-grade requirements, from R&D to mass production to large-scale supply. The difficulty is imaginable."

　　Wang Shengyang believes that as domestic chips rapidly complete introduction and application, the "chip shortage" will be alleviated. Next, domestic chip makers represented by Novosense need to further optimize costs. In addition, for future applications and key customers, they should engage in deep collaboration on product definition and development, rather than one-way introduction merely substituting existing demand.

　　It is worth mentioning that as a global highland for intelligent vehicle technology R&D and deployment, beyond chips, China's automotive industry also faces diverse and complex industrial development issues. "If the automotive industry's problem of lacking both chips and operating systems is not solved, we cannot go fast or far." Miao Wei, deputy director of the Economic Committee of the National Committee of the Chinese People's Political Consultative Conference, said in a recent public speech that in the past few years, automakers have deeply recognized how chip shortages constrain development, but most have not yet realized that the absence of operating systems is a more fatal problem.

　　Miao Wei pointed out that the development of the smartphone industry shows that without an operating system, no matter how powerful the chips are, it is like building a high-rise on sand. Once an operating system ecosystem forms, it follows the law of the jungle - the winner takes all. "The next three to five years are a critical window for the development of the automotive operating system ecosystem. We should strive to create an independently controllable, open-source, and ideally free operating system through three years of effort."