The impact of the shortage of passenger car chips on the automotive industry continues to spread, and China's automotive production has also been greatly affected, which needs to be actively dealt with in many ways.

As the largest market for new car production and sales in the world, China has a mature automobile industry chain. The urgent need for chips once again highlights the urgency and necessity of the independent control of the supply chain of the industrial chain. Chinese enterprises must strive to break the situation that high-end core components for vehicles are controlled by others.

The impact of chip shortage on the automotive industry has spread from the public to more car companies around the world. Recently, Ford, Fiat, Chrysler and other auto companies announced that some factories were temporarily shut down, and Volkswagen, Toyota, Honda, Nissan and other auto companies also launched a global production reduction plan.

Chenshihua, Deputy Secretary General of the China Association of automobile manufacturers, said that the shortage of passenger car chips in China began in late December 2020, which has a great impact on the production in the first quarter of 2021, and may have an impact on the second quarter, which needs to be actively dealt with in many ways.

Automobile production is forced to "step on the brakes"

On January 8, Ford announced that its production line in Kentucky was forced to stop production due to a shortage of semiconductor chips.

"The epidemic has affected the supply of chips and related parts." Honda also launched a production reduction plan to reduce the production of civic and accord cars in North America. It is reported that Honda may cut the production of tens of thousands of cars before March this year.

In addition to reducing the production of the full-size Tantu pickup truck produced by the Texas assembly plant in the United States by about 40%, a production line of GAC Toyota, a joint venture of Toyota in southern China, has also recently announced the suspension of production, which is mainly responsible for the production of Camry, c-hr and other models. However, as of press time, production had resumed, but was told that production capacity had been compressed.

In December last year, Volkswagen publicly said that due to the shortage of semiconductor chip supply, it would adjust its production in China, North America and even Europe, and began to implement it in the first quarter of this year. In response to the news that the production of Jetta models in FAW Volkswagen Chengdu plant has been significantly reduced due to the shortage of chips, Volkswagen China said that it is closely monitoring the development of the situation and optimizing the resource allocation nationwide, hoping to fill this gap in the next few months.

According to insiders, in the face of the lack of "cores" that cannot be solved in the short term, car companies have to take "selective" production reduction measures, that is, giving priority to ensuring the demand for high-end models and popular models with large profits. For example, Volkswagen's response in China is to take the lead in reducing the production of low-cost models and give priority to meeting the high-end needs of its high-end brands and best-selling models.

"Although some car companies will create a gap in the production capacity of some models, not all cars are no longer produced. Now there are many competitive products in the market, and consumers can choose similar models from other car companies." As for the impact of the domestic end market, cuidongshu, Secretary General of the national passenger car market information joint committee, believes that the impact of the decline in production is limited. "At present, many domestic car enterprises still have models in stock. Car enterprises can reduce the impact as much as possible by adjusting production plans, and can also remove part of the inventory.".

In response to the price rise that consumers are worried about, he said that in the past two years, China's auto market has entered a period of adjustment, with fierce competition among auto companies and intensifying price war. In the mainstream joint venture or independent brand market, even if some car enterprises have insufficient supply of some models in the short term, there will be no obvious rise in terminal prices. Otherwise, there will be no competitive advantage.

Chip supply shortage caused by multiple factors

Automotive chips are roughly divided into three categories: the first category is responsible for computing power, specifically processor and controller chips, such as central control, ADAS (advanced driving assistance system) and auto drive system, as well as engine, chassis and body control; The second type is responsible for power conversion, which is used for power supply and interface, such as IGBT (insulated gate bipolar transistor) power chip for EV; The third category is sensors, which are mainly used for various radar, airbag and tire pressure detection.

According to reports, this chip shortage is mainly divided into two types, one is MCU (micro control unit) applied to ESP (electronic stability control system). In the Chinese market, generally, models with more than 100000 yuan, especially medium and high-end models, will be equipped with esp. It is a part of the vehicle active safety system and can play the role of preventing side slip. The other is MCU in ECU (electronic control unit). ECU is widely used in various automobile control systems and is called "driving computer".

The China Automobile Association said that affected by the COVID-19 in Europe and Southeast Asia, major chip suppliers have successively reduced production capacity or shut down factories, further aggravating the imbalance between chip supply and demand, leading to the risk of chip shortage or even supply interruption in some downstream enterprises. The recovery of China's auto market exceeded expectations, which also further promoted the growth of chip demand.

In addition, driven by the development of 5g technology, the demand for chips in the consumer electronics field is increasing rapidly, and the chip capacity is facing challenges, seizing the capacity of some automotive chips.

More importantly, with the continuous improvement of automobile electrification, intelligence and networking, the single vehicle value of automotive chips continues to increase, driving the global demand for automotive chips faster than the growth rate of vehicle sales, which also directly caused the imbalance between supply and demand of chips. "Chips are becoming more and more important to cars. In the future, cars will surpass PCs and mobile phones and become the largest demander of chip enterprises." Yu Kai, founder and CEO of Beijing horizon robotics research and Development Co., Ltd., predicted that "the scarcity of automotive chips will continue in the future."

Chinese car chip enterprises need to be stronger

As the largest market for the production and sales of new cars in the world, China has a mature automotive industry chain, but an unavoidable fact is that high-precision core components for vehicles such as chips are still in the hands of foreign-funded enterprises. The shortage of chips once again highlights the urgency and necessity of the independent control of the industrial chain supply chain.

Relevant data show that in 2019, the import rate of automotive chips in China exceeded 90%, and key system chips such as advanced sensors, on-board networks, three electric systems, chassis electronic control, ADAS, automatic driving, etc. are excessively dependent on imports. Among them, the value of IGBT in electric vehicles is second only to power batteries, more than 98% of which need to be imported from abroad, and the price is 1.2 to 1.8 times that of foreign countries.

"This chip shortage also made many car companies realize that they should not rely too much on overseas in the supply chain, but should also find suitable chip suppliers in China, which is also an opportunity for our independent chip R & D manufacturers." Yu Kai said that since the launch of horizon journey 2, China's first vehicle specification AI chip designed and developed by horizon, it has successfully signed a two digit fixed-point model for mass production, "160000 vehicles were delivered to consumers with horizon chips last year, and 1million vehicles will be delivered this year".

China's demand for automotive chips with autonomous and controllable technology is undoubtedly strategic. " Zhaofuquan, President of the Institute of automotive industry and technology strategy of Tsinghua University, said that on the one hand, the state should provide practical and powerful policy and resource support to relevant enterprises; On the other hand, Chinese car chip enterprises should not be limited to supplying local car enterprises, but should actively expand and strive to enter the supply system of foreign car enterprises, and cooperate with international top car enterprises, which will help to accelerate the improvement of the strength of Chinese car chip enterprises.

Although Chinese chip enterprises still have a long way to go before entering the global automotive supply chain on a large scale, dynamically, the participation of Chinese chip enterprises is increasing, and it is only a matter of time before the proportion of their chip business is leveled or even surpassed that of the vehicle business. Zhao Fuquan firmly believes that through joint efforts of various parties, China will definitely cultivate a strong car chip enterprise.