Under the influence of "chip shortage" in the past few years, countries seek to strengthen semiconductor production. For example, the European Commission will allocate 15 billion euros for public and private semiconductor projects by 2030. In the past two years, information about the expansion of production by major car chip manufacturers has come one after another, and the Never-ending “Chip War” Stirs the Car Chip Manufacturers To Expand Their Production.
The automotive industry has witnessed a surge in demand for vehicle electronics in recent years. As vehicles become more technology-driven, the need for advanced features such as entertainment systems, driver assistance systems, and autonomous driving capabilities has increased. As a result, the demand for car chips has surged, creating tension among chip manufacturers as they compete for the market share.
The never-ending "chip war" has driven car chip manufacturers to expand their production capacity to meet the increasing demand. One of the leading players in the industry, Intel, recently announced an investment of $20 billion to build two new chip-making factories in Arizona, USA. The move will boost the company's production capacity and investment in the automotive industry.
Similarly, semiconductor company Infineon has announced a $1.6 billion investment in expanding its manufacturing plant in Villach, Austria, to meet the rising demand for car chips. The expansion will enable the company to double its production capacity at the facility by 2026.
Also a chip giant, Texas Instruments, held a groundbreaking ceremony for a 12-inch semiconductor chip factory in Sherman, Texas, in mid-2022. The $30 billion investment includes four chip factories and is expected to create as many as 3,000 direct jobs. The first chip factory at Sherman's new base will be put into operation in 2025.
As the world's largest manufacturer of dedicated analog chips and power conversion chips, STMicroelectronics is also a supplier of industrial semiconductors and set-top box chips and is rooted in discrete devices, mobile phone camera modules, and automotive integrated circuits. STMicroelectronics said that the company plans to build a new factory in Italy and create about 700 new jobs. The European Commission has said it has approved 292.5 million euros for the project.
The pandemic has further accelerated the demand for vehicle electronics, as more people rely on personal cars for transportation due to the fear of contracting the virus through public transportation. According to a report by Allied Market Research, the global car chip market is expected to reach $56.24 billion by 2027.
The increasing demand for car chips has also led to a shortage in the market. The shortage has affected the production of vehicles and led to an increase in prices, which has further intensified the competition among chip manufacturers. Major automakers such as General Motors, Ford, and Volkswagen have been forced to temporarily halt production due to the chip shortage.
To overcome the shortage, automakers have started to prioritize the production of high-profit margin vehicles, such as pickups and SUVs, which require fewer chips. However, this has led to a shortage of chips for lower-priced vehicles, affecting the manufacturing output of automakers.
The never-ending "chip war" among car chip manufacturers has triggered a shift towards vertical integration, where companies are acquiring other firms or forming alliances to secure their supply chain. For instance, in March 2021, Intel announced the acquisition of self-driving technology company Mobileye, while Honda and General Motors formed an alliance to jointly develop electric and autonomous vehicles.
In conclusion, the increasing demand for vehicle electronics has stirred car chip manufacturers to expand their production capacity. However, the shortage of chips in the market has intensified the competition and led to a shift toward vertical integration. As the automotive industry becomes more tech-driven, the "chip war" is expected to continue in the foreseeable future.
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