New Delhi, Dec 7 (IANS) The deepening global chip shortage, along with trends such as electrification and autonomy, will force five out of 10 top automotive original equipment manufacturers (OEMs) to design their own chips by 2025, a new Gartner report said on Tuesday.
As a result, it will give them control over their product roadmap and supply chains, as automakers worldwide struggle to meet the demand owing to supply constraints arising due to chip shortages.
“Automotive semiconductor supply chains are complex. In most cases, chip makers are traditionally tier 3 or 4 suppliers to automakers, which means it usually takes a while until they adapt to the changes affecting automotive market demand,” said Gaurav Gupta, research vice president at Gartner.
“This lack of visibility in the supply chain has increased automotive OEMs’ desire to have greater control over their semiconductor supply,” he said in a statement.
In addition, the on-going chip shortage is primarily with mature semiconductor technology node devices that are fabricated on smaller 8-inch wafers, where capacity expansion is difficult.
“The fact that the automotive industry has been conservative in qualifying older devices on larger wafer sizes has also hurt them and will likely motivate them to take chip design in-house,” said Gupta.
Semiconductor chip foundries, such as TSMC and Samsung, have provided access to cutting-edge manufacturing processes, and other semiconductor vendors have given access to advanced intellectual property that makes custom chip design relatively easy.
“We also anticipate that the lessons learned from the microchip shortage will further drive automakers to become tech companies,” Gupta added.
The report also noted that the market for new vehicles would remain flat or even decline in the face of rising prices.
Meanwhile, automakers will push new services and even upgrades of equipment and computers to extend the lives of existing vehicles.