Automative chips in spotlight as EV popularity booms

Electric vehicles' popularity will continue to boost demand and increase prices for automotive chips, as EVs are equipped with more chips than diesel cars. Market tracker Omdia predicts that global sales of automotive chips will grow 70 percent to...

Hyundai Motor Group Executive Chair Euisun Chung, center left, and Intel Corporate Vice President Ann-Marie Holmes, center right, pose for a photo at Intel's semiconductor complex in County Kildare, Ireland, on Friday. [HYUNDAI MOTOR]

Electric vehicles' popularity will continue to boost demand and increase prices for automotive chips, as EVs are equipped with more chips than diesel cars.

Market tracker Omdia predicts that global sales of automotive chips will grow 70 percent to reach $129.8 billion (169 trillion won) in 2030 from this year’s $76 billion.

Automotive chips were previously sidelined due to low profitability. The average unit price of automotive chips was only $2 and chipmakers were hesitant to enter the market due to stringent safety standards. As automobile functions are directly linked to consumer safety, automotive chips had to meet higher quality standards regarding defaults and recalls.

Back in 2021, TSMC’s global sales proportion of automotive chips only took up 3 percent, while that of smartphones was 51 percent.

The tables were turned in the market with the advent of electric vehicles and autonomous driving technology.

The role of key chips such as microcontrollers, used to control electronic devices in cars, largely expanded with the advent of Tesla. The auto chips were “reborn” to become a computerized system made up of application processors and operating systems. The development of self-driving technologies led to the swift growth of auto chips’ functions to support central processing units (CPU), image sensors, and infotainment systems.

Auto chips' growing importance is compelling global chipmakers such as TSMC and Intel to focus on the market. TSMC is building a $7 billion chip foundry to produce auto chips and image sensors in Kumamoto, Japan, to start production by the end of 2024. The Taiwanese chipmaker is also building a 10-billion-euro ($11 billion) chip plant in Dresden, Germany. Taiwanese foundry company PSMC also announced plans to build an auto chip plant in Japan last week.

Intel, which acquired leading advanced driver-assistance systems provider Mobileye in 2017, is making large-scale investments to drum up more auto chip sales. The global chipmaker's move prompted Korean car manufacturers to pay particular attention to their auto chips. For instance, Hyundai Motor Group Executive Chair Euisun Chung visited Intel Ireland’s Leixlip campus that day to inspect the chipmaker's advanced system-on-chip production line at the facility where Hyundai's fifth-generation infotainment system and central processing units for its Genesis G90 model and Kia EV9's advanced driver assistance systems are produced.

Demand for automotive semiconductors is expected to nearly double to $115 billion by 2030, and demand for processors will jump to 20 percent of the market from the current 4 percent, Intel’s chief executive Patrick Gelsinger predicted at the company’s annual investor meeting in February 2022.

“More chipmakers will likely pool their resources to invest into automotive chips as they don’t expect to find new growth engines from smartphones,” eBest Investment & Securities analyst Kim Kwang-soo said. “Demand for auto chips will grow from next year as EV batteries will need to be replaced from 2025.”

Samsung Electronics will also enter the auto chip market and start its foundry service to produce next-generation semiconductors silicon carbide and gallium nitride products from 2025 onwards.

“Domestic product and manufacturing portfolio for auto chips is very weak compared to our other top industries in semiconductor and automobiles,” an industry source said. “We need to raise competitiveness in the high value-add industry of auto chips.”

BY LEE HEE-KWON [lee.jaelim@joongang.co.kr]