Foundries are ramping up their efforts in automotive chip production in preparation for a surge in semiconductors used in assisted and autonomous driving.

All of the major foundry vendors are scrambling to assemble the pieces and expand their process portfolios for automotive customers. The foundries are seeing a growing demand from automotive IC customers amid the push toward advanced driver assist systems (ADAS), electric/hybrid vehicles and traditional cars with more connectivity features. Automotive also is attractive for foundries because many devices don’t require leading-edge processes, meaning a large number of vendors can participate.

Automotive isn’t a new market for foundry vendors. In fact, many of them have participated in the sector for years. Fabless design houses with automotive chips outsource their production to the foundries. Even automotive IDMs, which have their own fabs, outsource some chip production to the foundries.

Until recently, though, automotive wasn’t a top priority for most foundries. “In the past, automotive was not considered a big money maker for the foundries,” said Jim Feldhan, president of Semico Research. “It took too long to qualify a process. There weren’t a lot of automotive customers, and it wasn’t a high-volume market when compared to computing or communications.”

The attitude has recently changed, however. “The recent demand for automotive electronics, such as ADAS, AI, sensor hubs and connectivity, has changed the foundry perspective,” Feldhan said. “The automotive market is wide open (for foundries now). TSMC has qualified their automotive process and others are doing the same. The automotive supplier landscape has also been transformed. Because of Artificial Intelligence and the ‘big brain’ requirements for autonomous driving, there is now a scramble for new designs from companies such as Intel, Nvidia and Qualcomm. Of course, Nvidia and Qualcomm are major foundry customers.”

Both automotive device makers and foundries are benefiting from a surge in demand for various devices in cars, such as analog, memory, MCUs, sensors and others. In fact, the average semiconductor content per car has grown from $62 in 1990, to $312 in 2013, and to $350 today, according to figures compiled from TI, IHS and others. By 2022, the figure is projected to reach $460, according to IHS. But even today, the chip content for hybrids is $600, while luxury models are hovering around $1,000, according to McKinsey.

In total, the automotive semiconductor market is expected to reach $41.7 billion in 2017, up 11% over 2016, according to Semico. In 2016, the automotive IC market grew 8.1% over 2015, according to Semico. The figures include power discretes, sensors and optoelectronics.

Still, the automotive IC market represents a small percentage—roughly 10%—of the overall IC market. It pales in comparison to the smartphone chip market. “Keep in mind that 100 million vehicles are sold each year compared to 2 billion cellphones,” Feldhan said.

Automotive represents a small but growing business for foundries. Some foundries have seen their automotive businesses grow from zero a decade ago to about 5% to 10% of their overall sales today. Others have a larger percentage mix in automotive.

But foundries face some challenges in automotive. The requirements are rigid, while the product qualification process remains arduous and expensive. And competition is fierce.

By: DocMemory
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