The microchip crisis it is one of the many stones that have appeared in recent years in the path of car manufacturers. Logically, manufacturers are not waiting for the situation in Taiwan, the world’s largest semiconductor manufacturer, upgrade and make up for lag.
Intel, for instance, it was inundated with requests from brands to have the microchips manufactured for them. However, it will not. Why doesn’t Intel want to enter that market? As Intel CEO Pat Gelsinger explained to Fortune, because it doesn’t pay off.
Automakers use a technology considered obsolete in the consumer electronics industry. Which partly explains why car brands have to have suppliers in Taiwan, where producing the kind of semiconductors they no longer want in consumer electronics can still be profitable. And it also explains Intel’s response.
Thus, car brands asked Intel to invest in new semiconductor production capacity with designs that were state-of-the-art at best when the first iPhone was launched. Apple.
“It doesn’t make any economic or strategic sense,” Gelsinger said. “Instead of spending billions on new ‘old’ factories, let’s spend millions to help migrate designs to modern ones.”
It is nothing new that the automotive industry is a heavy industry, with very long reaction times, especially compared to consumer electronics. If you look in the mirror of mobile phones, car brands are like slow dinosaurs.
For example, since its launch in 2007, there was a new iPhone every year. And the commercial life of each new generation does not exceed four years. Four years on the car is about when a model experiences its first update. The commercial life of a car is between eight and ten years, even longer in some cases.
Auto Industry Times Still Slow
But it is also true that if the automotive industry is so slow to adopt novelties and new technologies it has its reasons. As Thomas Coughlin of the Institute for Electronic and Electrical Engineers recalls in Jalopnik:
“People expect their cars to last more than 10 years, while many five-year consumer electronics products are often considered almost obsolete. That’s why auto parts, including some chips, are often built using older, proven technology, rather than the latest technology available. “
More specifically, it means that car manufacturers use different types of chips that are usually much larger than those used in consumer electronics. They are often used for simple tasks such as raising and lowering the windows or controlling the climate control.
From a single wafer, the semiconductor manufacturer can make more microchips, if they are smaller, than if it has to produce larger chips. The problem for car brands is that the semiconductor manufacturer prefers to make and sell more chips from a single wafer.
Additionally, miniaturization makes supply easier to maintain and enables chipmakers to get a higher return on their investments. And that’s why they don’t want to invest in renewing machines and processes to make fewer chips in relation to the wafer.
But that is not the only reason. In principle, each component of a car has to be validated and tested to ensure that it works correctly, that it will endure the passage of time (at least 10 years) and that it will work well in conjunction with the rest of the components and equipment of the car. If these tests are already long and expensive to perform, manufacturers sometimes have to turn to external validation and testing companies.
In the end, as the electric car becomes more and more present in the market and new advances are generated in the systems of assistance to the ADAS type driving, we may see car manufacturers reach out to strategic agreements with semiconductor manufacturers, as they have now done with battery manufacturers. After all, the industry already knows that in the future, the software it will take most of the investment.