With a new wave of smart energy vehicles entering the market, competition in the global automotive semiconductor industry is changing. In light of this trend, WPG Holdings, a leading global semiconductor component distributor, together with its subsidiaries—WPI Group, SAC Group, AIT Group, and YOSUN Group—successfully held the Automotive Technology Application Exhibition in Shanghai and Shenzhen, China. The exhibition provided insight into the changes occurring in the industry's supply-and-demand chain and highlighted the company's main strategies with regard to horizontal integration of chip manufacturers and vertical integration of automakers to optimize up- and downstream cooperation in the automotive semiconductor supply chain. These strategies will significantly maximize chip supply efficiency and create a win-win situation among automakers, chip manufacturers, and WPG Holdings.
Evolving competition in the automotive chip market
Eric Ho, Chief Marketing Officer of WPI Group, pointed out that smart energy vehicles are very diverse, creating demand for differentiated components. Additionally, the continuous upgrading of component specifications has prompted automakers to require a wider range of chip solutions. Kevin Lin, Vice President of CN Business Group at AIT Group, explained that in the past automakers mainly purchased components that complied with vehicle regulations. With the development of smart and electric vehicles, however, demand for components that do not need to comply with vehicle regulations has been growing in the past two years. As a result, chip demand among automakers and tier-1 suppliers has become more intricate.
Due to this development, as well as an acute awareness of the importance of stable chip supply following the disruptions of the COVID-19 pandemic, the industry's chip procurement methods are undergoing changes. Andrew Man, Chief Marketing Officer of SAC Group, explained that some automakers have started to bypass tier-1 suppliers and directly collaborate with MCU suppliers to shorten the design process, ensure stable supply, and achieve cost reduction goals.
In response to increasing demand and different procurement patterns of downstream customers, upstream chip manufacturers have begun consolidating in order to expand product lines and increase chances of winning orders from automakers. Indeed, the entire automotive semiconductor industry supply chain is experiencing drastic change.
Optimizing supply chain to create a win-win situation
In order to continue its role connecting up- and downstream sectors in the industry, WPG Holdings is integrating the resources and capacities of its four subsidiaries to promote two integration strategies and optimize cooperation models in the global automotive chip supply chain.
Integrating horizontally with chip manufacturers and deploying diversified solutions
Eric Ho stated that automotive chips have a wide range of applications and that WPG Holdings has been actively involved in many of them for more than 10 years, providing customers with comprehensive solutions. Among WPG Holdings' 250 product lines, more than 50 are automotive-related, covering almost all automotive applications, including ADAS, controllers, EIC systems, passive components, connectors, and others.
Among YOSUN Group's nearly 60 product lines, 26 are related to automotive chips, with extensive technology coverage, said Jerry Chen, CEO Special Assistant at YOSUN Group. He pointed out that in response to the booming development of the new energy vehicle market in recent years, YOSUN Group has initiated an EV project to meet the changing needs of the market and customers. By consolidating the EV strategies of the sales, PM, FAE, and solution teams, as well as combining various technologies and chip requirements inside and outside the vehicle, YOSUN Group provides customers with rich and complete solutions. In addition, with the global service layout of WPG Holdings, the results that the company has achieved so far are remarkable. It has gained widespread recognition from automakers, customers, and the market. This has underlined the value of WPG Holdings to automakers, tier-1 and tier-2 manufacturers, and OEMs in the EV market.
Integrating vertically with automakers and tier-1 manufacturers to provide customized technical services
Andrew Man stated that SAC Group established an automotive electronics business team seven years ago and a technical team five years ago. Today, SAC Group has nearly 100 employees who are well-versed in the automotive industry. Among all its subsidiaries, WPG Holdings now boasts up to 300 engineers. These engineers not only have ISO-26262 certifications but also possess special skills and certifications related to MCU. They delve deeply into the needs of automakers and tier-1 manufacturers and provide customized technical services.
Using AIT Group's business as an example, Kevin Lin further explained that it has many tier-1 customers, each with different requirements. Therefore, AIT Group leverages the collective strength of WPG Holdings to deliver optimal services to automakers and tier-1 suppliers through diversified solutions and customized technical support capabilities. This ensures that all the processes of the chips handed over by WPG Holdings can be completed smoothly and efficiently, from assembly to components and complete vehicles.
As the automotive industry is transforming, WPG Holdings continues to serve as a critical distributor, aiming to provide automakers with the most suitable and diverse chip solutions and services, help chip manufacturers establish clear advantages in the changing market environment, and gain favor from automakers.
