The global semiconductor shortage that plagued automotive chips from 2020 to 2022 has subsided, as electric vehicle (EV) demand in Europe and the US falls short of projections. While this eases immediate supply concerns, major industry players are reassessing their strategies amid new challenges.
Intel has postponed its planned EUR30 billion (US$33.3 billion) facility in Germany, which was set to be Europe's largest semiconductor initiative, citing financial constraints.
In a parallel development, Wolfspeed and ZF have indefinitely suspended their partnership on silicon carbide (SiC) components for EVs in western Germany, pointing to weak demand and financial limitations.
Industry adaptation and risk management
Despite these setbacks, Europe maintains an adaptable stance. Bosch, a leading tier-1 automotive component supplier, continues to emphasize semiconductor supply security while advocating for a measured approach. Though immediate automotive chip shortage risks have diminished, the industry requires ongoing vigilance regarding supply adequacy.
While current low automotive sector demand may prevent issues with advanced processes, the surging demand for advanced processors in the AI data center market could reshape their importance. However, the supply of mature large-size processors remains a critical concern. Bosch has concluded that risk mitigation requires avoiding single-source dependencies.
Strategic partnerships and regional autonomy
Bosch views share acquisition in TSMC's German fab as a strategic hedge against Intel's European withdrawal. The company's existing silicon carbide production capabilities provide additional security, even as it monitors new market entrants following the Wolfspeed-ZF partnership suspension.
Through collaboration with TSMC, Bosch, Infineon, and NXP can ensure local mature automotive process demands are met, according to supply chain sources. These partnerships extend beyond Europe, exemplified by NXP's arrangement with TSMC affiliate VIS in Singapore, where TSMC's licensing plays a crucial role. This interconnected network strengthens negotiating positions for future advanced process requirements.
Market dynamics and future outlook
The competitive landscape in SiC technology includes various tier-1 suppliers partnering with manufacturers, though the suspended Wolfspeed-ZF alliance has altered market dynamics. European power semiconductor manufacturers remain vigilant about Asian competition, industry sources note. As SiC material supply shifts from scarcity to surplus and prices decline, various supply chain segments may intensify competition with established players like Bosch.
The slowdown in EV market growth across Europe and the US may impact projected automotive chip demand, sources suggest. While economic fluctuations are inevitable, maintaining vigilance remains crucial. Additionally, geopolitical considerations necessitate establishing reliable local supply capacity, as Europe seeks to reduce dependence on Asian supply chains through increased domestic production.
