In 2021, total sales of new energy vehicles (NEVs including battery electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles) reached 6.473 million units, with annual growth rate reaching 122%, the highest growth rate since the development of vehicle electrification, according to TrendForce’s research. Battery electric vehicles (BEV) accounted for approximately 71.6% of total sales and plug-in hybrid electric vehicles (PHEV) accounted for approximately 28.1%, while the scale of fuel cell vehicles remained small.
Tesla ranked first among BEV brands with total global sales exceeding 930,000 vehicles and a 20.2% market share. SAIC-GM-Wuling ranked second, posting strong sales numbers for their low-priced mini electric vehicles in 2021. Other BEV brands such as Ora and Chery have also greatly increased sales performance on the backs of mini-vehicle products. The significance of this segment in the NEV market is considerable. On the whole, a reinvigorated BEV market has birthed a number of new brands that have further fractured market share. The concentration of market share among the top ten BEV brands dropped from 64.4% in 2020 to 57% in 2022, indicating an escalation of market competition.
BYD ranked first in PHEV sales with 273,000 vehicles sold in 2021, accounting for 15% of the market. Both BYD and seventh ranked Li Auto posted multifold growth, suggesting China’s reduced PHEV subsidy policy exerted minimum impact on the market. In addition to a number of luxury European brands holding their spots on the sales ranking, TOYOTA moved swiftly into fifth place while Jeep, a part of the Stellantis group and known for its performance cars, ranked 10th with the lion’s share of sales coming from the United States and Europe.
From a regional perspective, NEV sales in China once again exceeded half of the global total in 2021 while NEVs accounted for 19.3% of China’s overall auto market. TrendForce states, in addition to fierce competition, the Chinese market also includes numerous new brands, accelerated mass production, joint venture brands adjusting strategies, and overseas deployment of domestic brands targeting Europe, the Middle East, and Southeast Asia.
In addition, with the European Union strongly promoting electrification, the penetration rate of NEVs in several leading countries such as Germany and France is expected to reach 20~25% in 2022. In terms of the currently trailing US market, the Biden administration’s many policy incentives have focused the actions of brands and supply chains which include the introduction of ever-popular (in the U.S. market) battery electric pickups by a number of automakers. In addition, many new brands such as Rivian, Lucid Motors, Fisker, and Lordstown Motors have successively entered the mass production and assembly stage of vehicle manufacturing or plan to enter mass production in 2022, making the future of the U.S. electric vehicle market worth observing in terms of quantity and competition.
As the global trend of energy conservation and carbon reduction remains unchanged and automakers shift greater proportions of their product lines to electric vehicles, the total number of NEVs is forecast to exceed 10 million in 2022. However, the international situation is turbulent, and the Russia-Ukraine conflict has caused the price of crude oil to rise. In addition, Ukraine supplies neon gas for the semiconductor process and Russia is a producer of nickel ore. Nickel is a key material for electric vehicle batteries. Once the war heats up, the automotive industry will bear the brunt of rising costs and unstable supply chains, which are variables for the development of NEVs in 2022.
Intel officially confirmed on February 15 that it will acquire Israeli foundry Tower Semiconductor for nearly US$6 billion, and the deal will likely contribute to the growth of Intel’s foundry business if it reaches a successful conclusion, according to TrendForce’s latest investigations. Tower was 9th place in the global ranking of foundries by revenue for 4Q21 and operates a total of seven production sites across Israel, the US, and Japan. Tower’s foundry capacity in 12-inch wafer equivalents accounts for about 3% of the global total. The majority share of Tower’s foundry capacity is for 8-inch wafers, and Tower’s share of the global 8-inch wafer foundry capacity is around 6.2%. Regarding manufacturing process platforms, Tower offers nodes ranging from 0.8µm to 65nm. It has a diverse range of specialty process technologies for manufacturing products in relatively small quantities. Products that Tower has been contracted to manufacture are mostly RF-SOI components, PMICs, CMOS sensors, discretes, etc. As such, the Tower acquisition is expected to help Intel expand its presence in the smartphone, industrial equipment, and automotive electronics markets.
Although Intel undertook a series of business strategies to compete with TSMC and Samsung, IFS (Intel Foundry Services) has historically manufactured with platform technologies for processors such as CPUs and GPUs. Furthermore, competition still persists between Intel and certain foundry clients that require advanced processes below the 10nm node, such as AMD and Nvidia, which have long histories of developing server products, PC CPUs, GPUs, or other HPC-related chips. Intel’s preexisting competitive relationship with these companies may become a barrier to IFS’ future expansion because IFS will be relatively unlikely to attract them as customers.
Taking the aforementioned factors into account, TrendForce believes that the Tower acquisition will likely expand IFS’ business presence in the foundry industry through two considerations. First of all, the acquisition will help Intel both diversify its mature process technologies and expand its clientele. Thanks to advancements in communication technologies and an increase in demand for new energy vehicles, there has been a recent surge in demand for RF-SOI components and PMICs. Tower’s long-term focus on the diverse mature process technologies used to manufacture these products means it also possesses a long-term collaborative relationship with clients in such markets. By acquiring Tower, Intel is therefore able to address IFS’ limited foundry capabilities and limited clientele. The second consideration pertains to the indigenization of semiconductor manufacturing and supply allocations, which have become increasingly important issues in light of current geopolitical situations. As Tower operates fabs in Asia, EMEA, and North America, the acquisition is in line with Intel’s current strategic aim to reduce the disproportionate concentration of the foundry industry’s supply chain in Asia. As well, Intel holds long-term investments and operates fabs in both the US and Israel, so the Tower acquisition will give Intel more flexibility in allocating production capacities, thereby further mitigating risks of potential supply chain disruptions arising from geopolitical conflicts.
In addition to the aforementioned synergy derived from acquiring Tower, it should also be pointed out that Intel is set to welcome an upcoming partnership with Nuvoton. Tower’s three Japan-based fabs were previously operated under TowerJazz Panasonic Semiconductor, a joint venture created by Tower and Panasonic in 2014, with Tower and Panasonic each possessing 51% and 49% ownership, respectively. After Nuvoton acquired PSCS (Panasonic Semiconductor Solutions Co.) in 2020, Panasonic’s 49% ownership of the three fabs was subsequently transferred to Nuvoton. Following Intel’s Tower acquisition, Intel will now possess the 51% majority ownership of the fabs and jointly operate their production lines for industrial MCUs, automotive MCUs, and PMICs along with Nuvoton. Notably, these production lines also span the range of CIS, MCU, and MOSFET technologies previously developed by Panasonic.
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Although current semiconductor process technologies have evolved to the 3nm and 5nm nodes, SoC (system on a chip) architecture has yet to be manufactured at these nodes, as memory and RF front-end chiplets are yet to reach sufficient advancements in transistor gate length and data transmission performance. Fortunately, EDA companies are now attempting to leverage heterogeneous integration packaging technologies to link the upstream and downstream semiconductor supply chains as well as various IP cores. Thanks to this effort, advanced packaging technologies, including 2.5D/3D IC and SiP, will likely continue to push the limits of Moore’s Law.
While SoC development has encountered bottlenecks, EDA tools are the key to heterogeneous integration packaging
As semiconductor process technologies continue to evolve, the gate length of transistors have also progressed from μm (micrometer) nodes to nm (nanometer) nodes. However, the more advanced process technologies are not suited for manufacturing all semiconductor components, meaning the development of SoC architectures has been limited as a result. For instance, due to physical limitations, memory products such as DRAM and SRAM are mostly manufactured at the 16nm node at the moment. In addition, RF front-end chiplets, such as modems, PA (power amplifiers), and LNA (low noise amplifiers) are also primarily manufactured at the 16nm node or other μm nodes in consideration of their required stability with respect to signal reception/transmission.
On the whole, the aforementioned memory, and other semiconductor components cannot be easily manufactured with the same process technologies as those used for high-end processors (which are manufactured at the 5nm and 3nm nodes, among others). Hence, as the current crop of SoCs is not yet manufactured with advanced processes, EDA companies including Cadence, Synopsys, and Siemens (formerly Mentor) have released their own heterogeneous integration packaging technologies, such as 2.5D/3D IC and SiP (system in package), in order to address the demand for high-end AI, SoC architecture, HPC (high performance computing), and optical communication applications.
EDA companies drive forward heterogeneous integration packaging as core packaging architecture and integrate upstream/downstream supply chain
Although the current crop of high-end semiconductor process technologies is still incapable of integrating such components as memory, RF front-end, and processors through an SoC architecture, as EDA companies continue to adopt heterogeneous integration packaging technology, advanced packaging technologies, including 2.5D/3D IC and SiP, will likely extend the developmental limitations of Moore’s Law.
Information presented during Semicon Taiwan 2021 shows that EDA companies are basing their heterogeneous integration strategies mainly on the connection between upstream and downstream parts of the semiconductor supply chain, in addition to meeting their goals through chip packaging architectures. At the moment, significant breakthroughs in packaging technology design and architecture remain unfeasible through architectural improvements exclusively. Instead, companies must integrate their upstream chip design and power output with downstream substrate signal transmission and heat dissipation, as well as other factors such as system software and use case planning. Only by integrating the above factors and performing the necessary data analysis can EDA companies gradually evolve towards an optimal packaging architecture and in turn bridge the gap of SoC architectures.
With regards to automobiles (including ICE vehicles and EVs), their autonomous driving systems, electronic systems, and infotainment systems require numerous and diverse semiconductor key components that range from high-end computing chips to mid-range and entry-level MCUs. As such, automotive chip design companies must carefully evaluate their entire supply chain in designing automotive chip packages, from upstream manufacturers to downstream suppliers of substrates and system software, while also keeping a holistic perspective of various use cases. Only by taking these factors into account will chip design companies be able to respond the demands of the market with the appropriate package architectures．
According to TrendForce’s estimates, the global automotive market will sell 88.6 million vehicles in 2022, growing 10.1% YoY. This estimate includes deferred demand due to automakers’ production cuts in 2021. However, numerous uncertainties still bedevil the overall automobile market in terms of production while supply chain issues and the COVID-19 pandemic are expected to continue impeding automobile sales. In addition to supply chain issues, global inflation caused by rising energy and upstream raw material costs has also become a hidden economic burden in various countries. When the overall cost of living increases, the automotive market will experience the ensuing negative impact.
NEVs expected to exceed 8 million units in 2022 as competition intensifies
The penetration of electric vehicles into the automotive market is accelerating. The estimated combined sales of BEV and PHEV in 2022 will be in excess of 8 million units. Regulations also remain an important driving force for the market. There is fierce competition among automakers and automakers of disparate types and backgrounds have distinct future development priorities. However, accelerating capacity expansion is the primary developmental focus for all types of automakers. The years 2022-2024 will be the target for many emerging automakers to achieve mass production. This will further promote heightened competition in the electric vehicle market including in price, performance, technical specifications, etc.
In addition, after the rapid growth in sales of electric vehicles, TrendForce has articulated that retired batteries have become another business opportunity. Both China and Europe have new regulations pending which place requirements on electric vehicle battery performance, recycled materials, utilization rate of recycled materials, battery second-life (echelon utilization), disposal, etc. In addition, specific battery information and traceability is also commonly promoted as part of these regulations, which entail additional time pressure on automotive companies and the supply chain due to various management measures required in the battery life cycle. A multitude of demands spur car manufacturers and supply chains to seek external partnerships and increased investment to meet regulatory requirements.
With the explosion of new energy vehicle (NEV) production and sales, the installed capacity of power batteries has also seen rapid growth, in turn promoting the rising demand for battery materials, according to TrendForce’s investigations. Among battery materials, cathode materials are most in demand for power batteries and their shipments have benefited from the rapid growth of the NEV market. It is estimated that the global demand for power battery cathode materials in 2021 will reach 600,000 tons and this number is expected to exceed 2.15 million tons by 2025.
As the largest downstream application market for lithium batteries, electric vehicles account for more than 60% of total lithium battery consumption. With estimated total consumption of lithium batteries for electric vehicles worldwide reaching 310GWh this year, corresponding demand for cathode materials will reach approximately 604,000 tons.
According to statistics from the China Association of Automobile Manufacturers, China’s NEV sales reached 2.99 million vehicles between January and November of this year, accounting for approximately 50% of total global sales of NEVs, and becoming the key to boosting global demand for power battery installations. During this period (January to November), the installed capacity of power batteries in the Chinese market reached 128.3GWh, a YoY growth rate of 153.1%. The cumulative installed capacity of lithium iron phosphate batteries reached 64.8GWh, surpassing the 63.3GWh installed capacity of ternary batteries for the first time.
TrendForce believes, benefiting from strong market demand for electric vehicles, lithium battery material manufacturers (representative of cathode materials) have started a new round of large-scale production expansion this year and are expected to gradually release new production capacity in the next 2 to 3 years, relieving tight market demand. At present, the overall capacity utilization rate of China’s cathode material industry is not high. Taking lithium iron phosphate materials as an example, the capacity utilization rate of China’s lithium iron phosphate cathode materials in 2020 is approximately 44% and expected to rise to 56% this year. Whether or not future global market demand of more than 2 million tons can be met will depend on whether new production capacity of cathode materials can come online according to schedule and whether the supply of key raw material lithium carbonate is sufficient.
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