THIS MATERIAL IS A MARKETING COMMUNICATION.
Inside the Auto Semiconductor Industry
In this article, we will provide an overview of the auto semiconductor industry and explore the opportunity arising from the electric vehicle (EV) and automation trends.
Auto semiconductor is estimated to be a US$38bn market in 2020 (Credit Suisse 2021). MPU (microprocessor unit)/MCU(microcontroller unit) is the largest sub-segment (18% of the total market) followed by discrete, non-optoelectronic sensors and PMIC (power management integrated circuit). (Credit Suisse 2021). Global leaders in auto semi include NXP, Infineon, Renesas, Texas Instrument, ST Micro, Bosch and On Semi. NXP and Infineon had the largest market share in 2019, both at around 10%. Although industry leaders are mostly IDMs (integrated device manufacturers), they also outsource part of the production especially in MCU where more advanced manufacturing process is required. IHS Markit estimates that around 70% of all automotive microcontrollers are manufactured by TSMC. The top six microcontroller suppliers (Renesas, NXP, Infineon, Texas Instruments, Microchip Technology, and STMicro combined to be around 98% of the auto microcontroller market) (MS 2021) all outsource to foundries.
EV and Automation to Increase Auto Semiconductor Value per Car
We are positive on the long-term outlook of auto semiconductors, as the increasing EV penetration and autonomous driving will drive demand for auto semi content. EV penetration (including pure EV and hybrid) is projected to rise from 11% in 2020 to 62% by 2030. (CS 2021) Infineon estimates semi BOM (Bill of materials) of full EV today to be US$834, compared to around US$500 in an ordinary car. Around 75% of the incremental content comes from power semiconductors. We estimate the BOM for a full self-driving car can be US$1,200 – US$2,000+ depending on the design of the full self-driving computer. This will drive the auto semiconductor market to reach US$110bn by 2030, representing a 11% CAGR. (CS 2021)
Backbone to Self-Driving-Chip
Semiconductor plays an important role in autonomous driving, and the performance improvement in auto SoC (system on chip) will be key to the deployment of complex machine learning models in L4/L5 self-driving vehicles. We see strong product line-up from companies like Nvidia, Tesla, Mobile eye, and Horizon Robotics in the race to provide autonomous driving chips. Current products can do around 30 TOPS (trillion operations per second) per chip designed for L2-L3 applications, and companies are expected to launch products with 100-200+ TOPS by 2022. (Mirae asset 2021) We expect to see 1,000+ TOPS chips by 2024 for L5 full autonomous vehicles.
China’s Auto Semiconductor Supply Chain
Although domestic power semiconductor players are relatively small compared to global leaders, China has formed a local supply chain in auto semiconductors. Wingtech acquired Nexperia which is a key supplier in discrete auto semiconductors, especially in low-voltage products. Hua Hong works with domestic fabless to produce automotive chips. In IGBT, Starpower has around 2% (CICC 2020) market share globally and is gaining market share in industrial and auto applications. CRRC Times operates an IDM model supplying high voltage IGBT for railway and industrial applications, and the company is now working to enter the auto segment.
Staying Ahead with Mirae Asset’s Latest Insights
Disclaimer & Information for Investors
No distribution, solicitation or advice: This document is provided for information and illustrative purposes and is intended for your use only. It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service.
The views and information discussed or referred in this document are as of the date of publication. Certain of the statements contained in this document are statements of future expectations and other forward-looking statements. Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements. In addition, the opinions expressed may differ from those of other Mirae Asset Global Investments’ investment professionals.
Investment involves risk: Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. It may not be suitable for persons unfamiliar with the underlying securities or who are unwilling or unable to bear the risk of loss and ownership of such investment. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.
Sources: Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (“MAGI”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.
Products, services and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries and/or distributors of MAGI as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Information for EU investors pursuant to Regulation (EU) 2019/1156: This document is a marketing communication and is intended for Professional Investors only. A Prospectus is available for the Mirae Asset Global Discovery Fund (the “Company”) a société d'investissement à capital variable (SICAV) domiciled in Luxembourg structured as an umbrella with a number of sub-funds. Key Investor Information Documents (“KIIDs”) are available for each share class of each of the sub-funds of the Company.
The Company’s Prospectus and the KIIDs can be obtained from www.am.miraeasset.eu/fund-literature/ . The Prospectus is available in English, French, German, and Danish, while the KIIDs are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the “UCITS Directive”). Please refer to the Prospectus and the KIID before making any final investment decisions.
A summary of investor rights is available in English from www.am.miraeasset.eu/investor-rights-summary/.
The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. FundRock Management Company can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.
Hong Kong: This document is intended for Hong Kong investors. Before making any investment decision to invest in the Fund, Investors should read the Fund’s Prospectus and the information for Hong Kong investors (of applicable) of the Fund for details and the risk factors. The individual and Mirae Asset Global Investments (Hong Kong) Limited may hold the individual securities mentioned. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Copyright 2021. All rights reserved. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Mirae Asset Global Investments (Hong Kong) Limited.