Kathy Anselmo, National Semiconductor Silicon Wafer Computer Chips Abstract 5

Digital Transformation of Auto

https://mule.substack.com/p/the-digital-transformation-of-cars

• Similar capacity problems are being seen for GPUs, notebooks, and MLCCs, among others. It’s what driving the eye-popping 45% YoY growth at TSMC, and likely a 20%+ year in wafer fab equipment (WFE) spending.
• global foundry capacity utilization rate both total & leading edge re: Sanford Bernstein
• demand drivers: more silicon in cars than there used to be
• electronic systems as % of total car cost is going up (~50% by 2030, from Deloitte analysis)
• ADAS level progression requires increased tech —> more semis

from: ChinaTalk — Will China Hit Back on Chips?

China can choose targets of retaliation in a direct or asymmetric manner. Given China's relatively weak position across the semiconductor supply chain and its high dependence on chips for national security and economic growth, it will likely opt for an asymmetric approach.

BCG recently reported that China has a commanding 38% share of value-add in the OSAT market.

The PRC could wreak havoc on global chip supply chains with directives to China-based operations of these firms to deny or restrict capacity allocation or supply their inventory to select companies or regions of the world.

Chinese companies have extensively deployed ARM processors across a wide range of applications, and Chinese regulators will be looking for assurances of continued access to the technology.

To make chips, all semiconductor fabrication plants (commonly known as fabs) need a host of high-purity gases, photoresists and specialty chemicals from companies in Japan, Taiwan, South Korea and Germany, which in turn depend on China for a supply of rare earth materials for their production.

The technology advisory services firm TECHCET reports that China controls an 82 percent share of rare earth materials or critical minerals, including 80 percent of global tungsten supply. Rare earths can be mined in many countries, but China controls the refinement and purification processes, and indirectly controls supply, pricing and export control.

The impact of the chip shortage on the auto sector has been estimated at $110 billion in the U.S. in 2021 alone. The global impact of a sustained supply disruption of chips from Taiwan would move quickly beyond economic impact, triggering national security concerns by every major power.

The U.S. government should focus on seeding capacity investments not only in leading-edge fabs but also in emerging chip technologies such as gallium nitride and silicon carbide, as well as in segments such as advanced packaging-assembly-test, rare earth mining and refinement, and critical materials.