By Ed Dodd, VP Business Development, Cofactr
Ed Dodd
The high reliability mature-node semiconductor supply had been weak for years and was on track to be outpaced by automotive demand in the years leading up to 2020. Just before the supply shortage was able to impact the market, the global COVID pandemic forced the automotive industry to reduce production. The drop in high reliability demand signal, combined with an increased demand for the consumer and telecom devices associated with remote work, incentivized semiconductor manufacturers to shift their production. Now, as automotive vehicle production continues to increase and approaches pre-pandemic volumes, we encounter a weakened high reliability semiconductor supply, as advanced node manufacturing grows and mature node manufacturing becomes more concentrated in China. This all sets the stage for a significant parts shortage that will be felt across all high reliability verticals.
Pre-pandemic Conditions
In the decade leading up to the pandemic, the automotive industry rapidly adopting more electronics in their vehicle designs, fueled in part by stricter regulations that covered everything from exhaust to fuel efficiency to safety [1]. Not only was there more electronics in each vehicle, but automotive production volumes, the number of cars made, were also increasing [2]. As a result, during the period from 2012 to 2019, automotive semiconductor sales increased over 60% from $25.4 billion to around $41 billion. The expected additional growth in demand for 2020 would have further strained supplies [3], and provided an economic incentive to expand manufacturing. The COVID-19 pandemic masked these demand signals.
