Rapid Demand of EVs Globally Forcing Chip-makers to Increase Their Production Capacity

Published  December 21, 2022   0
Rapid Demand of EVs

Companies, which supplies chips for personal PCs and smartphones like Samsung, TSMC, and Intel have been impacted with a colossal drop in demand

As per a media report, international semiconductor and automobile manufacturers have warned that the escalating growth of electric vehicles will further push for a slump in semiconductor production until 2023. In an interaction with the Financial Times, Hassane El-Khoury, chief executive of US-based chipmaker Onsemi highlighted that their top-notch silicon carbide chips, which are mostly used for electric vehicles, are all sold out. As the demand for EVs are augmenting, the shortage will continue towards the end of 2023.

“There’s nothing you can do now to change 2023,” the boss of one of the world’s leading auto chipmakers said. “We will be adding capacity every quarter, every month in 2023 to meet our customer demand.” In fact, Infineon’s CEO Jochen Hanebeck also highlighted the warning about slump in chip production at an event in Munich recently. Moreover, he also stated that the production shortage could be extended beyond 2023. Automobile makers have already started gearing up to face the challenges. CEO of Stellantis, Carlos Tavares hinted that challenges in chipset production is going to be a nightmare for the car makers.

The increasing demand for car chipset has uplifted the market growth of semiconductor manufacturers such as Nexperia, STMicroelectronics, NXP Semiconductors, Onsemi, and Infineon Technologies. A month back, Infineon speculated its revenue growth from 9 percent to 10 percent in the coming years, although they are yet to provide a specific timeline of the growth. The Neubiberg based semiconductor maker also announced the construction of its largest factory in Dresden with an investment of €5bn. The company is expected to produce analogue, mixed-signal and power semiconductors, which are largely utilized in various industrial sectors and cars.

Because of the increasing demand for cars, Onsemi also announced plans to escalate its production units, which are located in Rožnov in Czech Republic, Busan in South Korea and New Hampshire in the US. The capacity is expected to escalate by 30 percent by 2023. Gregg Lowe, chief executive of Wolfspeed, a SiC substrate materials supplier exclusively told Financial Times, "what we’re anticipating is through the end of this decade, power semiconductors — specifically silicon carbide power semiconductors — could see a 14 per cent compounded annual growth rate, which means all of us will be running as fast as we can, trying to catch up with the demand."