Chip shortages will likely drive automotive OEMs to design their own chips

“Automotive semiconductor supply chains are complex,” said Gaurav Gupta, research vice president at Gartner in a press release. “In most cases, chip makers are traditionally Tier 3 or Tier 4 suppliers to automakers, which means it usually takes a while until they adapt to the changes affecting automotive market demand. This lack of visibility in the supply chain has increased automotive OEMs desire to have greater control over their semiconductor supply.” Gupta points to the fact that the ongoing semiconductor shortage is primarily with mature semiconductor technology node devices, fabricated on smaller 8-inch wafers, where capacity expansion is difficult. “The fact that the automotive industry has been conservative in qualifying older devices on larger wafer sizes has also hurt them and will likely motivate them to take chip design in-house,” Gupta explains. Trying to regains control by bringing chip design in-house isn't new. It even has it's own term; ‘OEM-Foundry-Direct’, and it isn't unique to the automotive industry either – it is also expected to intensify among tech companies as some changes are happening in the semiconductor market. Semiconductor chip foundries, such as TSMC and Samsung, have provided access to cutting-edge manufacturing processes, and other semiconductor vendors have given access to advanced intellectual property that makes custom chip design relatively easy. “We also anticipate that the lessons learned from the microchip shortage will further drive automakers to become tech companies,” says Gupta.