Zept Inc, a Taiwanese startup specialized in EV powertrain, held a forum on July 9, gathering the leaders in Taiwan’s electronics industry to discuss the challenges they face in the EV market.
“Platform is the key”, said one representative of Gigabyte Technology Co. Driven by its main business in motherboards, servers and graphic cards, Gigabyte’s revenue and profit soared to record high last year, and it has been using the opportunity to expand its footprints in the EV sector. As Gigabyte got in the sector, however, it discovered an industry heavily dependent on vertical integration. In addition, it needs an industry leader to promote applications, but Taiwan has none.
Moreover, given Taiwan’s small market size, it is almost impossible for a company to hit into the global automobile supply chain singlehandedly. The Taiwanese government has to address the situation, said the representative, by developing a strategy to attract international automobile companies. “There are no Tier 1 automotive suppliers in Taiwan”, explained the Gigabyte representative, “and consequently companies flock to China, Thailand and Malaysia.” If the government could link the domestic EV industry to the global market, he said, it would create a suitable condition for domestic integrated solutions providers to emerge.
The view was echoed by many others present in the discussion, regardless of their backgrounds. Amita Technologies Inc, a longtime manufacturer of lithium-ion polymer batteries in Taiwan, started out in 2000 and has been active in the Southeast Asian market, especially in Thailand, where the region’s largest automotive manufacturing base is located. Energy Absolute, a Thai renewable energy company, has planned to cooperate with Amita in building a gigafactory. In contrast, the limited market size in Taiwan prevented Amita Technologies from trialing their products via applications.
Likewise, Inventec Corp., an ODM which has recently switched its focus onto the EV industry after observing the shrinking server market, lamented how the small domestic market has been constraining Taiwanese companies from unleashing their potentials. Inventec has been five years into the automotive electronics industry, starting from sectors with lower entry barriers such as in-vehicle infotainment as well as Advanced Driver Assistance Systems (ADAS). Eventually, Inventec seeks to enter the Electronic Control Unit (ECU) sector with higher entry barriers.
Meanwhile, David Shen, CEO of Turing Drive, identified drive-by-wire technology as a linchpin of Taiwan’s autopilot industry where breakthrough is needed. Currently, as he pointed out, Taiwan lags behind in its development. Founded in 2018, Turing Drive is a startup developing the hardware and software components of autonomous driving.
As Taiwan’s electronics makers enter the automotive sector, these dominant concerns partly explain why they often opt to eventually become integrated solutions providers so as to supply or even supplant current Tier 1 and Tier 2 companies in the global EV value chain. It also explains the rationales behind Foxconn’s launch of MIH Alliance, of which Zept is also a member: first, it aims to create a vertically integrated industry and connect it with the global EV supply chain through the existing channels established by Taiwanese contract manufacturers. Second, the MIH platform can also create abundant application scenarios for domestic suppliers.
Source: Yahoo News