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The shortage of microcontroller units (MCUs) has been central to the ongoing chip crisis. As the shortage prolongs, compounded with geopolitical factors, China has taken significant steps to build its domestic automotive MCU industry. In the long term, it might shift the balance of MCU industry that is already heavily dependent on Asia. 

Currently, approximately 90% of the global automotive MCU market has been dominated by six companies, including Infineon, NXP, Renesas, STMicroelectronics, Texas Instruments and Microchip. Their packaging facilities, however, are largely concentrated in Malaysia. Meanwhile, Taiwan’s TSMC manufactures 70% of these microcontrollers. 

China might soon alter this regional dynamics: it has been forecasted that China’s share of the global MCU market will grow to 10% in 2025 from its current 3% share. In the same time span, China will be able to source 25% of its MCUs domestically, rising from the current 5%. The recent emergence of Chinese Tier 1 suppliers has been partly responsible for the growth of Chinese MCU industry, as the national chip autonomy program and the rising costs of MCUs amidst vehicle electrification prompted these Tier 1 suppliers to move away from established MCU brands in favor of domestic brands. 

GigaDevice, a Chinese MCU brand, launched its first automotive MCUs in August, and aims to  volume produce them in mid-2022. At the same time, another Chinese MCU company Yuntu Semiconductor has entered a strategic partnership with Xiaomi to help with the latter’s EV ambition. 

Apart from relying on domestic MCU companies, Chinese automobile manufacturers have also begun to produce in-house automotive chips. Some automobile manufacturers have also sought direct partnerships with IC design houses, skipping the chip distributors as intermediaries.



Reference: Commercial Times