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October 3, 2021 10:34 pm

Why Chip-Constrained Carmakers Can't Just Transition To Newer Chips

Car buyers are discovering that supply chain constraints "have thrusted prices upwards considerably for new and used vehicles alike," notes Jalopnik. But while last month Fortune ran an article headlined "Chipmakers to carmakers: Time to get out of the semiconductor Stone Age," Jalopnik argues it's not that simple.The implication here is that the auto industry is far too reliant on archaic tech that isn't applicable to other consumer tech fields. It's now finally reckoning with its reluctance to change, and only a fool would invest in shops to pump out the outdated silicon cars require. But is that a fair assessment? As Fortune notes in its own piece, there are reasons why carmakers — some of the largest corporations in the world — choose the chips they do. The comparison to smartphones is moot... The potential ramifications of a glitch in a metal box traveling at many miles per hour are a little more severe. That's especially true if you're talking about modern vehicles with driver-assist functions... I asked some auto industry veterans to weigh in... What automakers require is somewhat at odds with what chipmakers prefer and are tooled to produce: smaller, more densely packed chips, that can be manufactured at lower cost and yield more units.... However, to suggest as [Intel CEO] Gelsinger did that the burden to adapt should fall squarely on automakers simplifies the issue. General purpose chipmakers don't seem to grasp the unique challenges of the automotive sector — something that became clear to me after chatting with Jon M. Quigley, Society of Automotive Engineers member and columnist at Automotive Industries. "Qualifying a product, specifically testing activities, are costly and requires time, talent, and equipment," Quigley said. "Some of the test equipment requirements are expensive and often not on hand at the OEM but will require an external lab, and booking time at this lab can be a long lead time activity, and is necessary for certain product certifications. Depending upon the vehicle system commonality, this testing might have to be performed on multiple vehicle platforms. Making changes to an existing product, changing an integrated circuit that only has the difference in the manufacturing processes would still require this sort of testing. Unless there are some compelling associated cost improvements to recoup the investment, this is not very plausible." It's easy for those of us on the outside to miss the many steps of validation automotive components are required to go through before they end up in what we drive. Ultimately, carmakers don't care how small or new a chip is; all that matters is that it works for its intended purpose and is properly vetted... Chipmakers want as much miniaturization as possible to maximize production efficiency, automakers need significant lead time to make sure a chip will work for them. Each industry has reasons for operating the way it does. That doesn't change the fact that someone's going to have to budge to address this shortfall.... Over time, the transition to newer technology may naturally happen, but certainly not quickly enough to Band-Aid the snags of the present moment. That doesn't give anyone a single, solitary scapegoat, and it's not the easy answer anyone likely wants to hear — not prospective shoppers, not automakers and not the CEO of Intel. But it's the most realistic answer nonetheless. In the meantime, one analyst that Jalopnik spoke to predicted automakers will try strategic partnerships with chipmakers — that is, "find ways to own or control more of the chip supply base going forward by partnering with ASIC design companies who do similar design service for networking companies."

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