Infineon, STMicroelectronics, NXP, and other European automotive semiconductor corporations are strengthening their local production systems in China. Although the conflict between the United States and China surrounding the semiconductor industry is intensifying, corporations from European countries, including the Netherlands, an ally of the U.S., are focusing their efforts on China, which has emerged as the world's largest electric vehicle market.
According to local Chinese media on the 27th, semiconductor manufacturers from Europe, including Infineon, STMicroelectronics, and NXP, are increasing their facility investments in China. Infineon, NXP, and STMicroelectronics together hold about half of the market share in automotive semiconductors alongside Texas Instruments (TI) from the U.S.
China has rapidly emerged as the largest new energy vehicle (NEV) market, including electric vehicles. According to the Korea International Trade Association, of the 13.7 million global electric vehicles sold last year, China sold 8.2 million units, ranking first. BYD, China's leading electric vehicle corporation, delivered 867,000 units in just the first quarter of this year, capturing a global market share of 20.2%. While European automotive corporations are experiencing a downturn in the electric vehicle market, China is showing robust growth, backed by a strong domestic market.
China is emerging as a significant player in the automotive semiconductor industry, and the revenue share of related corporations in the Chinese region is high. According to IR data from Infineon and NXP, last year's revenue share from the Chinese region was the highest at 25% and 33%, respectively. STMicroelectronics reports that over 30% of its revenue in the Asia-Pacific region is generated from China.
In response, Infineon, STMicroelectronics, NXP, and other European automotive semiconductor corporations are expanding their local production systems. STMicroelectronics plans to fully operate a production facility developed in a joint investment of $3.2 billion (approximately 4.6 trillion won) with China’s Sanan Optoelectronics for the development of next-generation automotive semiconductors, silicon carbide (SiC), in the fourth quarter of next year.
NXP, which operates semiconductor packaging and testing facilities in Tianjin, China, has stated its intention to proceed with new investments in China. Andy Micallef, senior vice president of NXP, said in an interview with Bloomberg on the 5th (local time), "We plan to establish a new supply chain including local partner corporations and production facilities to support our Chinese clients."
Collaboration with Chinese foundry (contract manufacturing) corporations is also expanding. Last November, NXP signed a production contract for microcontroller units (MCUs) based on a 40nm (nanometer, one billionth of a meter) process with Huahong Semiconductor, the second-largest foundry in China. Infineon, which operates a plant in Wuxi, China, is said to plan to outsource some of the front-end processes to Chinese foundry corporations since its local production facility is focused on post-processing and packaging.
China's low domestic production rate of automotive semiconductors is also analyzed to be an opportunity for automotive semiconductor corporations. An industry insider noted, "China is planning substantial subsidies to foster the semiconductor industry, but the proportion of support for advanced semiconductors and related equipment is high, so the share of domestically produced automotive semiconductors is only around 10%. This is one of the reasons why European corporations like Infineon are aggressively targeting the market."
Kang Seong-cheol, a research fellow at the Korea Semiconductor Display Technology Association, said, "Considering the scale of the Chinese electric vehicle market, it is natural for automotive semiconductor corporations to increase local production to secure supply chains," adding, "As specific regulations from the U.S. regarding automotive semiconductors have not yet emerged, European corporations, which are entangled in international trade controls, are expanding their production capacity. However, the possibility of sanctions against next-generation high-performance automotive semiconductors cannot be ruled out."