'Automotive Semiconductor Leader' NXP, Infineon and Other European Companies
High Market Share of Legacy Semiconductors... Impacted by China's Technological Rise
The European Union (EU) has emerged as the biggest victim of China's semiconductor technology rise. Since major European semiconductor companies primarily operate in legacy (older) technologies with relatively lower process levels, it is expected that they will be the first to suffer as China advances its semiconductor technology development.
According to Bloomberg on the 1st (local time), the EU recently expressed concerns in a report that semiconductor companies in the region face a significant risk of losing market share to China. Leading European semiconductor companies such as the Netherlands' NXP Semiconductors and Germany's Infineon focus on legacy semiconductors like microcontrollers (MCUs) used in automobiles. As China rapidly expands its electric vehicle market share, if the supply of automotive semiconductors is fulfilled within the Chinese semiconductor market, European semiconductor companies will inevitably be impacted.
In March, the Chinese government sent a request to domestic electric vehicle manufacturers such as BYD and Geely Automobile, urging them to use Chinese-made semiconductors. Initially, the Chinese government aimed for 20% of the semiconductors used by Chinese automakers to be sourced domestically by 2025, but it is reported that they have recently decided to accelerate semiconductor self-sufficiency.
The EU report stated, "If China uses discriminatory standards, regional requirements, and other non-tariff barriers in its vast electric vehicle market, this alone could incentivize Chinese MCU and other semiconductor manufacturers," adding, "This would negatively impact semiconductor suppliers in Europe and Japan." The EU also mentioned Renesas, a Japanese automotive semiconductor manufacturer, as a representative company likely to suffer market share losses due to China.
Furthermore, the report predicted that European semiconductor companies would be affected not only in MCUs but also in other fields such as analog and power semiconductors due to China's large-scale investments. It also noted the possibility that Chinese semiconductor companies might initiate price competition amid an oversupply of semiconductors.
Bloomberg explained that the EU's recent report was prepared during discussions on expanding supply chain cooperation for semiconductors and critical minerals with the ministers of industry from South Korea, the United States, and Japan. Although China was not mentioned in the joint statement issued by the three countries' ministers, the content effectively aimed to counter China. In this context, the EU also participated in the discussions and appeared to express concerns about the shrinking market share of its domestic semiconductor companies.
European semiconductor companies hold relatively high market shares in the legacy semiconductor market below 10 nm (1 nm = one billionth of a meter). The issue is that since China officially began its semiconductor rise in 2014, it has been focusing all efforts on enhancing its technological capabilities. As the United States strongly restricts China's advanced semiconductor production, China has prioritized developing legacy processes.
According to a recent semiconductor supply chain report by the Semiconductor Industry Association (SIA) and Boston Consulting Group (BCG), China's share of logic semiconductor production below 10 nm is expected to be only 2% by 2032. However, for 10?22 nm, it is projected to increase significantly from 6% in 2022 to 19% in 2032, and for 28 nm and above, from 33% in 2022 to 37% in 2032. In the 10?22 nm range, where automotive semiconductors mainly exist, Europe's share is expected to rise slightly from 13% in 2022 to 14% in 2032, making it highly likely that China will overtake Europe in market share within ten years.
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