By hmimcu 
On March 9, SAIC Group announced that its subsidiaries, SAIC Financial Holding, Huayu Shanghai, Donghua Auto, Zoomlion Electronics, Zhanxin Fund, Modern Industry Fund, Chongqing Yufu, etc., would jointly invest to establish Henan Shangqi Huirong Shangcheng No.1 Industry Fund Partnership (limited partnership).
According to the announcement, the fund focuses on the fields of automotive electronics, semiconductors, new energy, and industrial chain extension, with a focus on exploring sub track projects such as autonomous driving, intelligent cockpit, low-carbon transportation, and semiconductor and information security related to the industrial chain.
image.png
(From company announcement)
The author found through analysis that the total amount of subscribed capital for the fund is RMB 4 billion, and the initial closure scale is RMB 3.3734 billion. The subscribed capital of each partner is as follows:
image.png
(From company announcement)
SAIC Group stated that this is to further enhance the company’s scalability and flexibility in the automotive industry layout. The fund focuses on the fields of automotive electronics, semiconductors, new energy, and industrial chain extension, with a focus on exploring sub track projects such as autonomous driving, intelligent cockpit, low-carbon transportation, and semiconductors and information security related to the industrial chain.
SAIC Group stated that the company mainly relies on the advantages of professional investment institutions, expands investment channels through a professional investment management team, explores high-quality investment targets for the company’s future development, helps the company further improve the layout of the automotive industry chain, and forms a positive interaction between investment and industrial development through strategic cooperation and investment synergy in the industry chain, ecosystem, and various parties, which is in line with the company’s development strategy, At the same time, it can obtain reasonable investment returns and create value for the company and all shareholders.
Reversing Sales Decline, SAIC Group Joins the “Price Reduction Wave”
On March 9th, SAIC Group released its February production and sales report, which showed that SAIC Group sold a total of 301342 complete vehicles in February, a year-on-year decrease of 6.41%.
image.png
(From company announcement)
Among them, SAIC Volkswagen sold 73303 vehicles, a decrease of 19.10%; SAIC General Motors sold 68157 vehicles, a decrease of 10.33%; SAIC’s passenger car sales decreased by 9.17% to 58499 units. It can be seen that several major sales pillars of SAIC Group have experienced a significant decline. However, SAIC Group’s February sales data also showed some highlights, with its export and overseas base sales soaring by 49.26% to 83749 vehicles.
Previously, SAIC Motor Corporation stated that with the disappearance of the peak of infection, the gradual easing of core shortage issues, and the continuous efforts of the central and local policies to promote automobile consumption, the Chinese automobile industry is expected to achieve a recovery growth of over 4% in 2023. Starting from February, multiple heavyweight new products such as the Zhiji LS7 and Feifan F7 will be launched one after another. SAIC Group will also fully rely on its strong industrial chain advantages and innovation system competitiveness, continue to exert efforts in high-end intelligent electric brands and overseas markets, and strive to achieve the annual targets of 6 million vehicle sales, 1.5 million new energy vehicle sales, and 1.2 million overseas sales by 2023.
It is worth noting that in recent days, Dongfeng Motors has taken the lead in significantly reducing prices in Hubei Province by not following common principles, which has exploded on popular search websites and sparked a “butterfly effect” of domestic car companies lowering prices. With the help of “Dongfeng”, major car companies have also launched promotional activities and preferential policies one after another. SAIC Group is also in a hurry, not only launching special discounts and promotions covering brands such as Roewe, MG, Buick, and Cadillac in Hubei, but also launching nationwide subsidy activities for the entire Chevrolet series.
Not long ago, there were rumors that SAIC Audi had launched a brand car purchase campaign targeting its internal employees. All three models under Audi’s brand had a staggering decline, with a profit margin of 70000-160000 yuan. Among them, five configuration models had a profit margin of up to 160000 yuan, and the lowest profit margin, the Audi A7L Jingyuan Flowing Crystal Package Best3.0T, also had a discount of 70000 yuan, while the Audi Q5e-tron only needed more than 250000 yuan after internal profit margin concessions.
Such a high level of profit margin promotion to the market will inevitably attract consumers, but unfortunately, such efforts are only effective for internal employees. At the same time, there are also sources pointing out that in response to online rumors of internal employee price reductions, SAIC Audi said: “Employee internal purchasing activities are real and information leakage is being strictly investigated. If there are employee reselling qualifications, once discovered, they will be traced to the end.” SAIC Audi also stated, Employee welfare activities are limited to employee participation and not open to ordinary consumers.
It can be seen that under the decline in sales of SAIC Group in February, this wave of price reduction measures can indeed usher in a sudden increase in sales and achieve inventory digestion. However, whether it is SAIC Group or other cars participating in this round of price reduction, it is still unknown whether such strong promotional measures will interfere with the normal market system and even the future potential of overdrawn enterprises.
Car companies rush to market and lay out semiconductors
Semiconductor, as one of the key topics in China in recent years, has been receiving attention from a large number of enterprises, and there are many companies that will make chips in the future, covering many fields such as semiconductors, home appliances, and mobile phones. With the rapid growth of the electric vehicle industry, it has also begun to join this camp.
From an industrial perspective, car manufacturers making cores is an inevitable trend for industrial development. Everyone still remembers that due to the issue of car companies stopping production due to a shortage of chips, as early as early as 2021, many car companies such as Ford, Toyota, and Daimler were forced to reduce production or stop production of some models due to a shortage of chips. Until 2022, the issue of chip shortage still hangs high above the heads of car companies. It can be said that the “chip shortage” storm has made the automotive industry, especially automotive manufacturing enterprises, clearly realize the importance of chip supply chain security, which has prompted many car companies to accelerate the pace of independent chip manufacturing.
At present, it seems that car manufacturers mainly make cores through the following methods:
Strategic investment: This approach has low strategic risk and is also the most commonly used approach by car companies. Moreover, this investment will not seize chip resources and can help some startups expand their business channels;
● Self research and development: There are fewer traditional car companies that independently develop chips, while there are more new forces in car manufacturing. These car companies also hope to use this wave to understand what needs to be done in chip development, but it is too difficult to independently control the core technology of chips at this stage;
Joint research and development: This approach is also the choice of many car companies, which can combine their own product needs (propose their own needs). The development work is mostly completed by chip design companies, and the overall risk is relatively small.
The rise of the “core making trend” among car companies has led car brands including SAIC, Dongfeng, BYD, Great Wall, Geely, and others to participate in this “core making” movement through self research or strategic cooperation.
SAIC
SAIC Group has been expanding its chip industry on a large scale since 2018. Initially, it collaborated with Infineon in the field of power semiconductors, and subsequently invested in nearly 20 top domestic chip companies through its subsidiaries SAIC Venture Capital, Shangqi Capital, and Hengxu Capital. Among them, the cooperation with Horizon has attracted widespread attention in the industry. It is reported that SAIC Group started strategic cooperation with Horizon as early as 2017, jointly promoting the acceleration of the implementation of automotive grade AI chips; In 2019, SAIC participated in Horizon B round financing and became the largest institutional shareholder; In 2020, both parties established the “SAIC Group and Horizon Artificial Intelligence Joint Laboratory”; In 2022, both sides will work together to build an intelligent driving computing platform equipped with the new Horizon Journey 5 chip and a domestic cabin driving fusion computing platform equipped with the Horizon next-generation large computing chip Journey 6, focusing on the SAIC “Galaxy” intelligent vehicle full stack solution.
As a leading automotive company in China, SAIC has also invested in chip companies such as Jingchen Semiconductor, Xinti Technology, and Xinwang Microelectronics in the field of automotive chips, continuously accelerating the layout of the automotive chip industry chain; At the same time, SAIC and Shanghai Microtechnology Industry Research Institute have collaborated to build a third-party joint evaluation platform for automotive electronic chips, reducing chip companies’ repeated certification investments and shortening certification cycles, promoting the localization of automotive grade chips. The proposed 4 billion yuan fund will focus on the semiconductor and new energy fields. SAIC Group also hopes to use its layout of the semiconductor industry to help the company further improve the automotive industry chain ecology.
BYD
As the Chinese new energy vehicle brand with the highest number of patents, BYD has more patents than the combined number of patents owned by the second and third place brands. It is also the only car company that can fully achieve self-sufficiency in the three major components of electric vehicle batteries, motors, and electronic control sectors. BYD has been involved in the semiconductor field for a long time. According to incomplete statistics, BYD and its subsidiaries have invested in over 20 semiconductor enterprises, covering the design, materials, equipment and other industrial chain links, including DSP, silicon carbide substrate/epitaxial, LiDAR, VCSEL, d-ToF, navigation positioning chips, sputtering targets, industrial software and other sub tracks. The invested enterprises include Helitai, Tianke Heda, Horizon, Jiehuate, Xinshijie, Tianyu Semiconductor, and so on.
In addition to considering semiconductors as a key investment direction, BYD also established BYD Semiconductor to accelerate the development of its semiconductor business. BYD Semiconductor Company is engaged in the research and development, production, and sales of power semiconductors, intelligent control ICs, intelligent sensors, and optoelectronic semiconductors, covering the induction, processing, and control of electrical, optical, magnetic and other signals. Previously, BYD attempted to promote the spin-off listing of BYD Semiconductor, but ultimately chose to voluntarily withdraw its application and stated that “when conditions are ripe, the company will take the opportunity to restart the spin-off listing of BYD Semiconductor”.
the Great Wall
Great Wall Motor has begun to lay out chips for a long time. In February 2021, Great Wall Motor’s strategic investment horizon, the two sides will focus on the direction of advanced assisted driving (ADAS), automatic driving and intelligent cockpit; On the evening of October 21, 2022, Great Wall Motor announced that it planned to use its own funds to jointly invest with Wei Jianjun and Wensheng Technology (Tianjin) Co., Ltd. to establish Core Semiconductor Technology Co., Ltd. Later, some insiders revealed that the chip field developed by Great Wall Motor involves IGBT, autopilot and smart cockpit. On the same day, it was reported that Great Wall Motor had recruited some R&D personnel from Samsung.
On August 16, 2022, Great Wall Holdings Group signed a strategic cooperation agreement with Xishan Economic and Technological Development Zone in Jiangsu Province, focusing on the manufacturing of third-generation semiconductor module packaging. On February 26th of this year, the “Third Generation Semiconductor Module Sealing and Testing Project” of Great Wall Wuxi Xindong Semiconductor officially began construction. It is reported that the total investment of the project is 800 million yuan, with a building area of approximately 30000 square meters. The planned annual production capacity of vehicle grade modules is 1.2 million sets. It is expected to have the equipment fully ready for factory entry by September 2023, and mass production will be launched as soon as the end of this year.
auspicious
On October 31, 2021, Geely Motors publicly demonstrated its self-developed intelligent cockpit chip “SE1000” in collaboration with Xinqing Technology at a technical conference, which is China’s first 7nm automotive grade SOC chip. According to Geely, this 7nm chip is mainly used for conventional data processing and information transmission of smart cars. The effective area of the logic chip is 83 square millimetre, the number of circuit integration layers is 87, and the number of built-in transistors is directly up to 8.8 billion.
On October 24, 2022, Geely Technology Group and China Resources Microelectronics jointly set up the “Geely Technology – China Resources Micro Automotive Sensor and Application Laboratory”, and the two sides cooperated to build a cooperation mechanism for the vehicle scale power semiconductor industry, and launched joint solutions based on products or technologies such as power modules, MEMS sensors, panel level packaging, etc., to achieve complementary advantages, and promote the improvement of semiconductor self-sufficiency rate in new energy vehicles, electric motorcycle and other scenarios, Realize social benefits.
Since the beginning of this year, Geely Technology Group and Jita Semiconductor have reached a cooperation to jointly establish the first automotive electronic shared vertical integrated manufacturing (CIDM) chip alliance in China, establish a joint laboratory, focus on the research and development, process integration, and production process of automotive electronic MCU, power devices, SoC, PMIC and other chips, and are committed to vehicle reliability testing and vehicle mass production applications.
east wind
Dongfeng Motor Group has been collaborating with CRRC Zhuzhou Times on IGBT power modules since 2018. In 2019, Dongfeng Motor Group and Zhuzhou CRRC Times Semiconductor Co., Ltd. jointly established Zhixin Semiconductor Co., Ltd. to build a power semiconductor module packaging and testing production line in the Dongfeng New Energy Automobile Industrial Park, independently researching, developing, manufacturing, and selling power semiconductor modules; On April 20, 2021, Dongfeng Motor Group Technology Center and Huada Semiconductor signed a cooperation agreement for the “Joint Laboratory for Automotive Independent Chip Research” in Shanghai, and held a laboratory unveiling ceremony; On March 9, 2021, Dongfeng Asset Management Co., Ltd., a subsidiary of Dongfeng Motors, held a stake of 15.23%, becoming the second largest shareholder of Wuxi Huaxin. It is reported that Wuxi Huaxin’s business scope includes the manufacturing of semiconductor discrete devices; Sales of semiconductor discrete devices, etc.
BAIC
As early as 2018, BAIC Group’s subsidiary BAIC New Energy and Rom Semiconductor established a joint laboratory; In 2019, BAIC Group signed a strategic cooperation agreement with Enzipu; In 2020, BAIC Group’s investment platform, BAIC Production and Investment Corporation, and well-known chip IP company Imagination, initiated the establishment of Automotive Wafer Free Semiconductor Company, Core Core. Its main business is to design automotive standard chips (SoCs), develop related software, and provide comprehensive support services. It will operate independently as a Wafer Free Semiconductor Company and a technology solution provider, Focusing on the research and development of application processors for autonomous driving and voice interaction chips for intelligent cabins, providing advanced solutions for domestic automotive companies represented by BAIC Group in the field of automotive chips; In 2021, Shenzhen Anpeng Angel Investment Center (limited partnership), an affiliated enterprise of BAIC Group, invested in Feijin Semiconductor, a silicon carbide SiC power device R&D enterprise, to further enable BAIC New Energy Vehicles under BAIC Group to reach synergy, including the charging pile business under BAIC Group, and also to incorporate it into the supply chain system.
Car manufacturers’ core manufacturing is both a challenge and an opportunity
It can be seen that currently, domestic car companies mainly focus on chip research and development, design, and other fields when entering the market for chip manufacturing. They are all involved in chip production capacity construction like BYD, which is not realistic in the short term.
Because the chip industry is ultimately a technology intensive industry with a long cycle, heavy technology, and high investment, it is very difficult for car companies to do “chip self research”, especially full stack self research. Taking car grade chips as an example, the research and development costs, including IP and talent, are much higher than those of consumer grade and industrial grade chips. Sometimes, having money alone may not necessarily lead to success, and even if it takes 5, 10, or 15 years to succeed, one may not be able to achieve anything. It can be seen that the entry of automotive companies into the chip industry is both a challenge and an opportunity.
Secondly, there is the issue of commercialization. Many car companies produce chips to achieve self-sufficiency, which means that their customer structure will be relatively single and it is difficult to meet the huge shipment volume required for chips. This may also be why both new car manufacturers and traditional car companies choose to separate their chip teams. Therefore, a more robust strategic investment or joint research and development approach is currently the best choice for most car companies.
The development of automotive electronics is undoubtedly one of the most closely watched directions in the industry, not only for car manufacturers to manufacture cores, but also for relevant upstream and downstream enterprises to actively respond to the wave of new energy vehicles since 2023. Taking this opportunity, we would like to recommend the “OFweek 2023 Engineer Series Online Conference – Automotive Electronics Technology Online Conference” jointly created by OFweek Wiki Electronic Engineering and dozens of electronic enterprises, which will be held on the official live streaming platform of OFweek on March 23. The meeting schedule is as follows: