KUALA LUMPUR (Dec 9): Chip shortages and trends such as electrification and autonomy will drive 50% of the top 10 automotive original equipment manufacturers (OEMs) to design their own chips by 2025.

Technology research and consulting firm Gartner Inc on Tuesday (Dec 7) said that as a result, it will give them control over their product road map and supply chains.

Gartner research vice-president Dr Gaurav Gupta said automotive semiconductor supply chains are complex.

“In most cases, chipmakers are traditionally Tier 3 or Tier 4 suppliers to automakers, which means it usually takes a while until they adapt to the changes affecting automotive market demand.

“This lack of visibility in the supply chain has increased automotive OEMs' desire to have greater control over their semiconductor supply,” he said.

Gupta added that in addition, the ongoing chip shortage is primarily with mature semiconductor technology node devices that are fabricated on smaller eight-inch wafers, where capacity expansion is difficult.

“The fact that the automotive industry has been conservative in qualifying older devices on larger wafer sizes has also hurt them and will likely motivate them to take chip design in-house,” he said.

Gartner said this model of bringing chip design in-house, or popularly known as the "OEM-foundry-direct" model, isn’t unique to the automotive industry and will intensify among tech companies as some changes are happening in the semiconductor market.

It said semiconductor chip foundries, such as Taiwan Semiconductor Manufacturing Company Ltd and Samsung, have provided access to cutting-edge manufacturing processes, and other semiconductor vendors have given access to advanced intellectual property that makes custom chip design relatively easy.

“We also anticipate that the lessons learned from the microchip shortage will further drive automakers to become tech companies,” said Gupta.

Meanwhile, Gartner also predicted that by 2025, the average sale price of new vehicles will exceed US$50,000 (about RM210,900) in the US and Germany, leading to greater repair and upfit of older vehicles.

Gartner research vice-president Mike Ramsey said this price acceleration will likely shrink the overall number of sales of vehicles and increase the market for parts and upgrades as people seek to keep existing vehicles on the road longer.

He said Gartner analysts anticipate that the market for new vehicles will remain flat or even decline in the face of rising prices, adding that automakers will push new services and even upgrades of equipment and computers to extend the lives of existing vehicles.