Distributors, as supply chain "middlemen," have not received much attention from auto companies over the past few decades. But now that auto companies are starting to realize the value of distributors, OEMs and Tier 1 suppliers are beginning to integrate distribution into global supply chains and assist in electronics-intensive systems such as autonomous vehicles (AVs) own design.
The new crown epidemic and the shortage of semiconductor cores that have lasted for several years have led to cooperation between OEMs and global distributors. Automakers have turned to distributors for help in recent years as chipmakers can't fully meet soaring demand for cars. People are surprised to find that at the most serious stage of the chip shortage wave, when consumer/industrial OEMs get the allocated chips, the OEMs are still in the dilemma of waiting in line for chips. Because automakers have a great voice in the market, they have long been accustomed to the feeling of being "held up" by their supply chain partners. But then automakers discovered that consumer electronics companies had long since become large, reliable strategic customers in the heart of distributors, who had surpassed themselves in the distribution market.
Some distributors have also noticed new relationships with OEMs over the past few quarters. Most of these relationships are related to fulfillment. At the same time, OEMs, Tier1 and equipment manufacturers in the design chain also benefit from the distributor's expertise in components and wireless communication.
"We work with OEMs, Tier 1, EMS suppliers and technology developers who are working on technologies related to the autonomous vehicle space," said Jason Skoczen, director of sales for Avnet's LightSpeed and Transportation business unit.
Connectivity Needs for Autonomous Vehicles Are Everywhere
Self-driving cars rely on data collected by sensors as the basis for their self-driving functions. Skoczen said that Avnet provides products from sensors, communication ICs, memory devices, microcontrollers and other peripheral technologies for autonomous driving systems.
Gabe Osorio, director of transportation marketing for TTI Inc. in the Americas, said that the autonomous driving function requires the support of a large number of sensors. Customers may just want to find the right sensor at first. Distributors can provide different brands of sensor products and guide customers to choose the most suitable solution for them.
Osorio emphasized that the connection of AV equipment alone provides fertile ground for distributors. "Car audio and video data comes from sensors, cameras and LiDAR. These data are initially transmitted in the car system, and then the collected data can be transmitted to the wireless network through Ethernet, connectors, components and wiring harnesses. Since the vehicle needs to receive and There is an increasing amount of data being processed, and there will generally be a communications infrastructure (using 5G or other wireless standards) in the cockpit.”
Self-driving cars have more cooperative needs
McKinsey pointed out that no company can independently master all the capabilities of autonomous driving, so the establishment of an autonomous driving alliance is very important. In order to be able to span different technologies and business models, participants need to consider strategically "in which areas should we cooperate with partners", "how to determine the appropriate partners and environments", "which partnership relationship is most suitable for their own needs", etc. question.
TTI Inc. is a specialty distributor whose automotive customers are often involved at the design stage and may deepen their relationship through supply chain collaboration. Osorio said that such cooperation usually starts with components, such as capacitors, resistors or wiring harnesses, and then expands to complete solutions, such as display or camera solutions. All in all, these cooperations revolve around multiple levels. In addition, the cooperative customers include not only OEMs, Tier1, but also Tier2 and equipment developers. He added that OEMs don't design all of their self-driving solutions in-house, "and they're looking for partners that they can work with and that can go deep into their own systems."
For most distributors worldwide, this partnership usually begins with supply chain management involvement. A distributor's expertise in component interaction can help automotive customers optimize or simplify designs. Avnet's Skoczen said: "Our service is mainly focused on designing the hardware, but we do also provide customers with the ability to connect the hardware to the software platform."
Now, it is difficult for OEMs to obtain chips that fully meet their needs. Therefore, automakers may also design their own chips, as well as jointly develop chips with semiconductor companies. McKinsey believes that "custom" chips are more efficient, can rapidly improve the performance of automotive systems, and allow the execution of complex software functions and analysis capabilities.
Electronics Content in Cars Soars
According to the classification of the International Society of Automotive Engineers (SAE), there are five levels (Level 1 to Level 5) of autonomous vehicles, and its demand for components will increase as the level increases. According to the McKinsey report, vehicles with LiDAR-based Level 2+ features include about $1,500 to $2,000 in semiconductor component costs, and vehicles with Level 3 and Level 4 options require more semiconductor components.
In addition, a set of data from McKinsey also shows that based on consumers' interest in AD (autonomous driving) functions and commercial solutions currently on the market, it is expected that by 2035, ADAS (advanced driver assistance systems) and AD may be used in passenger vehicles. The automotive market generates $300 billion to $400 billion in revenue.
Automakers have grown increasingly distant from chip companies in recent years as they began sourcing off-the-shelf parts to save costs. As automotive chips become more durable, neither has the incentive to upgrade them, or increase the production capacity of them. The intelligentization and electrification of automobiles have changed this trend, and OEMs have begun to attach importance to cooperation with chip manufacturers: General Motors and GlobalFoundries recently announced the establishment of a partnership; General Motors also plans to cooperate with Qualcomm, ST. Semiconductors, TSMC, Renesas Electronics, NXP, Infineon and ON Semiconductor are cooperating; in addition, Volkswagen is cooperating with STMicroelectronics.