On February 19, according to the "Suzhou Release" notice, the staff of Bosch Automotive Parts (Suzhou) Co., Ltd. was diagnosed with asymptomatic infection.
As of now, it is not possible to say how the case will affect the operation of Bosch's Suzhou plant. However, Bosch said in an interview with Reuters a few days ago that "it is expected that the epidemic will have a short-term impact on manufacturing and post-production operations."
Image source: Suzhou posted a screenshot
Relatively optimistically, Bosch China has strictly implemented Suzhou's epidemic prevention and control policy, prepared for various possible situations, and has notified relevant customers as soon as possible to minimize the impact on customer supply.
Many semiconductor companies have stopped work, "missing cores" or worse
Referring to the diagnosis of Bosch employees, some automotive OEMs employees immediately commented that the epidemic in Suzhou may make the "lack of core" in the automotive industry worse, at least in a short period of time.
As the industry knows, Bosch is not the first time to be tested by the epidemic. In August last year, Bosch suppliers shut down their Factories in Malaysia due to the epidemic, and Bosch CHIPS/IPB, VCU, TCU and other chips were directly affected. Among them, Bosch ESP products were even discontinued for a time.
History may be similar, but it will not simply be repeated.
Chen Yudong, President of Bosch China, has publicly stated that Suzhou is one of Bosch's most important R&D and production bases in China. According to official information, Bosch has been stationed in Suzhou since 1999, and is also the business site of the Automotive Electronics Division, the Chassis Control Division, the Automotive Multimedia Division and the Equipment Manufacturing Division.
In other words, because Suzhou is crucial to Bosch R&D and production, Bosch plays a "bellwether" role in the automotive supply chain, and the dynamics of Bosch Suzhou are more likely to have an important impact on the industry. The industry is always on the lookout for what's going on.
In addition to Bosch, other supply chain companies have also confirmed cases. According to the "Suzhou Release" news on the 19th, Taiwan's Jingyuan Electronics subsidiary Jinglong Technology has two staff members for the new case. In addition, other semiconductor-related enterprises such as Xinhe Electronics, a brand of Xinhe Semiconductor, also have employees diagnosed with new crown.
Image source: Screenshot of the official website of Lianhua Electronics
As early as February 14, UMC released a news that the company's 8-inch fab in Suzhou and the ship chip manufacturing company were currently cooperating with the local authorities to conduct full testing due to an employee suspected of being infected with new crown pneumonia, so production activities were gradually suspended.
In terms of market share, UMC is currently the world's third largest foundry. As a subsidiary company, Hejian Chip was officially put into production in 2003, with a monthly output of about 80,000 pieces and more than 2,000 employees. In China, its main competitors are SMIC, Huahong Semiconductor and subsidiaries set up by overseas foundry giants in China.
At the end of last year, Jibang Consulting announced the value of wafer foundry output in the third quarter. According to the data, with the gradual increase in the new capacity of wafer foundries and the continuous increase in average selling prices, the wafer foundry output value in the third quarter of 2021 reached 27.28 billion US dollars, an increase of 11.8% per quarter, which has reached a record high for nine consecutive quarters. Even so, the industry generally believes that in 2022, wafer foundry capacity will still be in a slightly tight market situation, and price increases are still expected to be difficult to avoid.
In the context of the original tight supply of mature process chips, if the shutdown time of hejian chips is longer, it may further exacerbate the problem of "lack of cores", which will inevitably trigger industry concerns about the future production order.
The relevant examples are not listed here. However, it can be preliminarily concluded that the normal operation of many enterprises has been affected and has been suspended, which has brought about a chain reaction. A few days ago, chip design company Zhongying Electronics disclosed an announcement on the impact of the supplier epidemic on production and operation, saying that because the production activities of suppliers and ship chips and Jinglong Technology located in Suzhou Industrial Park were suspended, the company's product production will be affected.
It is true that Suzhou, as an important chip and auto parts base in the country, even if the scope is reduced to Suzhou Industrial Park, there are also a large number of semiconductor manufacturers, as well as upstream and downstream electronic industry chain enterprises gathered here.
According to the "2021 Market Situation" released by the Suzhou Bureau of Statistics, by the end of 2020, a total of 156 Fortune 500 multinational companies outside the world have invested in Suzhou, involving the automotive industry including Delphi Technology, Aisin Seiki, Siemens, Bosch, ZF, Flextronics, etc.
Image source: Screenshot from Suzhou Industrial Park
As far as the Suzhou Industrial Park is concerned, it is a semiconductor powerhouse - as of the beginning of 2021, there are 28 semiconductor equipment and materials enterprises in the park, including 9 equipment companies, 15 material companies, 3 equipment accessories companies and 1 equipment processing enterprise. At the same time, 6 of the world's top ten sealing and testing enterprises have entered the park, and 9 companies rank among the top 30 in the mainland sealing and testing industry.
Although "whether the suzhou epidemic will make the automobile supply chain face a new test" affects the nerves of the entire industry, there are also relatively optimistic voices that believe that the current epidemic is still in the early stage of the outbreak, and the follow-up impact is not easy to judge. Moreover, the domestic epidemic management level has been relatively mature, and relevant enterprises may be able to resume work and production as soon as possible.
Survive the epidemic in Suzhou, can you willow dark flowers?
With that, the focus is on when will the affected semiconductor companies resume work?
There is no clear answer to this question. Later on February 19, Bosch Suzhou released the latest news that due to the extremely limited internal space of the first, second and third factories, and the hardware facilities could not meet the large-scale staff stationed in the factory to implement closed-loop management, the company's emergency team decided after research that all production lines switched back to the original mode to meet production needs and order delivery.
According to a previous statement issued by UMC, companies that have been suspended from production activities need to obtain approval from the competent authorities if they want to resume work.
Source: AFS; Image source: Gaz Cars
In fact, since the end of 2020, global automakers have been trapped by chip shortages and show no clear signs of recovery. According to the latest statistics from AFS, due to the shortage of chips, as of February 13, the global auto market has reduced production by 527,400 vehicles this year, a sharp increase of 42% compared with the cumulative production reduction (370,500 units) as of February 6. Among them, the cumulative production reduction of China's automobile market remained unchanged, still at 51,100 units, accounting for 10% of the cumulative production reduction in the global automobile market.
In the past two years, the topic of "lack of core" can always update the dynamics of car companies for the melon-eating masses.
On February 18, Mercedes-Benz announced that it would suspend orders for E-Class cars in Germany due to the lack of cores.
For the same reason, Ford announced on the 14th that it will suspend the production of Transit in the Missouri plant and suspend truck production in the Ohio plant, in addition to the company will also cut production shifts in some other factories.
In early February, Volkswagen said that due to the chip shortage, the night shift of some production lines at the Wolfsburg plant would be cut. In addition, the company expects chip shortages to continue to affect production this year.
Last week, when Bosch announced its 2021 earnings forecast, it expected that chip shortages and rising raw material costs would continue to affect this year's automobile production. "In 2022, global car production will reach about 85 million units, and even so, this volume is still about 8% lower than before the epidemic."
MEMS sensor test in a dust-free workshop; Image source: Bosch
In this context, the automotive industry has been trapped by "lack of cores" for at least three years. But it is worth noting that both businesses and governments have clearly recognized that "inaction" is not a good way to deal with difficulties.
First of all, the shortage of supply needs to improve the manufacturing system to deal with it. Over the past year, major semiconductor manufacturers such as TSMC, Samsung Electronics and Intel have unveiled tens of billions of dollars in investments to build new factories.
Secondly, the government supports the development of the chip industry at the national level, such as the recent introduction of the Chip Law in the United States and the European Chip Act in the European Union. Against the backdrop of current geopolitical tensions, countries are strengthening "digital sovereignty" and promoting their own innovation to reduce their reliance on foreign technology and foreign companies.
As far as China's automotive chip market is concerned, if you want to make great strides, you must also establish a complete semiconductor R&D-manufacturing system during this platform period - whether it is etching machine manufacturing, building wafer production lines, or chip design and integration, each link should be down-to-earth to form a "living source of water".
Facing the future, whether it is a semiconductor company or an upstream and downstream enterprise in the automotive industry chain, if you want to eliminate the risk of being stuck in the neck, the burden on your shoulders must be heavier. After the epidemic in Suzhou, I am afraid that it is not the best time to issue a sigh of "willow dark flowers and bright villages", and every participant in the industry chain has a long way to go.