According to data from AutoForecast Solutions (AFS), as of October 30, the global auto market has reduced production by about 3.905 million vehicles due to chip shortages. By the end of the year, that number could rise to 4,278,500 vehicles.

The number of chips that can be lacked will not allow fabs to loosen their prices. If fabs are allowed to loosen their prices, either the demand will decrease, or the number of chips will be increased, and the price will be exchanged for volume.

Previously, Lin Zhenming, director of TSMC's automotive MCU business development department, said that TSMC has complete technology and sufficient production capacity to support the automotive industry, and is fully committed to deploying automotive chip technology and expanding production capacity. In terms of logic technology, it has launched the most advanced 5nm N5A technology, RF technology Also launched the 6nm N6RF process. But he also said auto chip makers should plan and build buffer inventories.

It is understood that because the automotive supply chain is quite complex, it is at least 10 times more complicated than smartphones. More importantly, advanced process development costs are high, and the cost of mature processes has continued to rise in the past two years. Moreover, the production cycle of automotive chips takes 5 months, and it will take 5 months for the customer to deliver the chips after they put forward the demand. The required cost is high and the supply time will be extended.

The semiconductor industry's future-oriented investments are focused on advanced processes, which is not good news for the automotive industry, which is vying for mature process chips. For fabs, mature processes need to be treated with caution even if demand is strong.

It is expected that starting from 2023, there will be a wave of investment in the expansion of mature process capacity. But it will take time to invest in output, and importantly it will take 6-9 months for chip companies to ramp up production, which means the global shortage of automotive chips won't be resolved until late 2024 or early 2025.