A report from Liberty Times, citing Reuters, states that Infineon, NXP, and STMicroelectronics—the three major European semiconductor manufacturers—have expressed that the efforts by the U.S., China, and European governments to establish and fortify their own semiconductor industries are creating increasingly serious challenges for companies operating in the semiconductor sector.

Following Trump’s re-election as U.S. President, the CEOs of Infineon, NXP, and STMicroelectronics made a rare joint appearance on the 11th, underscoring that over the past decade, their businesses have encountered substantial challenges due to rising uncertainty and the intensification of nationalist industrial policies, according to the Reuters.

On the topic of nationalist policy risks, Infineon’s CEO, John Hanebeck, noted that supply chains are moving toward increased fragmentation, a trend likely to worsen with anticipated tariff hikes, as the report indicated. This comes as Infineon projects lower sales for its new fiscal year, citing continued weak demand for chips in the automotive and industrial equipment sectors, as a report from the Wall Street Journal noted.

The Reuters report noted that Infineon, NXP, and STMicroelectronics are major suppliers of chips used for cars, electrical power controls, and industry, and they are currently seeing solid performance in China, driven by its booming electric vehicle market. In contrast, other global chip markets remain sluggish, with the exception of chips used in artificial intelligence, as the report indicated.

Jean-Marc Chery, CEO of STMicroelectronics, expressed similar concerns, noting that the high costs of reconstructing supply chains on different continents to create “China for China” and “West for the West” chips are extremely high, both in materials and engineering.

Kurt Sievers, CEO of NXP, also remarked that no single country can dominate the chip industry or operate independently of others. He believes that if any country attempts to do so, chips would become so expensive that no consumer could afford devices that use chips. He added that over time, governments will increasingly recognize the severity of this issue.

According to a report from Ijiwei, Infineon is also said to delay the second-phase construction of its fab construction plan in Kulim, Malaysia due to the downturn in the semiconductor market.

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(Photo credit: Infineon)

As reported by Nikkei Chinese, Mitsubishi Motors from Japan has made the decision to halt car manufacturing operations in China. This move comes as Mitsubishi Motors engages in final discussions with its local joint venture partner, Guangzhou Automobile Group (GAC Motor).

In China, Mitsubishi Motors has been struggling with reduced sales due to the growing popularity of electric vehicles (EVs) and the increasing appeal of local brands. This strategic shift might have wider implications for other Japanese automakers. What lies ahead for the production facility originally situated in Changsha, Hunan?
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As software and hardware technologies improve in the automotive industry, cars now have an increasing number of smart features in response to the demand for user friendliness; for instance, the Car2Home ecosystem was created as a natural extension of V2X (vehicle-to-everything) technology. Advances in automotive systems and technologies, however, do little to assuage prospective car buyers’ fears of instant depreciation and maintenance fees, which are both justified and frequently parroted by existing owners.

Recent years, however, have seen the emergence of a new technology known as OTA (over-the-air) that can at least address car buyers’ maintenance-related worries. Automakers can fix software issues in the car with OTA updates, thus saving the driver the time and effort it takes to perform a factory maintenance. Simply put, OTA is a cloud-based service that allows automakers to perform a host of actions, including software/firmware updates, OS upgrade, issue fixing, and security patches, through a cloud-network-car connection.

As such, OTA technologies are highly dependent on data encryption, decryption, and transmission, meaning OTA services involve not only software and cloud services vendors, but also cybersecurity companies as well. According to TrendForce’s investigations, about 72% of new cars sold in 2025 will be OTA-enabled vehicles thanks to advancements in V2X, automotive electronic/electrical architectures, and intra-vehicle communications.

OTA pioneer Tesla kicked off its OTA strategies in 2012

Tesla is perhaps the impetus responsible for the surge in OTA viability in the automotive industry. Elon Musk believes that cars should be appreciated, as opposed to depreciating, assets for the consumer. As part of that belief, all Tesla models are capable of OTA updates of software and firmware, reflected in Tesla’s revenues from “service and other”, which saw yearly growths from 2016 to 2020 (Tesla’s 2020 earnings from “service and other” alone surpassed US$2.4 billion). Therefore, Tesla’s sales volume will remain the key to the market size and penetration rate of OTA technology.

Other automakers, such as BMW, Mercedes-Benz, GM, Ford, Toyota, and Volkswagen, also began rolling out OTA updates in their models from 2015 to 2020, although it wasn’t until the year 2020 did most of these companies perform OTA updates on any appreciable scale. Furthermore, most OTA updates were software updates as opposed to firmware updates (for ADAS and powertrain functionalities), since issuing firmware OTA updates still remains a major issue for automakers at the moment.

TrendForce also indicates that, should automakers wish to improve automotive functionalities with OTA updates, they would need to completely overhaul their cars’ electronic and electrical architectures. In this light, one of the prerequisites of performing functional OTA updates is the availability of compatible hardware in cars.

For instance, in order to activate LiDAR functionality, automakers must first equip a car with LiDAR hardware. Once self-driving technology matures to the point when it is deemed appropriate to be enabled on a given car, then automakers can activate the necessary LiDAR functionality with OTA updates.

Of course, all of this hinges on whether automakers are willing to bear the cost of preemptively equipping their cars with the necessary hardware, as well as whether they have any faith in the success of new services/functions to be activated by OTA in the future. Most importantly, however, if consumers were uninterested in these services and functions, then automakers would have no way of recouping their preemptive investments in the aforementioned hardware.

On the whole, despite most automakers’ planned to roll out the capability of OTA updates to their vehicles, they still face bottlenecks in performing OTA updates safely and providing useful upgrades for users. Only by overcoming these hurdles will automakers effectively improve the driving experience and convince car owners as well as prospective buyers that OTA is a worthy investment.

（Cover imgae source: Pixabay）