Written submission from the Advanced Propulsion Centre UK (SEM0066)

 

Business Energy and Industrial Strategy Committee Inquiry:
The semiconductor industry in the UK

Evidence provided by the Advanced Propulsion Centre UK (APC) 14 June 2022

Executive Summary:

The Advanced Propulsion Centre (APC) is an organisation that was formed in 2013 as a joint government industry partnership. Our unique relationship with the automotive industry, and the political and academic landscape means, collaboratively, we drive the right commercial and strategic outcomes for the benefit of the UK. Our bridging position, between the industry and the innovation means we can influence up and down the ecosystem taking a science superpower to an industrial superpower.

We support the UK government to deliver its aspiration for net-zero road transport while growing the UK’s automotive sector creating jobs and growth. Over the past eight years we have supported projects that have safeguarded or created around 50,000 jobs and led to reductions in CO2 equivalent to the lifetime emissions of 12 million cars.

The answers provided to the question within this consultation response relate to automotive power semiconductors and their impact on the electric vehicle industry. It is worth highlighting that data from IHS Markit suggests (Figure 1) the number of semiconductors per car has doubled from 2017 to 2021. This is due to more infotainment and advanced driver assistance features.

automotive-chips-per-car

Following on from this the insight from the APC suggests that vehicle electrification’s impact on the semiconductor industry hasn’t fully taken hold. When it does, a power semiconductor shortage is possible as the supply of power semiconductors demanded by the automotive industry is controlled by a few dominant players.

This is something that the UK government need to be cognisant of this as a lack of power semiconductors could stall the government’s net-zero transport vision as much as a battery material shortage.

This response highlights some key insight and suggested areas of focus:

 


1. What is the current and future anticipated demand for common products built with semiconductor materials (e.g. computer chips) both in the UK and globally?

Semiconductors used in automotive power electronics play a crucial role in powering our electric vehicles. They ensure power is supplied to the electric motor (inverter), the voltage levels in a vehicle (DC-DC converter) are managed and enable plug-in vehicles to charge from the electricity grid (on-board charger).

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Description automatically generatedThe rise of hybrid and electric vehicles will generate additional demand for power semiconductors. Data from Infineon, presented in Figure 2, shows that vehicle semiconductor content is expected to rise from ~$490 per vehicle for an internal combustion engine vehicle to ~$950 for a battery electric vehicle (BEV). Power semiconductors will drive much of this content increase, especially from the high-powered inverters used to drive the electric motor.

Power semiconductors are the key component of inverters, DC-DC converters and on-board chargers. Figure 3, which shows data from a study conducted by the APC & AVL, demonstrates that silicon based “IGBT / MOSFET” (two types of power semiconductors) represent around a third of a typical inverter cost. This far outweighs any other component in the assembly of a power inverter.

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Due to the demanding performance requirements of electrified vehicles, it is expected that silicon-based semiconductors will be displaced in inverters, DC-DC converters and on-board chargers fairly quickly. As laid out in the APC’s Power Electronics Roadmap (Figure 4) inverters will rapidly adopt silicon carbide (SiC) semiconductors, especially in 800V architectures and vehicles that need longer range where efficient power electronics are key. Adoption for GaN will take another 2-3 years and will first occur in on-board chargers and DC-DC converters where the power requirements are lower.

Timeline

Description automatically generatedMarket update forecasts carried out by Yole and Exawatt reaffirm the bullish growth of SiC in the automotive sector. Exawatt predicts that silicon carbide-based inverters will surpass silicon-based inverters by 2024. By 2030 95% of battery electric vehicles will use SiC based semiconductors in their powertrains.

Work conducted by the APC and Industry Strategy Challenge Fund Driving the Electric Revolution (DER) on behalf of the UK Automotive Council forecasted the expected demand for inverters, DC-DC converters and on-board chargers. The numbers derived are based on the domestic manufacture of cars and vans, with the demand representing the need for these three components. The numbers don’t include manufacturing of converters in the UK from Tier 1s or OEMs without vehicle production (e.g. Ford). The demand numbers also don’t include demand arising from the production of buses, heavy goods vehicles and other off-highway machinery. The graphs and explanations are detailed below.

Inverters 20-500+kW components that are coupled with electric motors and transmissions to make electric drive units (EDUs). EDUs are often seen as the technology that can be made in repurposed engine assembly factories.

Therefore, vehicle manufacturers are looking at onshoring inverter assembly, or, have a Tier 1 help build the inverter ready to integrate into the EDU. An example of this type of activity was Ford UK committing to make 250,000 EDUs in its Halewood facility, which was part-funded by the Automotive Transformation Fund[1].

Based on 2020 production estimates, the number of inverters demanded by UK-based manufacturers is ~170,000 units, of which the vast majority comes from imports[2]. In 2025 and 2030, the number of inverters required is ~1.2 million and ~1.7 million respectively. In these transition phase years, there are a healthy spread of inverters for hybrid applications (plug-in hybrid electric vehicles (PHEV) and hybrid electric vehicles (HEV)) as well as BEVs. In 2025 it’s expected a lot of the supply will come from imports to meet the aggressive ramp up targets.

By 2030 an ambition would be to have a healthy amount of vehicle manufacturers and Tier 1s manufacturing inverters in the UK. By 2035, the inverter numbers jump to ~2.3 million being demanded by car and van manufacturers, with the vast majority of inverters being high powered, high voltage BEV inverters.

DC-DC converters are 3-7kW rated components that are much lower cost than inverters. There is typically only one in the vehicle to help take the 400-800V DC current from the lithium-ion battery and “step it down” to 12V so the power is suitable for ancillaries such as lights and infotainment. Given the relatively lower value of DC-DC converters along with them being far removed from vehicle manufacturers existing capabilities, it is assumed all DC-DC converters will come from Tier 1 suppliers.

Based on 2020 production estimates, the number of DC-DC converters demanded by UK based manufacturers is ~160,000 units, of which the vast majority comes from imports. In 2025 and 2030, the number of DC-DC converters required is ~1.0 million and ~1.3 million respectively. In these transition phase years, there are a healthy spread of DC-DC converters for hybrid applications (PHEV and HEV) as well as BEVs. In 2025 it is expected a lot of the supply will come from imports to meet the aggressive ramp up targets. By 2030 an ambition would be to have some Tier 1s manufacturing DC-DC converters in the UK, especially the ones that are GaN based. By 2035, the DC-DC converter numbers steadily rise to ~1.7 million being demanded by car and van manufacturers.

On-board chargers are 3-23kW rated components that are more expensive than DC-DC converters but a cheaper than inverters. Their role is to convert the AC electricity into the grid into DC suitable to charge the battery. On-board chargers are only found on “plug-in” vehicles which mean PHEVs and BEVs. The analysis assumes fuel cell electric vehicles (FCEVs) don’t come with an option to charge from an EV charger. Similar to the reasons for DC-DC converters, it is assumed all on-board chargers converters will come from Tier 1 suppliers.

Based on 2020 production estimates, the number of on-board chargers demanded by UK based manufacturers is ~44,000 units, of which the vast majority comes from imports. In 2025 and 2030, the number of on-board chargers required is ~800,000 and ~1.1 million respectively. In 2025 it is expected a lot of the supply will come from imports to meet the aggressive ramp up targets.

By 2030 an ambition would be to have a good amount of Tier 1s manufacturing on-board chargers in the UK.  By 2035, the on-board charger numbers jump to ~1.5 million being demanded by car and van manufacturers, with many on-board chargers being for BEVs.


2. What is the UK’s semiconductor supply chain and is this secure? If not, how can this be improved? What specific strengths does the UK have to contribute to regional or global semiconductor supply chains? How competitive is the UK within the global context of the semiconductor industry?

While the UK isn’t a top five manufacturer of power semiconductors for automotive applications, we have significant capabilities that make us globally competitive. Below are the specific strengths and weaknesses of the UK power semiconductor and wider power electronics industry.

APC insight highlights specific UK strengths:

 

 

APC insight on potential UK weaknesses:

 

 

 

 


3. Are there opportunities for strengthening different parts of the current UK semiconductor industry? What are the potential weaknesses and strengths of the UK semiconductor industry to meet future requirements of electronic device manufacturing?

Building capability in power electronics and semiconductors can be split into two distinct activities.

The first stream is the development of a UK-based power converter R&D and assembly industry. An industry where the investment requirement is relatively modest, and is made by suppliers in sectors such as automotive, rail, renewables, aerospace etc.

The second stream is to build an integrated UK power semiconductor industry and supply chain, where investments can supply multiple sectors. The investment type is usually greater with higher barriers to entry; however, much of the value is contained within these components, so represents a significant opportunity for the UK.

The other consideration is the relative scale of a sector that semiconductor supply chains are feeding into.

The first category is high-margin, niche sectors such as performance vehicles, rail and eVTOL. These sectors tend to be better serviced by UK suppliers as the volumes are lower, with higher IP intensity.

The second category is large-volume or value sectors, that require high volumes or a large market size in terms of value. Sectors like high-volume automotive, industrial drives and wind turbines. These industries tend to be more reliant on imports. The industrial drives sector is well covered by a UK industry but high volume automotive currently has no high volume production in either semiconductor manufacture or inverters, DC-DC converters and on-board chargers. These nuances can be summarised in Figure 10 which show the suitability of the UK industry and government ecosystem based on the various classifications.

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Top left square: Various APC and DER projects have supported converter R&D and manufacturing capability for low volume applications in the UK. Some examples include:

Top right square: There is no volume manufacture of inverters, DC-DC converters and on-board chargers for high volume automotive.

Although the £15.6m APC Hi-VIBES project has funded Jaguar Land Rover to develop an integrated control unit to control future BEV traction batteries which offers significant weight saving from current industry distributed solutions. The ambition, working with Lyra Electronics and Nottingham University, is to develop cutting edge power electronics design and analysis solutions working alongside Pektrons expertise in design for volume manufacture.