Automotive chip vendors are striving for mid- and long-term capacity support from Taiwan-based foundries, according to sources at Taiwan-based fabless IC vendors.

The automotive chip market has been dominated by international IDMs, leaving little room for pure-play foundries to grow their presence in the field. Nevertheless, with IDMs outsourcing more of their production, coupled with promising EV demand outlook next year, foundries may have a good chance of capturing a larger pie of the automotive chip market, the sources indicated.

The escalating US-China trade war and ongoing COVID-19 pandemic have also placed Taiwan's chipmaking industry at an advantage, the sources said. Taiwan-based foundries, led by TSMC, are gearing up for a ramp-up in high-margin orders for automotive chips and solutions.

Foundries including TSMC and UMC have already been approached by automotive chip vendors, which anticipate their supply will fall short of demand over the coming year, the sources noted. Orders for automotive chips usually carry high ASP and are more stable than orders for mass-market solutions, and are therefore given priority amid tight foundry supply, the sources continued.