Bosch looks at broader picture with $1.1B chip plant

Article By : Ariella Brown

It’s true the company is invested in the development of autonomous cars, but the story that Bosch itself tells about its plans for the factory it is building in Germany is not that narrowly focused.

Robert Bosch GmbH has made headlines after several news outlets echoed Bloomberg’s headline: “Bosch to build $1.1 billion chip plant for self-driving cars.” While it may not quite stray into alternative fact territory, the headlines is somewhat misleading because the chips are not reserved for self-driving cars. Buried within the article is the acknowledgement that Bosch says they will also be used for “smart homes and Internet-linked city infrastructure.” By all measures, it's clear the company intends to be a major player in the global supply chain for connected electronics.

It’s true that the company is invested in the development of autonomous cars. In March, it announced a partnership with U.S. company Nvidia, which produces artificial intelligence (AI) systems for self-driving vehicles” in which it would build an “artificial intelligence self-driving systems for mass market cars” based on Nvidia's Drive PX line with Xavier architecture.

So it does make sense that it would be considering the automotive customer, especially if it is true that, as the Bloomberg article states, each car purchased last year “contained an average of nine chips made by Bosch.”

However, the story that Bosch itself tells about its plans for the factory it is building in Dresden, Germany, is not that narrowly focused, as revealed by its press release. It takes a broader picture of the possible demand for its 12-inch wafers to justify “the biggest single investment in Bosch’s more than 130-year history,” as Dr. Volkmar Denner, chairman of the board of management of Robert Bosch GmbH puts it.

The company is confident about making such a substantial investment given the growing demand for semiconductors. As Denner explained, they form “the core components of all electronic systems.” Given that fact and the anticipation of greater “connectivity and automation” in cars, as well as other areas that depend on those qualities, he finds, “extending our semiconductor manufacturing capacity” is the way to build “a sound basis for the future and strengthening our competitiveness.”

The press release refers to “a study by Pricewaterhouse Coopers,” that projects 5% annual growth for “the global semiconductor market” through the next two years. Perhaps they had something like this in mind. The overall market forecast there states “PwC’s analysis of the global semiconductor market suggests that between 2014 and 2019 billings will increase by US$96 billion to US$432 billion, corresponding to a compound annual growth rate (CAGR) of 5.2%.”

The same report also includes a quote from Keith Jackson, president and CEO of ON Semiconductor, who says the following:

We observe three key trends in the semiconductor industry in the years ahead. The big one is the connectivity of information which is also called Internet of Things. It stimulates a huge demand of sensors for the semiconductor industry. Power consumption and automation are the other two important trends….When we look at the markets, in our perspective the automotive and communication markets will be the two largest drivers for the growth of the global semiconductor market for the next years.

Yes, the automotive sector is to be one of the main drivers for the semiconductor industry, but it really fits into the larger trend that is identified as IoT as well as the increase in automation. That is what Bosch references when it declares, “Semiconductors are a key technology of our modern age, especially as manufacturing, mobility and homes become increasingly connected, electrified and automated.”

Bosch is on a fairly tight schedule according to the deadlines it shares in the press release. The plant is to be fully constructed by the end of 2019. Then they are allowing “a rollout phase” for another couple of years. But by the end of 2021, they anticipate they will hire around 700 people and will be manufacturing the 12-inch wafers.

The advantage of the 12-inch wafer is that it offers greater “economies of scale” than “conventional 6- and 8-inch wafer fabs” because more “chips can be made per manufacturing cycle” for larger ones. The release stresses that that is crucial in making it possible for “Bosch to meet the rising demand for semiconductors brought about by connected mobility and applications relating to smart homes and smart cities.”

Bosch hopes to be a major player in the electronic supply chain for such connected applications, whether they are to be used in connected cars or in anything else that is to be powered by IoT and semiconductors.

First published by EBN.

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