Recently, the three major European MCU giants, stmicroelectronics, Infineon and NXP, have successively released multi-pronged strategic plans for the Chinese market like a whirlwind. Judging from the announced measures, the three major original equipment manufacturers can be said to be "full of sincerity". The strategy centered on local production will play an important leading role, driving the ecological construction of the three major manufacturers in the era of vehicle chips.

On the other hand, the competition in the domestic MCU market is already quite fierce. While domestic substitution has firmly established itself in the mid-to-low-end market, it is also making an impact on high-end markets such as automobiles. There will surely be various opinions on whether the layout of the three major European giants this time can adapt to the new Chinese market environment, which is worth continuous attention.

Stmicroelectronics (ST)

Manufacturing method: At the end of 2024, stmicroelectronics announced that it would entrust Hua Hong to manufacture its 40nm eNVM MCU products. The company will use exactly the same masks, equipment, and process parameters as its European factories to ensure zero performance difference between the Chinese production line and overseas products, achieving localization of STM32 products. It plans to start mass production in 2025. In addition, it has announced the establishment of a joint venture with SAN 'an Optoelectronics in China, with an investment of up to 3.2 billion US dollars, focusing on the research and development, production and sales of high-performance silicon-based silicon carbide power devices and diodes.

Overall strategy

Dual supply chain strategy: It was the first in China to embark on the dual supply chain path for MCUS, that is, through cooperation with Hua Hong, it established a local supply chain in China while retaining the original supply chain in Europe. This not only builds a solid security barrier for the MCU, but also makes it the only major MCU manufacturer capable of providing dual supply chains, enabling it to better cope with the risk of global supply chain silos and offer more reliable supply chain support to Chinese Oems conducting international business and global Oems operating in China.

Expand the market and customers: Utilize the localized operation model of "China-for-China" to adapt to the rapidly changing and highly competitive Chinese market. In the next five years, it is planned to expand the local customer base by 50%, further deepen the Chinese market, enhance its influence and competitiveness in the Chinese market, and meet the constantly growing demands of the Chinese market.

Technology and cooperative Innovation: We have established dedicated production capacity channels with Hua Hong Macro in 40nm, OFT, and BCD/IGBT technology nodes, and have collaborated with SAN 'an Optoelectronics to carry out front-end manufacturing of silicon carbide. By leveraging China's local industrial resources and technological advantages, we aim to promote technological innovation and product upgrades, providing customers with more competitive solutions.

Infineon

Manufacturing method: Infineon established a production base in Wuxi, China as early as 1996, initially mainly engaged in back-end packaging manufacturing. Nowadays, it is further promoting localized production, entrusting the front-end manufacturing of some chips to domestic foundries. It plans to cover the localization of mainstream products by 2027, including microcontrollers, high and low voltage power devices, analog mixed-signal, sensors and memory devices, etc. Moreover, the Wuxi factory has introduced a 12-inch wafer production line. The delivery cycle of the TC4x chip has been shortened to 4 weeks, which is 60% shorter than the production in Germany.

Overall strategy

Close to customer needs: By manufacturing locally in China, we can respond more promptly to the demands of Chinese customers, shorten the delivery cycle, provide better services to customers, and enhance customer satisfaction and loyalty.

Enhancing market share: Accelerating the localization of product production helps Infineon further expand its market share in China and consolidate its leading position in the global MCU market. In 2024, it captured 21.3% of the global MCU market share through this strategy, an increase of 3.5 percentage points from 17.8% in 2023, which is the largest growth rate among its peers.

Building a local ecosystem: Establish and improve a rich local ecosystem for automotive chips, covering automakers, Tier1 suppliers, universities, industry associations, tool manufacturers, Design houses, media think tanks and industry institutions, etc. Through the joint efforts of all parties, localized development, product definition and production cooperation will be implemented.

NXP

Manufacturing method: NXP already has its own packaging and testing factory in Tianjin and previously cooperated with SMIC in the foundry manufacturing of 40nm chips. We are currently making every effort to find a domestic wafer fabrication plant as a partner, planning to "fully develop all our products in the Chinese market" from the front-end to the back-end, from wafers to packaging and testing, further enhancing the degree of localization of manufacturing in China.

Overall strategy

Serving the demands of the Chinese market: It has clearly put forward the localization strategy of "in China, for China, for the world", aiming to better serve the needs of Chinese customers, provide support for the digital transformation of China's automotive, industrial and other fields, seize the development opportunities of the Chinese market, and increase its sales and market share in the Chinese market.

Industrial upgrading and synergy: By establishing a complete supply chain in China and cooperating with local enterprises, NXP promotes the coordinated development of the upstream and downstream of the industry, drives the upgrading of China's semiconductor industry, and also creates favorable conditions for its own technological innovation and business expansion, achieving mutual benefit and win-win results.

Responding to competition and challenges: In the face of the rise of domestic Chinese chipmakers and the intensification of market competition, NXP has increased its manufacturing and R&D investment in China. This will help enhance the competitiveness of its products, reduce production costs, strengthen its risk resistance in the Chinese market, and consolidate its market position.

Conclusion

The three major European MCU giants, stmicroelectronics, Infineon and NXP, have all intensified their layout in the Chinese market. Through various measures such as localized production, dual supply chain strategies, expanding customer bases and building local ecosystems, they are actively responding to the new environment and fierce competition in the Chinese market.