The expanding electric vehicle industry is good news for Taiwan, as it increases demand for semiconductor chips and provides environmental benefits. But although electric models are more climate-friendly, batteries continue to pose environmental challenges.
Foreign delegations and corporate leaders stood shoulder-to-shoulder in a packed conference room at the Nangang International Exhibition Center on September 14. They had gathered for the opening of SEMICON Taiwan, the world’s largest semiconductor expo. Collectively, they applauded an industry billed as national salvation (“Taiwan miracle”) and its best defense (“Silicon Shield”).
At the podium, American Institute in Taiwan (AIT) Director Sandra Oudkirk acknowledged Taiwan’s role in producing 70% of the world’s advanced semiconductors. She also called for increased supply chain resilience, a nod to the U.S. Congress’s passage of the US$50 billion CHIPS and Science Act, which encourages onshoring of chip production through increased Taiwan-U.S. investment.
The shift to electric vehicles (EVs) is undoubtedly good news for Taiwan’s semiconductor industry. An iPhone contains around 50 chips, while a PlayStation has 130. Automobiles, meanwhile, have about 1,200 chips in a standard internal combustion engine and 3,000 in a fully electric vehicle. Experts estimate that 8% of annual chip production goes to automobiles.
Ajit Manocha, president of SEMI, an electronics industry association and organizer of SEMICON, acknowledged the importance of the auto industry in a video address at the event. He noted that chips are responsible for everything from engine operation and fuel economy to emergency braking.
If fully autonomous driving becomes commonplace, passengers could multitask during their commutes, enabling truly smart mobility. Autonomous driving will also increase demand for chips, supporting more cameras, multiple radars, ultrasonic sensors, more advanced steering and braking, digital control units, and the infotainment system.
Unfortunately, chip dependence has unintended consequences and drawbacks. “Now there is an endless waiting list for every new car order,” said Berthold Hellenthal, strategic semiconductor manager of Volkswagen, who also appeared via video at SEMICON Taiwan. “We look at the supply chain and see issues. Everyone is blaming the next in line. We need to get involved, or things will not change.”
To illustrate the technological development in automobiles, Hellenthal noted that a Porsche 911 in 1978 contained eight semiconductors and one electronic control unit (ECU), while the newest fully electric model, the Porsche Taycan, has 8,000 semiconductors and 90 ECUs.
Hellenthal said automakers hurt themselves by delaying or canceling chip orders due to COVID-related factory shutdowns. When these orders were canceled, they were quickly snapped up by consumer electronics companies, leaving automakers out in the cold.
Fortunately, not all chips incorporate advanced technology – 80% of chips in vehicles are of the non-advanced type, typically the 40nm platform, which is inexpensive and easier to produce. However, these are the same chips used in consumer products, with orders typically running at 95% capacity, meaning delays are difficult to avoid.
A changing industry
Aside from a chip shortage, design bottlenecks are also slowing the transition to electric vehicles. “It takes four years to design a car,” said Bob Chen, general manager of Foxconn Semiconductor Business Group, at SEMICON Taiwan. “It’s kept secret, and parts are expensive, with a long certification cycle. We can’t do parallel or collaborative development right now, as there are few common parts. We saw similar problems in the semiconductor industry before the foundry model was invented.”
Chen is unequivocal about auto development, noting that “the internal combustion engine is 100 years old. Like it or not, it will disappear.” He adds that the conversion to fully electric vehicles has only been slowed by the time it takes to develop new automobiles.
Chen expects developmental time to be cut to two and a half years through the introduction of open-source design, which will pave the way for revolutionary innovation in the automotive industry. “Many believe a car is just hardware, and when you drive it off the lot, it decreases in value. In the future, EVs can be upgraded, becoming a ‘software-defined vehicle’ as you can download and install a new operating system.”
But the most important thing, according to Chen, is that autonomously moving cars “will be safer than human driving.” He expects that converts will be using a cellphone to call their car, much like how one might order an Uber. To account for innovations like autonomous driving, automakers will need to rethink the way they design and build cars.
“We need a paradigm shift in innovation,” he noted during a presentation. “Autos are heavy and bulky, and have to be made overseas in Mexico, Ohio, and Southeast Asia, meaning there are many brands and there’s no loyalty.”
“Our research finds that 66% of consumers are willing to change car brands based on their autonomous driving function,” says Hsiao-Lu (Denise) Lee, a partner leading McKinsey and Company’s semiconductor practice in Asia. “There will be more semiconductor complexity, and purpose-built chips will be more prevalent.”
She adds that the car industry is expected to look increasingly like the computer industry, with centralization making it easier to produce new chips. All this is good news for Taiwanese companies, which are proficient at anything involving electronics.
“Taiwan is good in cellphones and notebooks,” said Minister of Economic Affairs Wang Mei-hua during the event. “We can also be competent in auto chips. We have a good supply chain. An automobile now has 3,000 chips, and there’s unlimited potential as many suppliers want to enter this field, which holds lots of opportunities. The government is willing to make introductions and support these companies.”
“Currently 100 companies in Taiwan are involved in producing chips for autos, and this continues to be a new opportunity for local companies in both EV and self-driving vehicles,” she added. “These chips range from radar, Wi-Fi, navigation – all fields where we excel.”
Far from perfect
Most EVs have lower emissions than gasoline-fueled cars, but an important aspect of an electric vehicle’s carbon footprint is the electricity used to charge the car. Coal accounted for nearly 45% of Taiwan’s energy mix in 2021, and fossil fuel as a whole for around 83%.
Although a fully electric car still emits lower amounts of greenhouse gases than an internal combustion engine if it runs on coal-powered electricity, it’s clear that the full potential of an EV can’t be reached until Taiwan’s energy mix includes more renewables.
For many, the main concern about conversion to electric vehicles is that its central component – the battery – is heavy, expensive, and notoriously difficult to produce, let alone recycle. The battery in a typical EV is like the lithium-ion battery in your phone or computer – it’s just thousands of cells bundled together, wired into battery packs, and managed by a Battery Management System that carefully controls charging and discharging. Battery technology has seen little progress in the past decade and still relies on rare earth elements like cobalt and lithium.
Both elements are of environmental concern, although cobalt is particularly problematic. Around 70% of the global cobalt supply is mined from the war-torn Democratic Republic of Congo, where reports of child labor and severe worker safety violations have been frequent. Mining lithium, meanwhile, requires large amounts of groundwater. Manufacturing EVs is around 50% more water-intensive than mining materials used for internal combustion engines.
Taiwan’s Environmental Protection Administration (EPA) estimates that about 1,100 metric tons of lithium-ion batteries will be discarded annually in Taiwan by 2025, largely due to the increased use of EVs. Recycling and repurposing these batteries is therefore essential to the circular economy and increased sustainability.
For EV batteries, recycling is the worst-case scenario. Lithium-ion batteries are recycled through reprocessing or by being crushed into a black slurry, from which useful materials are extracted. But these processes still leave large amounts of unutilized waste.
In Taiwan, the EPA together with the Industrial Technology Research Institute (ITRI) this year announced a solution that will significantly improve the lithium-ion battery recycling process. The partners developed a method to extract higher-purity cobalt sulfate and cobalt oxide, which can then be reused in new batteries and other products.
Batteries are deemed degraded when they dip below 80% charge retention (just like cellphone batteries). Automakers generally offer a battery warranty of between seven and eight years or 100,000 miles, but except in instances of defectiveness, batteries rarely need to be replaced before the warranty period has ended. Even then, whether driving at 80% battery capacity has significant impact depends on the driver, as some people only do quick commutes between home and the office or to their local grocery store.
Rather than being recycled, degraded batteries can be repurposed or given a “second life” through pairing with solar panels for power storage.
“New batteries are able to be utilized at 100% capacity, but after a while can be degraded and lose 20% of their charging capacity,” says Chang Jeng-Jr, a semiconductor researcher at ITRI. “If we do diagnostic health checks by using software, we can adjust our battery deployment and layout and identify those that are in bad health. This can improve the whole battery array.”
Chang notes that ITRI has developed diagnostic and system-management software to analyze EV batteries and identify which cells or modules are degraded or defective. This means an intelligent battery array management system can manage the battery for optimal usage by bypassing depleted cells.
As batteries are typically made up of smaller battery cells and modules, they can be refurbished by identifying individual spent or degraded cells and modules and replacing them with new components.
Given the ability to repurpose an EV battery and the fact that the vehicle itself is made of glass, steel, and plastic, similar to traditional cars, there’s little doubt that electric vehicles are the more environmentally friendly choice. But much is still to be done to ensure that private vehicle transportation is truly sustainable.