On December 13th, the Ministry of Trade, Industry, and Energy (MOTIE) of South Korea held a ceremony to celebrate the establishment of the public-private Mobility Charging Industry Convergence Alliance. During the ceremony, the South Korean government announced measures aimed at promoting the electric vehicle (EV) charging industry and providing support to charging station operators.

According to a news report from Businesskorea, the South Korean government revealed a target of capturing a 10% global market share for chargers made by Korean companies by 2030, a significant leap from the current 1%.

The South Korean government aims to acquire five key technologies by 2030 in the field of EV charging market. These include ultra-fast charging, wireless charging, charging robots, intelligent charging, and cybersecurity software for charging stations.

The ultimate objective is to foster the growth of at least five domestic charging pile manufacturers with a combined annual revenue exceeding KRW 50 billion (approximately USD 38.66 million). Additionally, the government wants to significantly increase South Korea’s global market share in the EV charging market from 1.2% last year to 10% by 2030.

To achieve this policy objective, MOTIE has established the public-private Mobility Charging Industry Convergence Alliance. This alliance consists of more than 40 companies and 20 organizations, encompassing charging pile manufacturers, component suppliers, charging service operators, as well as testing and certification organizations.

TrendForce anticipates that by 2026, the global tally of public charging stations will soar to 16 million, marking an impressive threefold increase from 2023 figure. Alongside this growth, the global ownership of new energy vehicles (NEVs), which include plug-in hybrid vehicles (PHEVs) and battery-electric vehicles (BEVs), is projected to surge to 96 million. This will result in a vehicle-to-charger ratio of 6:1, a significant decrease from the 10:1 ratio observed in 2021.

(Photo credit: Pixabay)

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• Driven by Global Government Initiatives: A Surge in Public Charging Piles Expected—16 Million by 2026, Tripling 2023 Figures, Says TrendForce

China’s penetration rate of new energy vehicles (NEVs) exceeded 40% for the first time in November this year, reaching 40.4% in domestic retail sales, a 4 percentage point increase from the same period last year. Optimistic growth is anticipated by 2024, with wholesale sales of new energy passenger vehicles expected to reach 11 million units.

The China Passenger Car Association (CPCA) released the latest data, forecasting that the total sales of passenger vehicles in China in November 2023 will reach 25.5 million units. With a huge increase of the 3.2 million units exported in 2017, the overall sales of passenger vehicles are set to significantly surpass the wholesale volume of 24.5 million units in 2017, reaching a historic high.

It is evident that NEVs in China are seen as a catalyst for the next wave of economic momentum. According to a report by the BJNews, Cui Dongshu, the Secretary General of CPCA, stated that the Chinese domestic retail penetration rate of new energy passenger vehicles in November was 40.4%, a 4 percentage point increase from the 36% penetration rate of the same period last year.

This marks China’s first-ever monthly penetration rate of new energy passenger vehicles exceeding 40%. As a key driver of growth in the Chinese passenger vehicle market, the retail sales of NEVs in November increased by nearly 40%, reaching 841,000 units with an 8.9% MoM growth.

In the first 11 months of this year, China’s cumulative retail sales of new energy passenger vehicles reached 6.809 million units, a YoY increase of 35.2%. CPCA believes that the growth outlook for the new energy passenger vehicle market in 2024 is relatively optimistic, with wholesale sales expected to reach 11 million units, a net increase of 2.3 million units, a 22% YoY increase, and a penetration rate of 40%.

Chinese brands in the NEV sector are gradually expanding their market influence through multifaceted development in technology and sales strategies. According to CPCA statistics, in November, 18 companies saw wholesale sales exceed 10,000 units, accounting for 88.9% of the total new energy passenger vehicle volume. BYD continued to lead the rankings with a monthly sales volume of about 301,400 units, followed closely by Tesla China with 82,400 units. The export of Chinese brand new energy passenger vehicles also showed significant growth, with A0-class electric vehicles accounting for nearly 60% and becoming the absolute mainstay of exports.

(Image: BYD)

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After obtaining approval from Chinese regulatory authorities at the end of November, Broadcom, a leading IC design company, has officially completed the acquisition of VMware, a prominent player in cloud computing. This strategic move propels Broadcom into the competitive cloud market, with software becoming a substantial part of its revenue. This trend of IC design companies, including AMD, Qualcomm, and Nvidia, venturing into software acquisitions continues to reshape the industry landscape.

Broadcom announced the acquisition of VMware on May 26, 2022, through a cash and stock transaction valued at USD 61 billion. After obtaining approvals from global regulatory authorities, including the EU, UK, South Korea, and Japan, the final conditional clearance from Chinese authorities was secured. This clearance involved ensuring compatibility between VMware server software and Broadcom hardware competitors’ products. The official announcement of completion came on November 22, 2023, following approval from Chinese authority. The final total transaction value came to USD 69 billion.

VMware, known for its expertise in cloud computing and virtualization software, separated from Dell in late 2021. With a customer base exceeding 400,000, it competes with Nutanix and Cloud Software Group. VMware’s core service lies in multi-cloud management, streamlining the integration of cloud resources from various vendors. It enables customers to manage multiple public clouds on a unified platform. The VMware platform significantly reduces the time needed for data migration to different public clouds, from 45 months to approximately 2.5 months.

Broadcom’s Software Business Soars to 40-45% Share after Acquisition, Ventures into Cloud and AI Markets

In 2023, VMware is expected to dominate the server virtualization market with a market share exceeding 70%. VMware’s strategic plan involves increasing the sales share of subscription services and cloud services from 25% in 2021 to 40% by 2025. With Q2 2023 revenue of USD 3.41 billion, almost double the size of Broadcom’s software business, the merger positions Broadcom’s software business to account for 40-45% of the total revenue.

This May, Broadcom CEO Tan Hock Eeng publicity stated that his company is committed to an annual investment of USD 2 billion in VMware’s R&D. Following the acquisition, Broadcom’s software division will be rebranded as VMware, and a shift from perpetual software licenses to subscription and SaaS models is planned. Broadcom aims to increase VMware’s EBITDA from USD4.7 billion in the 2022 fiscal year to USD 8.5 billion within three years.

Besides Broadcom’s entry into the cloud market through VMware, TrendForce also highlights VMware’s significance as a key partner for NVIDIA. The expanded strategic partnership, announced in August 2023, resulted in the establishment of Private AI Foundation with NVIDIA. Built on the VMware Cloud Foundation, the Private AI Foundation is a platform that allows enterprises to customize models and deploy Generative AI applications. The acquisition positions Broadcom to tap into NVIDIA’s AI ecosystem, providing an opportunity to join the NVIDIA AI server supply chain and explore the immense potential brought by AI.

Tech Giants Embrace Ecosystem Competition as IC Design Firms Dive into the Software Industry

To enhance customer loyalty, major companies including Apple, Microsoft, Google, have progressively taken part in ecosystem competition in recent years. These companies have successfully established robust ecosystems. At the same time, IC design companies are gradually venturing into the software industry, shifting the focus from mergers within the IC design sector to mergers in the software industry. In addition to Broadcom acquiring VMware, notable instances in 2022 include AMD’s acquisition of data center platform provider Pensando, Qualcomm’s purchase of automotive software companies Veoneer and Arriver, and NVIDIA’s takeover of software-defined storage(SDS) company Excelero.

For Broadcom, strategic acquisitions have been a recurring theme since the failed attempt to acquire Qualcomm in 2018, after former U.S. President Donald Trump blocked it with national security concerns. Notable acquisitions include the USD18.9 billion purchase of mainframe service company CA Technologies in 2018, the USD 10.7 billion acquisition of the security division of Symantec in 2019, and the unsuccessful attempt to acquire statistical analysis software company SAS Institute for USD15-20 billion in 2021.

Buying software companies provides Broadcom with the advantage of leveraging cross-selling. This enables the promotion of its products, such as compute offload business, server storage connectivity, fiber optics, Jericho routers, and Tomahawk switches, to enterprise customers adopting solutions from these software companies.

(Image: Broadcom)

Honda, the Japanese automotive giant, is set to lay off around 900 employees from its Chinese joint venture, GAC Honda. This move comes as the company adjusts to the shifting market focus towards electric vehicles (EVs). Notably, this marks the first instance of job cuts in the 25-year collaboration between Honda and Guangzhou Automobile Group Co., Ltd. (GAC).

TrendForce’s Insights:

1. Independent Brands in China Ascend but Japanese and Chinese Joint Ventures Decline

As per GAC Honda’s released data, the cumulative production and sales figures for the first ten months of 2023 witnessed a significant drop of 20.52% and 21.55%, totaling 520,500 and 499,400 vehicles, respectively. Apart from GAC Honda, both GAC Toyota and FAW Toyota have embarked on plans to scale back production or streamline personnel. Mitsubishi Motors announced officially to exit the Chinese market in October 2023, with GAC Aion taking over its factory.

Despite efforts by Japanese automakers to catch up EV revolution, the competition from independent brands remains formidable. GAC Honda and Dongfeng Honda introduced pure electric models like e:NP1 and e:NS1 in the Chinese market. GAC Toyota and FAW Toyota also entered the EV market with models like bZ3 and bZ4X.

However, facing intense competition from independent brands, joint ventures struggle to maintain market share. According to the China Passenger Car Association (CPCA) data, independent brands claimed 60% of the market share in October 2023, while joint venture brands dropped below 40%. This is a stark contrast to two years ago when independent brands held only 41.2% of the market.

Constrained by the cautious approach of Japanese automakers to vehicle electrification, joint ventures lack a robust lineup of pure electric models, relying mainly on hybrid models. Despite the hybrid technology’s strength in Japanese automakers, they are gradually losing ground to independent brands like Geely and BYD, resulting in a steady decline in joint venture brands’ market share.

2. Japanese Automakers Urged to Collaborate Openly with Chinese Counterparts

The hybrid models and brand strength of Japanese automakers continue to command a presence in the market, due to current challenges such as EV high prices and range anxiety. However, in the mature Chinese market for pure electric vehicles, Japanese automakers must cede more control over the development of joint venture models to Chinese manufacturers. An example of successful collaboration is Dongfeng Nissan’s Venucia, which is based on Dongfeng Motor’s technology, blending Chinese manufacturers’ expertise with Japanese automakers’ brand strength.

Japanese joint venture brands face challenges, highlighting the necessity for innovative advancements in model technology amid the new energy vehicle era. Faced with the trend towards higher intelligence and electrification in new energy vehicles, Japanese automakers must recognize that their current priority is not to surpass Chinese manufacturers but to navigate the electrification wave successfully. Joint venture brands act as a crucial lifeline, and Japanese automakers can bridge the technological gap by leveraging joint venture platforms, utilizing resources from Chinese manufacturers, and fostering collaboration. The key lies in Japanese automakers transitioning from market development leaders to active learners.

TrendForce has released its latest report, “Analysis of EEA Architecture and ADAS Domain Controllers in New Energy Vehicles,” providing a detailed analysis of the evolution of electronic and electrical architectures in new energy vehicles and the current status of ADAS domain controllers. Excerpts from the report are as follows.

TrendForce’s Insights:

1. BEV Platform: the Ideal Carrier for High Integration EEA Development

In recent years, various automakers have been investing resources to enhance the competitiveness of their new energy vehicles, particularly Battery Electric Vehicles (BEVs), by developing BEV platforms.

With the complete elimination of internal combustion engines, BEVs exhibit a higher degree of electrification compared to other powertrain modes, facilitating the design of high-computing power and highly integrated Electrical/Electronic Architecture (EEA).

Furthermore, startup automakers unburdened by traditional internal combustion engine constraints currently lead in the integration of EEA architectures compared to traditional automakers.

2. Domain Controllers are Parts of the Key Components for the Development of Highly Integrated EEA

Currently, domain controllers with varying computational power are widely distributed in the market.

However, electric vehicles equipped with high-performance domain controllers still have prices significantly higher than the average, and given the limited economic scale of new entrants, sustained cost reduction requires continuous investment from more manufacturers and improvement in usage environment.

3. The Economic Scale of BEVs Will be the Main Hurdle for EEA Development

While BEVs are considered the optimal platform for developing highly integrated EEAs, the challenges of range anxiety and high vehicle prices continue to be significant barriers affecting the sustained growth of the market.

This has led to a recent slowdown in BEV demand, prompting automakers to redirect some of their development resources to PHEV and even HEV models. These vehicle types may not necessarily require or be suitable for high-performance chips.

Therefore, if PHEVs and HEVs continue to grow, they could become key factors affecting the economies of scale and widespread adoption of high-performance chips.