• Japan’s electric vehicle (EV) manufacturers may be about to take a leaf from the IT and telecom technology playbook by adopting standard ‘chiplets’ – specialised chips designed to perform the management functions for a full range of cars
• Advocates of the approach claim it could enable Japan’s big three auto vendors to take on the rising power of the Chinese manufacturers, such as BYD 

Japan’s major vehicle manufacturers are planning a consortium to lead the country’s connected car industry on a standards push designed to leapfrog the dominant position currently held by China. 

Japan’s big three – Toyota, Nissan and Honda – plan to lead discussions to create a standardised design for next-generation automotive chips that it hopes to have ready by March 2029. The goal is to build a sort of ‘Intel inside’ advantage for Japanese (and other) car manufacturers that sign up for the technology adoption. 

The chips used in modern cars, along with the associated design and intellectual property that must go with them, make up far and away the bulk of vehicle manufacturing costs. So a standard approach and set of underpinnings offer both huge upfront design cost reductions and a lower cost per vehicle assembled. The approach will also help speed up the introduction of new models and model variants to market while full vehicle programmability means continuous over-the-air software updates are possible, greatly reducing the need for vehicle ‘recalls’ to fix problems. This alone should reduce the number and severity of the physical recalls currently bedeviling ‘legacy’ car builders.

To get the fundamentals right, the initiative, led by the Advanced SoC Research for Automotive (ASRA), is setting much store by the development of a set of standard ‘chiplets’ – small, specialised chips – which are envisaged to form the basis of the consortium’s tech turnaround. 

It maintains that a foundational chiplet design could meet the needs of as many car manufacturers as possible, saving carmakers both time and money as there is no need to develop a custom chip for each of their models and they could instead create several types of chips, including a “base chip” that could be scaled according to the capabilities required by a specific lineup. For instance, a small, modestly priced car for an emerging market might need only one base chip, whereas a fully autonomous electric vehicle (EV) would require a series of base chips along with an AI chip.

The Japanese car manufacturer arguably most in need of a reset of this nature is Nissan Motor, which this month announced a significant downgrade to its full-year earnings forecast. It said it expected to post a net loss of 700bn yen to 750bn yen ($4.91bn to $5.26bn) for fiscal 2024, its biggest loss ever, due to “changes in the competitive environment and deterioration in sales performance”.

Some sort of collaboration between the big three has been on the table for some time, but has so far stalled. However, China’s electric vehicle acceleration – for example, BYD emerging as the leading EV vendor by revenues, toppling Tesla from pole position – and Trump’s tariff disruption will likely spur action. Where once the big three appeared reluctant to surrender their corporate autonomy in the interests of collective advantage, Japan’s vehicle manufacturers are now actively exploring collaborative options as competitive threats grow stronger – see Huawei shifts up a gear with China’s EV sector.

One big difference between the Chinese and Japanese car industries, note observers, is that Japanese carmakers tend to support a wide range of vehicle offerings – Toyota, in particular, has adopted what it calls a “multi-pathway approach” involving full electric, hybrid and and even hydrogen technologies to power them. The obvious downside with this approach is that it multiplies the number of technologies a vehicle assembler is obliged to support and develop. The Chinese manufacturers, by contrast, have tended to concentrate on pure EVs, thus largely sidestepping that problem for the time being. 

An alternative view is that Chinese carmakers have pulled ahead partly because of a sharply different design philosophy compared to the Japanese. Chinese and other leading EV manufacturers, it’s said, prefer to select software first and then ensure the appropriate hardware is in place; while Japan’s auto giants tend to prioritise a vehicle’s hardware and then determine the software and semiconductors that will control it, leaving decisions on software and chips until a later phase of the development process, at which point it’s harder to select the best and most efficient components.

For Japan, an innovative chiplet approach to its digital building blocks might make a lot of sense, enabling it to maintain a diversity of output while still enjoying the scale advantages of using a common set of chips and software.

– Ian Scales, Contributing Editor, TelecomTV