Case Study
Solving Semiconductor Sourcing Challenges in the EV Industry
In the fast-evolving electric vehicle (EV) landscape, innovation is only as strong as the supply chain that supports it. For one leading EV manufacturer, sourcing high-performance automotive-grade chips had become a strategic imperative, not just for ensuring performance and reliability, but for gaining cost and design control in a highly competitive market.
Facing opaque pricing, limited benchmarking data, and uncertainty around supplier yield assumptions, the company turned to TechInsights’ Semiconductor Manufacturing Economics (SME) solution. The goal: strengthen their negotiating position with a major foundry and build a long-term, cost-optimized sourcing strategy grounded in data—not guesswork.
The Challenge
As part of its drive toward greater vertical integration and performance optimization, a leading EV manufacturer entered negotiations with a major semiconductor foundry to source high-performance automotive-grade chips.
The company faced several key challenges:
- Lack of visibility into the true manufacturing cost of the proposed semiconductors
- Difficulty evaluating whether supplier pricing aligned with industry norms
- Limited insight into how the supplier's technology compares to competing offerings
The cost engineering team needed independent, trusted data to strengthen its negotiating position and validate strategic decisions.
The Solution
TechInsights Semiconductor Manufacturing Economics (SME)
The EV manufacturer adopted the TechInsights' Semiconductor Manufacturing Economics (SME) product to gain an objective view into:
- Cost structures at the die, wafer, and packaging levels
- Yield modelling and process maturity
- Competitive benchmarking across different foundries
- Total cost of ownership modelling for sourcing and in-house design scenarios
SME provided the technical and financial transparency necessary to challenge assumptions and optimize outcomes.
How the Manufacturer Used SME in Supplier Negotiations
1. Cost Benchmarking
The SME tools revealed that the supplier's pricing for 7nm and 14nm automotive-grade chips significantly exceeded the industry average. Armed with detailed cost models, the EV manufacturer was able to open a fact-based dialogue on pricing.
2. Yield-Driven Pricing Analysis
By analyzing SME yield models and historical defect rates, the cost engineering team identified that the supplier’s quotes were based on overly conservative yield assumptions. This enabled renegotiation based on more realistic, mature-node performance data.
3. Supplier Comparison and Competitive Pressure
SME insights made it possible to compare the incumbent supplier’s technology against alternative foundries. This created competitive pressure, strengthening the company’s position at the table and providing fallback options.
4. Strategic Sourcing and Roadmapping
The company used SME to model total long-term costs, enabling internal discussions about dual sourcing, future fab engagements, and even in-house chip development.
The Results
- Achieved a reduction in unit pricing
- Gained full visibility into cost and yield assumptions
- Improved supplier accountability through objective benchmarks
- Built a stronger long-term semiconductor sourcing strategy
TechInsights’ Semiconductor Manufacturing Economics product provided the EV manufacturer with the intelligence it needed to negotiate from a position of strength. With SME, the company transitioned from relying on supplier-provided data to making procurement decisions based on independent, industry-validated cost and process insights.
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