Today, no one would question a semiconductor company that designs but doesn’t make its own chips. How is that different from an automaker that designs but doesn’t make its own cars? It isn’t. Automakers will go fabless.
As AMD co-founder and past CEO Jerry Sanders once remarked “Real men have fabs.” The only conclusion I draw from that statement is that semiconductor fabrication is perhaps the one example in nature of human males competing for bragging rights as to who has the smallest feature size.
I imagine Lisa Su, AMD’s CEO since October 2014, has never lost sleep over the company’s now “fabless” status and considering the share price performance under Su’s tenure, neither have AMD’s shareholders. Taking the short ride from AMD headquarters in Santa Clara, California, to Apple in Cupertino, we find Tim Cook presiding over a company with a greater than $2 trillion market capitalization which also has no semiconductor fabs. I suspect he loses no sleep over this either.
Apple isn’t an OEM and could be thought of as a software developer and creative design studio that oversees one of the most complex manufacturing and supply chain networks in the electronics industry. For example, iPhone, Apple’s best-known and best-selling product, is made by sub-contract manufacturing partner Foxconn (Hon Hai Precision). The “Apple Supplier List” documents many of these partners and makes for compelling reading in itself.
Today many semiconductor companies are fabless, relying on foundry partners such as TSMC and Samsung for manufacturing. AMD and Apple are two examples, Nvidia and Qualcomm two more. So, if it is now an accepted practice for semiconductor companies to design but not manufacture their chips, why would it be a stretch to imagine a world in which an automaker designed but didn’t make its cars? It isn’t, because we are already well on the way there.
Enter Magna, a sub-contract manufacturer offering complete vehicle manufacturing. In the description for this process, Magna states:
As a worldwide leading brand-independent contract manufacturer Magna is the strategic partner of many global acting OEMs. Thanks to our complete vehicle competence, our flexibility and our multi-OEM experience, we are in a unique position to support traditional automakers in case of additional capacity, as well as new entrants in the automotive industry.
Two upcoming automakers that have partnered with Magna for complete vehicle manufacturing are Fisker and Sony. If there is substance to the rumors of a future Apple iCar — and I believe there is — then let’s focus on Fisker and Sony and look for clues as to how Apple could collaborate with a subcontract manufacturer to make iCar a reality.
The Fisker Ocean SUV will be manufactured by Magna at its facilities in Graz, Austria, using Magna’s EV architecture. According to the press release, production is scheduled to start in the fourth quarter of 2022.
In a further announcement, Fisker and Magna revealed the Fisker Intelligent (FI) Pilot, a scalable domain controller that will support a range of features for the Ocean including over-the-air (OTA) updates and driver assistance. I am particularly interested in the FI Pilot and the features it will support for assisted driving and driver monitoring, although no further details are available at this time.
As the picture below shows, Fisker has come up with a minimalistic interior design for the Ocean that appears similar in look and feel to the Ford Mustang Mach-E and Tesla Model 3.
According to SAE International, the Fisker Ocean is one of four EVs for which Magna has a production connection, including the Jaguar I-Pace, Sony’s Vision-S and the ArcFox Alpha-T. This confirms Magna as a suitable partner for Apple to manufacture an electric iCar.
I dedicated several hours to researching links between Apple and Sony to reassure myself that I wasn’t looking at the iCar prototype wearing a convenient Sony disguise. The Vision-S interior is shown below. What is the “tell” that the vehicle is heading for production and for sale to consumers? The appearance of a driver monitoring system above the center screen on top of the dashboard.
What the Vision-S confirms is that Magna has proven advanced digital cockpit design and development capability, as we can see in the pillar-to-pillar screens in the picture. In my opinion, screens and displays will be a critical feature of any Apple iCar, with an eye-gaze controlled human/machine interface and cockpit experience which is so revolutionary that it will take our breath away.
Pillar-to-pillar screens featured at the Frankfurt auto show in 2019, in both the Byton M-Byte and Honda E. At CES 2021 in January, we also saw the launch of the Mercedes-Benz User Interface (MBUX) Hyperscreen, which measures about 4.5 feet and extends across the entire cabin.
The promotional video of the Vision-S testing at the Magna facilities in Austria is shown below and the latest details can be accessed here.
I have concluded that the Vision-S probably isn’t the Apple iCar prototype in disguise, but it does provide evidence of Magna’s extremely innovative design and development capability for the digital cockpit. I am impressed.
Hyundai, Magna, Valmet and Foxconn
Rumors abound of manufacturing partners for the Apple iCar, with a story linking Apple with Hyundai appearing in early January, only to be squashed just weeks later. My view is that any supplier publicly confirming it is negotiating with Apple on anything will most likely find itself in short order negotiating with Apple on nothing, meaning Hyundai can be discounted.
What suggests to me that Apple could be working with Magna on development of the iCar is silence from Magna about working with Apple on development of the iCar. Reports estimate Magna’s complete vehicle manufacturing production capacity in Graz to be in the order of about 200,000 units per year, which is sufficient to get started. Magna is also reported to be looking at adding vehicle production capacity in North America.
Alongside Magna, Valmet Automotive also offers vehicle manufacturing services, and iPhone-maker Foxconn recently announced its foray into EV production. According to a report in Bloomberg, Foxconn is expected to launch vehicles later this year through a contract manufacturing division established with Geely. Interestingly, the first customer to be announced for the Foxconn/Geely partnership was Fisker.
Apple has many options available for the sub-contract manufacture of iCar and if Fisker and Sony can make this route to market work, so too can Apple. Magna is a proven automotive-grade tier 1 and vehicle supplier, while Foxconn is a longtime proven sub-contract manufacturer of the iPhone. My assumption is that Apple could follow Fisker’s lead and work with them both.
The key point to take away from this piece? Just as no one today questions the strategy of a fabless semiconductor company, so too in the near future we look to be heading for a world where some automakers don’t make cars. Which sounds like progress and incredibly beneficial for the environment to me.