CAN Newsletter magazine
There are dark clouds in the sky: China and USA started a trade war and Germany’s industry export is still not balanced.
This article originally appeared in the September issue of the CAN Newsletter magazine 2018. This is just an excerpt.
The success of CAN is overwhelming. This year, 90 million cars – most equipped with multiple CAN networks – require the largest amount of CAN transceiver chips. CAN networks are not just used in passenger cars; they could be in any control system comprising more than two micro-controllers. NXP, the market leader in CAN transceivers, carries them truck-wise out of its factories. But the CAN business might be affected by the general political and economical situation: The US tariffs on Chinese products have impacts on the CAN business as well as the export surplus of Germany.
Beginning of July, the US administration launched the first tranche of tariffs on $34 billion worth of Chinese products, because President Donald Trump accused China on unfair trade practice. This included also motorcycles, speedometers, and some other electronic equipment. The Chinese response came immediately: Beijing imposed tariffs on passenger cars and other goods with the same value. The second tranche of tariffs went into effect by end of August. Its value is $60 billion. Half of the list is related to investment goods – including micro-controllers (8542.31.00), control panels (8537.10.30, and electric motors (8501.nn.nn). But at the end, we all have to pay it. Tariffs take money from our pockets into the treasuries of Washington and Beijing.
Especially the automotive industries are highly networked, linked, and intertwined. The used ECUs are developed and manufactured mainly in Europe, North America, and Japan. It is paradox: The Japanese Honda Odyssey is the car with the highest portion of parts made in North America. The ECUs implement integrated circuits; the majority of them is assembled and tested in Asia. The chip developments are done mainly in North America, Japan, and Europe. In case of CAN, most of the protocol cores and transceivers are designed in Europe in close cooperation with German and European OEMs (original equipment manufacturers).
The first round of Trump’s tariffs affected the purchasing departments of the US automakers. About 40 percent of the content in GM’s US-sold vehicles comes from outside the United States, while that figure is 45 percent for FCA and 20 percent for Ford, according to data from research firm Edmunds.com. But just a few CAN-based ECUs are made in China. But when China responded with tariffs on products made in USA, the automakers saw impacts on their business. GM, for example, sells more cars in China than at home. Top managers from FCA, Ford, and GM talked to the US President without changing the mind of Donald Trump. They informed him that the 25-percent tariffs by the Chinese government would raise the price of US vehicles, which could cost jobs in the USA.
Even the German BMW, producing all of its SUVs in South Carolina, exports more of these vehicles to China than selling SUVs in the USA. As said, the automotive industry is a complex network of OEMs, Tier1s, and other suppliers. Changing the supply chain is not that easy, because of long-term contracts and technology partnerships.
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