Semiconductor industry loves automotive - but carmakers bet on more software

May 11, 2011 // By Christoph Hammerschmidt
"Automotive electronics, considered as dead two years ago, has returned into the driver's seat of the semiconductor industry" - this is how Sandro Grigolli, EMEA Executive Director of the Global Semiconductor Alliance (GSA) characterizes the significance of the car industry for the chip makers. But at the recent GSA meeting in Munich, the industry discussed the consequences resulting of this situation. It became clear that the automotive industry itself is facing massive challenges.

European midrange and luxury cars currently are in extremely high demand in emerging markets, in particular in China. This suggests that this is the market sector with the best growth expectations for cars and thus for automotive electronics. However, the sweet spot for electronics supplier will be somewhere else, explained Richard Robinson, top automotive analyst for market researcher Strategy Analytics. While the overall market for vehicle electronics is expected to grow at a pace of 8 percent annually through 2018, the demand for ECUs designed for economy cars will add 18 percent per year.

This growth however will take place not in Europe or North America but in Asia: Examples for brands on the winning side are Wuling Sunshine, Maruti Alto and, with Dacia Logan, at least one European. At the end of this process, economy vehicles will have doubled their share of the total automotive market to 18 percent - at the expense of mainstream cars (down 1 percent to 74 percent), and in the first place of premium cars whose market share will be reduced from 16 percent now to 9 percent in 2018, said Robinson.

Broken down by product segments, power train applications will be the clear winner. The market value for ECUs used in power trains will grow 18 percent annually in a global scale, the researcher calculated. Safety applications, driven by the trend to advanced safety systems, are expected to sport a growth rate of 11.2 percent, followed by driver information, body and chassis applications with about 8 percent each. With 6.8 percent growth rate, security applications will be at the bottom of the ranking.

One of the major technology challenges for the industry is the integration of consumer devices into cars, currently one of the major design trends. Robinson hinted that user expectations, based on what they are used to have access to in their homes, could overstretch the capabilities of the automotive industry.