Automotive OEMs have been spurred by trends similar to consumer electronics, that of designing to meet the demands of new user experiences and expectations with devices. As we've seen for a number of years, automotive infotainment and safety has been a rising sector providing differentiating features that auto OEMs can offer customers.
These feature packages have both increased automotive revenue, competition, and, importantly for the semiconductor and electronics industry, it has meant a significant rise in the percent of automotive Bill of Materials (BoM) for electronics and semiconductors.
Innovation and customizability
The automotive industry, much like the semiconductor and electronics industry, is one that has constant innovation as its hallmark. What that means is that the design challenges are, repeatedly, to provide innovative features and capabilities with each new model presented to the market; this is very much in synch what electronics designs seek to present as well. As automotive innovation has shifted from a central focus on the mechanical improvements to what can be improved through on-board electronics and software, new collaborations and shifts have been forged.
In-Vehicle Infotainment (IVI) innovation, as recently discussed in an IEEE Spectrum webinar series from VDC Research and IBM, is increasingly relying on software and middleware for OEMs to best differentiate themselves by providing customized offerings targeted towards customer groups, model ranges, and also for the individual customer to be able to meet their unique needs and experience preferences. As a result, VDC Research underscored that "IVI systems and software content [are] driving differentiation and investment" in the automotive industry presently.
From a practical perspective, what this means is that infotainment is moving more closely towards intelligence to provide the seamless interactive features and analytics that users are demanding and expecting of their smartphones and tablets. The shift from handheld device to auto is the driving force that automotive OEMs recognize as holding significant opportunities for significant innovation and differentiation levels that are not really mechanically possible at this point in auto design.
Beyond providing customized, intelligent interactive settings in auto infotainment design, the information aspects related to safety, fuel efficiency, repair notification, and navigation assistance are significant features being offered. Intel's collaborative IVI design research is one example of the successful diversification opportunities between traditional semiconductor OEMs and automotive OEMs. Importantly, while the on-board electronics are essential to enabling any of these IVI innovations, it is the software aspects that are pushing the customizable, enriched, user experiences that push the feature offerings for auto OEMs into a new level. Here is another shift, namely that of moving away from proprietary code to dedicated open source codes with automotive industry standards, such as Automotive Grade Linux (AGL) and collaborative ventures being designed with AGL.
Collaboration and growing semi opportunities
Beyond a new set of automotive opportunities for middleware and especially software, the exciting prospects of the latest innovative shifts in IVI are that as feature sets are enhanced, expanded, and further made customizable, there are increasing demands for on-board electronics components to actually deliver these experiences.
The data for the electronics component sectors are supporting the growth opportunities from auto penetration based on IVI design innovation. Recent research from IHS predicts a 50% growth, reaching US $240 billion, in the global automotive electronic market, for the period of 2010 to 2020. Among the benefitting sectors are the booming MEMS sector whose growth is directly attributable to automotive and mobility trends, with automotive MEMS being at the heart of early adoption and current increased penetration for this component sector; additionally, automotive touchscreen panels are adding significant support to displays and IC drivers as on-board systems and interactive features are based in the visual displays in the dashboard as well as for rear-seated passengers.
Along the IVI innovation shifts, the demand for embedded cellular solutions is similarly increasing. The driver for these solution designs is the general shift toward wireless connectivity for data transfer. Not only do wired solutions demand more power but the transfer speeds are slowing compared to the latest Bluetooth 4.0 standards. Machine-to-Machine (M2M) connectivity is an essential aspect for creating the seamless user experience as the user moves into the vehicle, wireless tethering of devices to the vehicle via Bluetooth technology enables ensures that users can continue their tasks in the vehicle as well as giving immediate updates to the on-board systems to provide intelligent automotive infotainment. Furthermore, as software increasingly takes on a driving role in IVI designs and innovation, the ability for OEMs to provide easy, seamless software updates to vehicles and drivers is essential. This update capability can be realized through the use of embedded cellular technologies:
Embedded cellular can also give auto makers a way to directly communicate with customers in cases like remote software upgrades, spare-parts management or vehicle recalls. Such an approach could allow OEMs to save money by centralizing communications and also pave the way for greater customer retention through tight management of car owners’ needs.
Revenue for original equipment manufacturers (OEM) of wireless solutions in cars will reach a projected $1.17 billion this year, up a respectable 5 percent from $1.11 billion last year. While growth this year has moderated from the sizable double-digit increases of 2011 and 2012, continued expansion is assured in the years ahead. An uptick in the 8 percent range is expected during both 2014 and 2015, with revenue headed toward $1.57 billion by 2018.
Today, a typical premium vehicle houses roughly 150 electronic control units, the continued growth opportunities from collaborative innovation in the IVI space is significant for both the semiconductor and electronics industry alongside of the automotive industry. As the auto-infotainment innovation demands increase, much in synch with the demand for seamless, highly customized user experiences with smartphones and tablets, the joint ventures between electronics and semiconductor OEMs, software developers, and automotive OEMs will deepen. The growth of the middleware and software solution series we are seeing is the expansion of significant opportunities for diversification along the semiconductor supply chain.