Automotive semi, once thought of as a niche market sector, continues to become more mainstream, thanks to the increasing number of electronic features in today's cars. According to iSuppli current growth levels hold in the 5-8% range and the forecast for 2014 and 2015 is at the higher end of that range, at 8% "with revenue headed toward $1.57 billion by 2014."
The reason behind the steady growth in automotive semi rests in the rapid expansion of automotive safety and infotainment demands. What initially began as improvements to engine monitoring and tire pressure sensing roughly a decade ago, when dashboards' main feature were CD players, has expanded to a significant portion of automotive OEM design efforts. As IHS research underscores:
[…] for some of the bigger brands by the end of 2014, every vehicle they sell will offer some sort of connectivity, according to Jack Bergquist, IHS senior analyst for infotainment. Looking at the cost to design a completely new car model, some companies are spending around one-third of the budget just on the in-vehicle infotainment (IVI) and the in-car technology around the system.
Mark Boyadjis, senior analyst, Infotainment & HMI - observed that there's also a great deal of connected-car growth at present. In fact, motor vehicles are the third-fastest growing connected device behind smartphones and tablets.
Among the leading brand differentiators influencing auto sales are precisely this set of safety, fuel efficiency, and infotainment features. As a result, the 2014 and beyond forecasts for automotive semi sales and volume are expected to possibly surpass current estimates, but depend on the wider automotive sales outlook and consumer adoption.
Lose the humans?
Improvements to fuel efficiency and driving safety are the leading features that hold both the OEM and the consumers' interest. These capabilities rely on increased embedded systems and connectivity to quickly and accurately collect, compile, and monitor the various data coming into the car's main processors. Advanced Driver Assist Systems (ADAS) are increasingly being adopted and accepted in cars as (self-)parking and back-up warning systems, lane departure and blind-spot warnings, and collision avoidance, as discussed in EETimes.
In the midst of the ADAS advances using radar and/or vision sensor solutions, are the leading semiconductor companies including Freescale Semiconductor and ST Microelectronics, to name but two. Regardless of which standards or solutions will lead, the next generation passenger vehicles, from economy to luxury, are already incorporating these ADAS features to improve safety and prevent accidents.
One example is Volvo, as discussed by Financial Times (FT), which has been testing its "active safety" crash avoidance systems against a notable Swedish foe: the moose. Beyond improving crash survivability through the physical construction of the vehicle, "active safety" improves the avoidance of the crash to begin with. This is accomplished by increasing the car's ADAS capabilities to actively engage avoidance braking or steering as well as inform drivers of hazardous situations such as having driving through oil, as the FT article explains.
Importantly, ADAS and other automotive infotainment features will not only continue to rise and eventually become mandated, but along with them, the automotive semiconductor sector will continue to see rising growth and prominence in the semiconductor and electronics industry.