March 6th was the public opening of the 84th International Geneva Motor Show after two days of media and industry viewing. The show opens this week in the midst of a five-month run of positive economic events for Europe, which has been mired in recession and economic troubles for the past few years. This continued positive climb has EU automakers feeling more positive about growth in 2014, although there is still a ways to go to return to what could be considered real growth. These economic notes spell growth for the semiconductor and electronics industry.
Tech penetration and auto rebound positive news for semi
Although macro-economic news continues to improve, we are still far from where we were pre-global recession – so, we're not talking about double digit growth numbers for 2014, but we are seeing steady gains and positive momentum for the year, as Global Purchasing recently reviewed. IC Insight's also recently released the March Update to their McClean Report covering IC market growth forecasts which notes important growth trends stemming from increased automotive semi:
Also, the "intelligent" car is another hot market for 32-bit MCUs, which are incorporated into driver information systems, throttle control, and semi-autonomous driving features such as self-parking, advanced cruise controls, and collision-avoidance systems. In the next few years, complex 32-bit MCUs are expected to account for over 25% of the processing power in vehicles.
Notable in the forecasts are the contributions from new growth markets surrounding the Internet of Things (IoT) which extends to include the "Connected Car." Regarding the impact of IoT on the semiconductor industry, Citi Research, "Mobility Hardware & Components March 2014," included connected car technology in their outlook on IoT, and cited "Cisco's Internet Business Solutions Group (IBSG) [which] predicts some 25 billion devices will be connected by 2015 (from 12.5 billion in 2010), and 50 billion by 2020."
Notably, automotive semi, particularly connector ICs, are forecasted to be positively impacted by this anticipated "device explosion" through on-board "[…] safety, infotainment, fuel efficiency, [and] environmental pollution" technology expansions. Those companies participating in the connectivity within and between cars (vehicle-to-vehicle (V2V)) and hybrid electric vehicles (HEV) "which have 2x connectors," will experience significant growth opportunities due to connected car and V2V expansion.
CarPlay builds Connected Car momentum
Among the the latest auto-infotainment news relating to the connected car comes from Apple. Apple recently announced their new CarPlay platform, while we continue to see penetration by Microsoft and Blackberry into automotive OEM entertainment systems. Importantly, this news is more than just software application capabilities because it is opening the door to wider V2V possibilities as well as to more auto-infotainment innovations.
The announcement by Apple is actually the company's second iOS unveiling for the connected car. Last year, Apple released "iOS in the Car" but not to much fanfare, as EETimes Europe reminds us. This year's revamping and renaming of the integrated platform is called CarPlay and was unveiled with a number of leading automakers already signed on board:
With Daimler, Ferrari and Volvo being the first partners, Apple has picked some of the most prestigious carmakers. But very soon others will follow - Apple names BMW, Ford, GM, Honda, Hyundai, Jaguar, and PSA Peugeot Citroen as well as Mitsubishi, Nissan, Suzuki and Toyota.
While the attention this week is on Apple's CarPlay and which automakers will in fact showcase the capability to the public over the next 10-days, the news holds great importance to the semiconductor and electronics industry (as well as automotive), because of the ease of moving consumers forward into a more IoT or connected car experience. As ComputerWorld commented:
CarPlay is interesting because ABI Research believes an astonishing 49.8 percent of vehicles will support the system by 2018.
CarPlay is also interesting in the light of Mobile World Congress last week, when exhibitors displayed lots of confidence that 2014 will see the birth of what they call the 'Internet of Everything', during which we can anticipate this kind of intelligent connectivity will disrupt multiple industries.
The similarities with Microsoft's Sync system which is available in Ford cars is not surprising, and underscores the automotive and semiconductor and electronics industries' deepening relationship. As Bloomberg noted, "In-vehicle technology is the top selling point for 39 percent of car buyers, more than twice the 14 percent who cited traditional performance measures such as power and speed as their first consideration, consulting company Accenture said in a study published in December."
While the auto industry certainly has its share of cyclical up-and-down turns, the deepening relationship between auto and semi is one that supports both industries in complimentary ways: providing notable differentiation options for auto OEMs through choices regarding on-board electronic features and options packages while providing semi and electronics companies diversification opportunities that will provide new sales markets and means for improving ROI for technology solutions that can be adapted to the support the consumer electronic experience that is being demanded in the car.