Increasing Customer Preference for Comfort, Safety and Infotainment Features is the Key Driver

Tuesday 31 January 2012, Amsterdam

The report covers the industry dynamics, information on the revenue and volume of the Automotive Semiconductors Market, and the market share of the suppliers. The report also provides product - based, region-based and end-use based forecasts up to 2015. The product based forecasts up to 2015 are given for the microcontrollers (MCUs), power semiconductors, ASICs, sensors, discretes and memory. The market for automotive semiconductors applications in powertrain, infotainment, chassis and safety, and, comfort systems and body electronics are discussed.

Increasing Customer Preference for Comfort, Safety and Infotainment Features is the Key Driver

The increase in the use of electronics in automobiles is expected to increase the demand for automotive semiconductors. Consumer demand for higher fuel efficiency and more comfort, safety and entertainment features has led to the development of innovative technology for automobiles. As the automotive industry is competitive, to meet this challenge manufacturers are implementing innovative technological processes to satisfy consumer demand. This has resulted in the replacement of manually operated systems with electronically controlled systems. For example, manually operated car windows are being replaced by power windows, hydraulic power steering is being replaced with electric power steering, and so on. Other features being included in vehicles are Anti-lock Braking Systems (ABS), telematics systems to cover geographic maps, Global Positioning Systems (GPS), navigation, and entertainment systems. With the increasing electronic content in the areas of safety, powertrain management, comfort and entertainment, the usage of automotive semiconductors will be high and the market for automotive semiconductors will increase until 2015. The sales revenue of the automotive semiconductors is expected to increase from $22.52 billion in 2010 to $32.66 billion by the end of 2015. The figure below gives the progression of sales revenues of the automotive semiconductors from 2005 to 2015.

See figure: Automotive Semiconductors, Sales Revenue Progression ($bn), 2005-2015
 
 
Increasing Demand for Environmentally Friendly Vehicles, Fuel Efficient Vehicles and Hybrid Electric Vehicles (HEVs) to Drive the Market for Automotive Semiconductors

The increase in the use of electronics in the automobile industry to produce environmentally friendly and fuel efficient vehicles is expected to increase the demand for automotive semiconductors. Conventional vehicle transportation systems are not sustainable as they utilize fossil fuels. The demand from consumers and governments for higher fuel efficiency and decreased vehicle emissions has accelerated the development of pure Electric Vehicle (EV) and Hybrid Electric Vehicle (HEV) drivetrains. This is because HEVs offer the advantages of lower energy consumption and reduced emissions.

Pricing Pressures are Impacting the Profit Margins of Automotive Semiconductor Manufacturers

Pricing is an important factor impacting the profit margins in the automotive semiconductors market. Automobile manufacturers try to bargain and if suppliers reject the terms go elsewhere for products. With intense competition for automotive sensors and Application Specific Integrated Circuits (ASICs), suppliers face significant pricing pressures and their growth in revenues is affected. The fierce competition, commoditization and rising pressure from Original Equipment Manufacturers (OEMs) to lower prices has led to declining profit margins.
 

Automotive Semiconductor Manufacturers Must Coordinate More with Automobile Manufacturers

The main challenge to automotive semiconductor developers is synchronizing with automobile manufacturers to design automotive semiconductors. To develop specific semiconductors for automotive applications, designers must consider important factors such as reliability, resistance to extreme temperatures, humidity, shock sensitivity and immunity to electro-magnetic disturbances. There are many demands from automotive manufacturers for semiconductor designers to keep in mind. For example, Microcontrollers (MCUs) are required that protect the environment from the noise they generate at high frequencies. To develop products with such specific considerations, automotive semiconductor developers must coordinate more with automobile manufacturers to meet their requirements.

Stringent Quality Requirements to be Maintained by Automotive Semiconductor Manufacturers

Automotive semiconductor manufacturers have to adhere to certain quality requirements, which is a big challenge in a market with fierce competition and pricing pressures. The vendors serving the automotive market undergo stringent qualification processes such as the ISO/TS 16949 certification (highest international quality standard) for the automotive industry. This makes sure that suppliers meet exact specifications for the design, development, production, installation and servicing of automotive-related products. Due to regulations on emissions and fuel efficiency becoming stricter in many parts of the world, semiconductor devices are required to reduce power consumption and heat dissipation, as well as capture solar energy and create more efficient lighting solutions.