Electronics Asia discussed the automotive electronics trends in Asia with Willie Fitzgerald, Electrical Engineer, Automotive Products Group, Microchip Technology Inc., and Jeroen Keunen, Regional Marketing Director, Automotive & Identification Asia-Pacific, NXP Semiconductors. Excerpts:
Semiconductor revenue generated by automotive applications is projected to grow at a CAGR of 9% over the next five years, according to both Databeans and Strategy Analytics. What is your projection?Fitzgerald: With the average electronic content within a vehicle continuing to increase in all regions, the semiconductor consumption by the automotive segment continues to grow. While China is the fastest growing area for automotive electronics, other areas—including Japan and Korea—are in a growth mode. Microcontrollers, mixed-signal ASICs, and power semiconductors represent the three largest segments of the semiconductor consumption.
Keunen: We expect to see the automotive semiconductor market growing 7% CAGR over the next five years up to 2011. This is lower than the projections by Databeans and Strategy Analytics, but still shows a strong outlook for growth in the industry, based on the following four assumptions. First, we expect to see continued growth of the light vehicle market in emerging market countries. Second, we see clear signs that semiconductor content per vehicle is continuing to grow across all regions globally. This has been stimulated by a combination of environmental concerns, stricter safety regulations, and the growing demand by consumers for more convenience features in the car. Third, countries in emerging regions will show a significantly lower average semiconductor content per vehicle when compared with developed nations over the forecast period. Finally, although content will rise, the industry will face increased price pressure due to the expected consolidation of car OEMs, Tier 1 manufacturers and semiconductor vendors, as well as the continued integration of multiple features into a single product. The third and fourth factors here will bring down the growth curve slightly.
What proportion of the semiconductor revenue will be generated in Asia?Keunen: If we include Japan in our estimates, we see that the semiconductor share of Asia will be between 30% to 35% of the total automotive semiconductor revenue over the next five years. If Japan is excluded from this calculation, then Asia’s total automotive semiconductor revenue may be between 10-15% over the next five years. Obviously, Japanese carmakers and automotive electronics companies are a significant and vital part of the overall automotive industry. Korea has also shown phenomenal growth over the last 10 years, which we can expect to continue.
Fitzgerald: In 2010, approximately 20-25% of the global automotive semiconductor revenue is expected to be generated in Asia. The largest segment contributing to the automotive semiconductor consumption is the engine management systems. These systems are important in improving fuel efficiency while reducing emissions.
Technologically, how does Asia’s automotive electronics industry compare with American automotive electronics industry?Fitzgerald: Each region tends to adopt systems and technology at its own pace. Usually, this pace is dictated by the rate of change in the vehicle electrical/electronic architectures, and not the level of competency by the engineers of the region. The global nature of the Tier 1s supports the transition of new electronic systems and is a catalyst for quicker adoption. Plus, lessons are well learned on the best methods of implementation and integration and are transferred worldwide—due to the global nature of the business environment.
Keunen: Japanese players have an enviable reputation for the high quality, reliability, and longevity of their products. The industry is growing rapidly in China and India as well. A lot of manufacturing and assembly operations are set up in Thailand. We’ve witnessed a rapid rise in Asia as local manufacturers shift from economy cars to more sophisticated and luxurious offerings.
What new issues need to be addressed so that the road ahead is not difficult to negotiate?Keunen: The semiconductor development process and life-cycle for automotive applications is very different from that of consumer electronics. Typically, a semiconductor product for an MP3 player or a mobile phone is developed quickly, and will have a comparatively short shelf life as product cycles are relatively short. In contrast to this, the automotive industry demands a much longer lifespan for semiconductor products, simply due to the fact that car development takes so much longer and the cars themselves are on sale for several years before a model change or upgrade. One of the biggest movements helping the industry today is standardization. As applications become more complex and costly to develop, standardization of drive-by-wire systems and in-vehicle networks, for example, can ensure that automakers achieve higher levels of safety, and can offer more features without drastically increasing development costs.
Fitzgerald: Highly integrated, power-managed microcontrollers are the cornerstone of the Electronic Control Module (ECM), which is the “brain” of every system. MCUs are a key enabler that supports embedded system designers in overcoming the significant challenges that are encountered in implementing new features within the vehicle. Challenges range from power consumption and space constraints to ECM connectivity for diagnostics capability, while remaining cost sensitive. The subsystem suppliers are continuously working with their MCU suppliers to develop innovative solutions that are reliable and cost effective.
