Bob, Thanks. Here's another article that goes into a lot of detail on this
frost.com
A brief outlook on the automotive semiconductors market - Down but not out; long-term opportunities in plenty for semiconductor suppliers
Date Published: 1 Oct 2009
By Akkaraju Venkata Sridevi, Research Analyst, Semiconductors
Automotive industry has been undergoing a sea change with respect to the implementation of semiconductors into vehicles. The conventional automobiles consisted of heavy mechanical systems, but the advent of semiconductor technology has powered the future of automotive design. With inclusion of electronic systems/control into the automobiles, the over all performance and efficiency of an automobile is enhanced to great heights. Semiconductor technology has enabled many automotive systems manufactures to integrate various applications on a single chip by reducing the board area and optimizing performance. Integrated electronics solutions have been one of the key drivers for growth for the automotive industry.
Few of the key reason for increased use of semiconductor content in automobiles are:
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Critical safety systems
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For producing fuel efficient cars
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Lighter automotive designs
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A key factor of differentiation for automotive manufacturers. For example, providing navigational and communications systems
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Demand from consumers for comfort and entertainment features
The main areas of applications in which semiconductors are used in automobiles are:
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Powertrain Control
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Body Electronics
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Safety
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Chassis
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Driver Information Systems
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Automotive Networking
Chart 1.1 Automotive semiconductor applications
Click to view enlarge
Semiconductor products starting from microcontrollers, microprocessors, Analog ICs, discretes, logic, sensors, and memory all find widespread use in all kinds of electronic control systems in an automobile. If we look at automotive semiconductors suppliers; Freescale continues to dominate the market with their cutting edge automotive semiconductor solutions. The other leading suppliers include Bosch, Infineon, ST Microelectronics, and Renesas. The main product segments that the top suppliers need to focus on are analog, microcontrollers and sensors.
Worldwide Automotive Industry Trends
The year 2008, witnessed steep decline in the automotive semiconductor sales. In 2008, the worldwide automotive semiconductor market declined by 4.7 percent and the revenue reached 18.38 billion. For the first three quarters of 2008, vendors in the automotive semiconductor market witnessed a positive revenue growth. The final quarter of 2008, revenues witnessed a steep decline; due to the effects of US credit crisis and its effects on the United States automotive industry. New car purchases dropped significantly in U.S. in the final quarter of 2008. The US auto sales for 2008 stood at 13.2 million down 18 percent from 16.1 million in 2007. Top three players in the U.S, General Motors, Chrysler and Ford faced significant slump in revenues. The government led auto bail out saved the big three players and the automotive industry at large. Elsewhere, leading European economies witnessed significant economic decline thus affecting the automobile sales. European new passenger car sales witnessed the sharpest decline in 2008; the car sells fell 7.8 percent.
For most of the leading automotive semiconductor manufacturers a significant amount of revenue is driven by the U.S and European markets. The U.S automotive semiconductor sales is driven by factors such as upgrades to cars, new car sales and also high-end cars with sophisticated electronic control systems for fuel efficient and environmentally friendly cars. U.S. is also home to some of the world's best hybrid cars which have substantially high semiconductor content compared to regular passenger cars. For the hybrid car segment, semiconductor products such as power transistors and power discretes will take up the majority of the total amount of semiconductors. A fully electric automobile will contain even higher semiconductor content compared to regular and hybrid cars as power electronics will be the core or central to the vehicle.
World over, in recent years there has been a strong emphasis and the need to reduce carbon emissions. This objective is likely to be beneficial for many automotive semiconductor manufacturers. This is likely to drive innovation and requires the semiconductor industry to come up with sophisticated technologies to drive the automotive industry towards producing fuel efficient cars, reduce the impact on the environment or in an overall effort to help the industry's transition to the next stage of growth. For example, a fully electric vehicle will require power electronics components/systems with completely new set of features or functions unlike the current existing power semiconductor applications. Some of the semiconductor products are likely to become obsolete or simply hard to integrate into the next generation sophisticated automotive systems or designs.
The market is likely to witness a further decline in 2009. The worldwide automotive semiconductor market is likely to decline by 10-12 percent year-on-year. The market is set to rebound in 2010, when demand for automobiles across all economies is expected to see an upward trend. In the long term the market is expected to have solid growth rates.
A look at the Asian Automobile Market
According to the statistics released by China Association of Automobile Manufacturers (CAAM), the total sales reached 9.38 million units. However, the Chinese auto manufacturers experienced a 6.7 percent rise in sales in 2008, the lowest rise in 10 years. Sales of passenger cars reached 6.76 million units in 2008, an increase of 7.27 percent from 2007. The 2009 auto sales in china have been on the upside starting from the month of February. For instance the car sales in china witnessed a rise of 70.5 percent, highest since 2006. Similarly car sales shot up by 47 percent in May, 2009 and 48 percent n June, 2009. The tremendous increase in the car sales is attributed to government's cut in the retail tax rates and subsidies handed over to auto makers. For the first time Chinese auto sales overtook the U.S auto sales in the fist half of 2009, reaching 6.1 million vehicles compared to 5.8 million in the U.S. Form the month of June 2009, the automotive semiconductor shipments have seen an upward trend due to the Chinese and the Japanese markets. The first 6 months of 2009, the Japanese car sales witnessed a decline, however, for the first time in July, 2009 the Japanese auto sales was up 2.4 percent compared to the previous month.
If we look at the automotive semiconductor segments, in China the penetration of automotive electronics is been on the rise. In recent years many low-end automobiles have safety features and electronics control systems. This was previously restricted to only high-end cars in China. It is also important to note that consumers are increasingly leaning towards infotainment systems; a case in point is the rapid increase in the number of infotainment systems sold in the after-market and refitting market.
In Malaysia, the market is slowing showing signs of upward trend. According to the latest data released by Malaysian Automotive Association (MAA), vehicle sales in the month of July 2009 increased by 14.9 percent from June 2009. The MAA also concluded that there will be an upward revision for the full year forecast from their earlier forecast done at the start of this year. MAA has revised upwards its forecast by 4 percent to 500,000 units, from 480, 000 units. For instance in Malaysia the penetration of cars safety systems has been on the rise since 2007. The automobile industry in Malaysia is highly protected by the government, in a statement in August 2009; the government of Malaysia announced that it will finish reviewing the auto policy by September 2009 and is expected to roll out new policy which is all set to liberalize the automobile market. The importance to include safety systems and electronics control units in a vehicle is driven by the manufacturer's initiatives, government policies and consumer awareness. Most often the cost is transferred on to the customers and hence the penetration of automotive electronic systems is considered to be low. However in future all this is set to change with the announcement of governments new auto policy. This new auto policy will help foreign OEMs to set up operations in the country and also help in introducing passenger cars with latest safety features. Currently the leading auto makers are Proton and Perodua and these two makers are strongly protected by the government. It is to be noted that in the long term, Malaysia will witness an increase in demand of automotive semiconductors, this will be driven by factors such as; government policies, customer awareness and also manufacturers initiatives.
Thailand is known as the Detroit of Asia. If we look at the domestic automotive market, 2009 will be worse than 2008. Sales are likely to drop by 22 percent year on year. The main reasons are low consumer spending triggered by global economic crisis and the other major concern is the political situation in Thailand. The automotive semiconductor make in Thailand is likely to see an increase with rise in consumer awareness and preferences. Currently the automotive electronics systems penetration is low; however this is set to increase in the long term. The domestic auto sales are likely to rebound in 2010 as political tensions subside and the over all economy improves.
The Indian passenger car market is characterized by many low-end mid-sized cars. In the month of July 2009, the domestic passenger cars sales grew by 31 percent to reach 115,067 units; this growth is attributed to softer interest rates. Like any other developing market, the automotive electronics penetration is driven by government's policies for safety and emission control, consumer awareness and preferences.
In Asian countries such as China, Malaysia, Thailand and India the growth of automotive semiconductors is closely tied to government auto safety policies and stringent environmental measure for emission control and also consumer awareness for safety, comfort and entertainment features. It is expected that these markets in the long run will witness growth of fuel efficient cars equipped with latest automotive electronics systems technologies. |
