The overall global semiconductor industry caters to a highly fragmented market. In the past few years, the automotive semiconductor industry has witnessed a considerable rise in the global market; especially in the BRIC countries. BRIC (abbreviation for Brazil, Russia, India, and China) are all considered to be in the same stage of economic development. These countries are self-sustained for industry factors like manufacturing, services, and simultaneous resource supply and hence it is no surprise that a large number of semiconductor companies have started focusing on these regions as target markets for automotive semiconductors.
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Key Market Drivers:
Increasing number of vehicles in the region:
The growing infrastructure in BRIC countries has led to a large-scale manufacturing of a number of vehicles in the area; with the sales of passenger cars, light commercial vehicles and heavy commercial vehicles witnessing a significant rise. Currently, the passenger cars are the most popular vehicle type in the automotive semiconductor market.
Increasing integration of electronics in vehicles
The automotive semiconductor industry has seen a rise in digitization over the past few years. The integration of electronics is significantly boosting the market growth. The automotive systems constitute of several embedded processors connected via multiple digital networks, making it easier to control and optimize any automotive operation system.
Safety and security
Advanced safety and security features are no longer limited to high-end automobiles, but are also an integral part of entry-level vehicles. Due to their low cost, most of the vehicles these days are equipped with safety and security features like driver assistance radar, camera, sensors or GPS systems along with electronic braking or steering. Nowadays, consumers are also inclined to spend more on premium vehicles that are fully equipped with comfort and safety features.
Growing innovations for the sake of luxury are continually being implemented in this market. The applications of these innovations are user-friendly as they are more electronic, rather than mechanical in nature. This fact makes their implementation quite affordable.
Cyclic nature of the industry:
The overall semiconductor industry in itself is cyclic, and therefore, things are no different for the automotive semiconductor market. Manufacturers experience fluctuations in revenue because of inconsistent demand, and as a result, they regularly have to alter their production capacity to meet the changing market demands. Sometimes this leads to a gap in the demand and supply.
Stringent quality standards
The quality regulations in the automotive market are pretty stringent as compared to other markets. Compliance with ISO 26262 is most crucial for the implementation of any automotive system. Also, the outsourcing, packaging and testing functions can lead to uncertainties, as it is difficult to control quality.
Potential threat of hacking and malware
Since the vehicles would be connected via communication networks and software, it is quite possible to easily tamper with the electronic control devices. In extreme cases, this might even lead to road accidents. Instances of embedding false codes into MP3 files to plant a malware and other cases of manipulation of speedometers and engines have been recorded in the past.
As the global demand for vehicles increases, the environmental concerns associated with them also increase. In the coming years, a rising need for energy conservation is anticipated due to depleting natural gas reserves. All these factors hold potential for developing hybrid electric vehicles (HEVs) from the automotive semiconductor industry. Along with their environmental benefits, these HEVs also fulfill the need for high power requirement. Hence, a potential rise in the global demand for hybrid cars, trucks and even buses is foresighted in the coming years.
Author: Jui Pande
Sr. Content Writer and Editor, Inkwood Research