Automotive Electronics Shifting to Higher Gears

Automotive Electronics Shifting to Higher Gears

While the new generation smartphones are driving the demand for memory products, the automobile market is continuing to evolve, which will impact the electronic component supply chain in the near future.

In September, China’s Vice Minister of Industry, Xin Guobin, confirmed they have begun to work on a timetable to ban the production and sale of vehicles powered solely by fossil fuels. It is not clear when the ban will be effective, but this announcement from the largest automotive market in the world anticipates a change in the automobile industry.

China is not alone. Britain, France, Germany, India, and Norway have all set goals to have zero-emission cars on the road between 2030 to 2040.  According to International Energy Agency, at least eight other countries and eight states in the United States have set official targets for electronic car sales.

Furthermore, automobile manufacturers around the world are already adjusting their strategy to adapt to those changes. General Motors’ head of product development, Mark Reuss, said in an interview, “General Motors believes in an all-electric future.” GM will roll out a total of 20 new electronic vehicles over the next 6 years.  Volkswagen Group, Mercedes-Benz, Volvo, and Jaguar all have made similar plans to move towards the production of electric vehicles.

The electronic component industry will experience rapid growth to keep up with the booming production of electric vehicles. The total market for automotive electronics is estimated to double to 26 trillion yen (231.1 billion USD) in 2022 from 14 trillion yen (124.4 billion USD) in 2012.

According to Fuji Chimera Research Institute, the value of electronic components in each car will increase 26% over the decade to 2022. For example, a traditional gasoline-powered vehicle will only need $70 worth of discrete components while an alternative fuel vehicle will need $387 worth of discrete components.

A notable segment to experience growth includes power semiconductors. IHS Markit predicts power semiconductors in the automotive market will increase from $5.5 billion in 2016 to more than $8.5 billion in 2022. For the alternative fuel vehicles, high-voltage power devices, such as insulated gate bipolar transistors (IGBTs) and freewheeling diodes, are playing essential roles in hybrid electric traction inverters. Experiencing the same are voltage boost dc/dc converters, fuel cell air compressor motor drives and other onboard power management converters. Moreover, low-voltage power MOSFETs and power integrated circuits are widely seen in engine control, vehicle dynamic control, vehicle safety and body electronics subsystems in electric vehicles.

The automotive electronics market has been a focus area for chipmakers, as a result of a few large acquisition deals which occurred in 2016.  For example, Qualcomm bought NXP, Samsung, bought Harman, and Siemens bought Mentor Graphic. Qualcomm, Samsung, and Siemens all hope to expand their share in the automotive electronics market through those acquisitions. As the market grows, we will see more acquisitions and more players.

Advanced MP Technology has been supporting OEMs and EMS in various verticals such as automotive industry for over 39 years with its strong supply network and high-quality products. By closely monitoring market conditions and trends, we can provide the best suitable services to our customers across different verticals.