Changing Auto Landscape Creates Challenges, Opportunities

July 11, 2016
More electronic content, new competitors, and a deeper level of integration in today’s cars add up to continued prosperity in automotive markets.

An app that replicates the iPhone interface inside the car, Apple Carplay is available in more than 100 models and as an after-market service. 

The auto industry’s recovery from the 2008-2009 recession continues to be good news to the electronics supply channel, especially as automakers embrace the changing ecosystem of the car to develop more advanced infotainment, safety, and security features. The change is altering the competitive landscape across the supply channel—think of Apple, Samsung, Google, and others that are developing automotive applications and systems—while opening the door for distributors to supply a wider range of components and services.

“You have a lot of different technologies designed for the [automobile] or taken from other verticals and being applied toward autos,” says Mark Boyadjis, principal analyst and manager, automotive user experience, for industry researcher IHS Automotive. “It’s changing the total makeup of the vehicle.”

Apple Carplay is one example of how the inside of the car is changing. An app that replicates the iPhone interface inside the car, Carplay is available in more than 100 models and as an after-market service. The key feature is Siri, as the system is controlled largely by voice commands and is in response to consumers’ desire for greater safety in today’s connected vehicles. Android offers a similar application with its Android Auto app. Samsung is also trying to capture a piece of the automotive market, focusing on supplying components for autonomous driving and infotainment systems—a market the company had not previously invested in.

All of these point to the changing automotive ecosystem, growing need for deeper integration of electronic content, and the changing competitive landscape.

“Samsung hadn’t really done anything in the vehicle, but in the last 12 to 18 months [has been] investing in this market,” says Boyadjis. “They’re going after parts of the business that the tier one supply chain currently owns.” 

Sensor Fusion, AI Hold Promise

A recent report from IHS Automotive points to sensor-fusion engine-control units (ECUs) as a key growth driver in the automotive industry, further emphasizing the advancing automobile. Safety-critical applications surrounding collision and speed, for instance, are prime areas for this technology, which pulls together different types of sensors in a customer-facing feature. In 2015, just 4% of new vehicle platforms included sensor-fusion ECUs for surround-view park assistance and safety-critical functions, for instance, but by 2025 that is expected to rise to 21%, according to IHS data. This represents one of the highest growth rates for components used in the automotive industry.

“Using a combination of these sensors will help car OEMs achieve robust sensing schemes and promote redundancy,” according to IHS’ most recent Automotive Electronics Roadmap. “Sensor fusion ECUs combine information from different sensors to implement algorithms for achieving the highest level of functional safety.”

Artificial Intelligence (AI) is another growth opportunity, albeit one that remains a bit more futuristic. IHS points to the potential use of AI in autonomous driving, citing increasing demand for hardware and software solutions that support AI, which uses electronics and software to emulate the functions of the human brain. Unit shipments of AI systems used in infotainment and advanced driver assistance systems (ADAS) are expected to rise from 7 million in 2015 to 122 million by 2025, the researcher says.

The majority of AI systems today focus on speech recognition, but the potential exists for more advanced applications. And although AI systems are relatively rare in the automotive market today, they are expected to become standard in new vehicles over the next five years, IHS says, especially in infotainment human-machine interfaces. Such systems are expected to move beyond speech recognition to include gesture recognition, eye tracking and driver monitoring, virtual assistance, and natural language interfaces. ADAS and autonomous vehicles are another big potential area, where camera-based machine vision systems, radar-based detection units, driver condition evaluation, and sensor fusion ECUs will be in high demand.

Such advances are no surprise to industry watchers such as Boyadjis.

“In developed markets, it’s no longer surprising to find a fully vetted car ecosystem in any car,” he explains. “The reality is that a lot of the global auto makers are already pivoting into connected car 2.0—a fully vetted, developed … car ecosystem.” 

The Path Forward

Despite slower growth in the automotive industry last year, the automotive semiconductor market grew 0.2% year-over-year to reach $29 billion in 2015, according to IHS. And although the automotive market remains a small portion of overall global electronic system sales, many suppliers remain focused on investing in this business. Leading distributors such as Avnet have pointed to strength in the automotive sector, along with long-term opportunities to go beyond supplying electronic content to providing services that support data, security, and business analytics aspects of the content in the car.

The bottom line is that the connected car is here, and most automakers are focused on what’s next—that is, what is the next level of advancement they can offer consumers? Developing deeper integration that links to the connected home is one example. This comes at a time when the transportation industry is set for dramatic change, with the advent of self-driving cars, advances in electric vehicles, and the growth of ride-sharing services.

“It’s a model that’s going to change pretty drastically for [auto makers] in the next 10 to 15 years,” Boyadjis says, pointing to a not-so-far-fetched scenario in which consumers subscribe to mobility services instead of purchasing new cars. 

Though such a situation is certainly not right around the corner, automotive industry advances in the last few years alone point to a swiftly changing industry that hinges on electronics.

“Many, many automakers and the rest of the supply chain see the change and are starting to drive the change due to customer preferences,” Boyadjis adds.

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About the Author

Victoria Fraza Kickham | Distribution Editor

Victoria Kickham is the distribution editor for Electronic Design magazine, SourceESB and, where she covers issues related to the electronics supply chain. Victoria started out as a general assignment reporter for several Boston-area newspapers before joining Industrial Distribution magazine, where she spent 14 years covering industrial markets. She served as ID’s managing editor from 2000 to 2010. Victoria has a bachelor’s degree in English from the University of New Hampshire and a master’s degree in English from Northeastern University.

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