There is no denying that mobile market is almost matured, the growth in the semiconductor industry has to pick up somewhere else. Although it’s expected that worldwide cellphone subscription will exceed the world population in 2015 (already exceeded in many parts of Europe) and continue for some time (while CAGR in unique subscription will decline to 3% by 2018, see report), the actual rise in CAGR in revenue is going to be much higher in automotive semiconductor segment.
According to IC Insights forecast report, in 2013-2018 the automotive IC segment is going to see 10.8% CAGR, much higher than other segments including communications, industrial and consumer. While cars and other vehicles will see more and more infotainment, ADAS (Advanced Driver Assistance Systems) and safety systems (National Highway Traffic Safety Administration has mandated backup cameras as a must in all new vehicles), some of the communication systems such as IoT devices and vehicle-to-vehicle communications will also go into vehicles. The growth in automotive ICs has already picked up; in 2014 it is expected to grow by ~15% to $21.7B compared to just 1% in 2013.
What do we infer from here? If I look at the top3 automotive IC players in 2012 and 2013, they have remained in the same order – Renesas, Infineonand ST Micro. Interestingly, they are in 2014 top20 semiconductor revenue list as well, but there ST is above (at #10) Renesas (at #11 although with very minor difference in revenue compared to ST) and Infineon (at #13, improved from #14 in 2013). Let’s look at some other interesting stuff.
The top drivers in automotive segment are Analog ICs and MCUs other than growing presence of sensors and power management ICs. I see other automotive players such as Texas Instrumentsand NXPin top20 list putting higher emphasis in these automotive semiconductor areas. TI had largest 21% increase in automotive revenue in 2013. In 2014 top20 list, TI has improved its rank to #7. Also, looking at the fact that APAC region is forecast to be the largest market for automotive ICs (at ~20% CAGR), UMC is stepping up its manufacturing of automotive chips; already have plans to supply these chips for Japan’s automotive industry.
Does that mean we are going to see some changing equations over next couple of years? Among automotive players in 2014 top20 semiconductor companies (Renesas, Infineon, ST, TI, NXP), they have either improved their rank or maintained where they were in 2013. And among top3 automotive IC companies, they are retaining their order since 2012. This signifies the fact that due a longer life cycle of automotive products, they are bound to be there and further improve with accelerated growth in that sector.
By the way, wireless and consumer sector players such as Qualcomm, Inteland NVidia will also get benefited from car electronics and infotainment systems. Automotive memory IC market is also expected to double ($2B to $4.2B) by 2018.
Although the automotive segment will grow from a low base revenue compared to other segments, its high growth rate can add to already established semiconductor players in the top20 to renew their fortunes. Are we going to see any major change in rankings?
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