Jeremiah 29:11

Chip-laden cars still opportunity for semiconductor companies


May 7, 2008

The automotive market would appear to be an attractive target for semiconductor manufacturers. The most recent figure I’ve heard, courtesy of Tektronix, is that semiconductors represent 25% of the cost of manufacturing a new car. And as EDN's Brian Dipert reports, “Talk to any semiconductor supplier's spokesperson, ask him or her what the company's most compelling future market growth opportunities are, and there's a pretty good chance [automotive electronics] will rise to the top of the list.”

But Brian is skeptical, for two reasons. He believes that luxury features like “a dash-mounted GPS with voice recognition and response, whose color touch-screen LCD also served to display the video feed coming from a rear-view camera, an integrated Bluetooth microphone-plus-speakerphone setup, separate climate control settings for driver and passengers, and a music system (albeit not surround sound) whose sonic purity I'd wager exceeds that of the gear in most folks' homes” won’t trickle down to mass-market automobiles, and he believes peak oil will cause people to seek alternatives to driving.

He writes, “News reports in recent weeks are filled with stories of folks drastically reducing the use of their vehicles, turning instead to public transit, to pedal power, or (hallelujah!) to telecommuting…. So if folks will be using their cars less often, and commuting less time per use on average, why would they want to load them up with lots of electronics gadgets?”

It’s true that some people seem to be seeking out alternatives to driving. But Brian himself seems to think that these aren’t the people who would be buying high-end cars. People driving a BMW, Cadillac, Infiniti, Jaguar, Land Rover, Lexus, Mercedes-Benz, Porsche, or Rolls-Royce simply aren’t sensitive to the price of gas—they will continue driving their gadget-laden automobiles. Luxury features may not trickle down, but the market for them is unlikely to shrink.

As for the mass-market auto customers who begin switching to alternative modes of transportation, it’s hard to imagine they will give up their cars entirely (although if they drive less, they may trade them in less often). And their cars will continue to need semiconductors for engine-control units, government-mandated safety features, and so on.

Certainly, the automotive market isn’t a panacea for chip makers, but it still seems to present significant opportunities. One bit of data I don’t have is, given that semiconductor content represents 25% of the cost of building a car, how much of that is for semiconductors that make a car act like a car (ECUs, airbag deployment systems, tire-pressure monitors, x-by-wire systems, and so on) and how much is for semiconductors that make a car seem like a home (stereo, phone, climate control, and so on). Any ideas?

RoswellGrey

The trouble is, if someone ever pops a nuke in the atmosphere, the EMP will wipe out all the modern vehicles and we'll be forced to drive '65 GMC pickups or '69 Roadrunners, like on "Jericho." Wait. This could be a GOOD thing....

Jeremiah 29:11

Nothing like driving old technology......points and condensers anyone?

DK challenger

I wouldn't mind at all.

RoswellGrey

That reminds me of one night several weeks ago when my wife and I were out in our inherited '89 Tempo. We stop at a store, go in, do some shopping and come back out. I go to start the Tempo. It does nothing but crank and crank, acting like it's not getting gas. Forgetting that it's fuel-injected, I pop the hood, intending to take a look at the carb. When I open the hood, it dawns on me that I know virtually NOTHING about fuel injection. Looking at the engine, I idly twist the No. 1 spark plug wire. Dejected, I decide to try it one more time. It fires right up. Damn these modern 19-year-old cars.

DSkippy

Wow brings back memories of my dad and his timing gun with his head under the hood.

I can almost here the Allman Brothers Band in the back ground, see the Miller High Life with the X label on the neck in the gravel driveway, and the Golden Eagle (I think that was the name of it) CB antenna going up the side of the house affixed to the chimney.......

nostalgia.....

As for the nuke, interesting thought, our ops center has a shielding against emp (to protect against pulse guns), I wonder if military vehicles have a higher grade of semiconductors that are individually shielded against EMP as well as insulation on all wiring.....????