Following a healthy expansion in 2012, the growth of the global automotive semiconductor market is set to decelerate slightly this year because of a slowdown in the aftermarket and portable navigation device (PND) segments. Total semiconductor revenue in 2013 derived from automotive infotainment will reach $6.67 billion, up 3 percent from $6.48 billion, according to IHS. Growth this year will be lower than last year’s approximately 4 percent increase, but an acceleration is expected next year and beyond, with revenue growth of 3 to 7 percent each year during the next five years. By 2018, automotive infotainment semiconductor revenue worldwide will amount to $8.54 billion.
“Despite relatively soft growth this year, the automotive infotainment semiconductor market is set for continued expansion well into the future, fuelled by major technology improvements that not only increase the functionality of cars but also improve the overall driving experience,” said Luca DeAmbroggi, senior analyst for automotive infotainment at IHS. “The muted growth this year is the result of decreased revenue in the aftermarket sector, where sales are depressed because cars are being sold with more complete infotainment features and systems, reducing the need for consumers to make upgrades. The progress of the market also is being slowed by a continuing decline in the PND segment, as motorists increasingly turn away from dedicated navigation devices and toward smartphone-based solutions.”
The drop in aftermarket and PND sales will eat into gains made in semiconductor sales to OEMs, which will rise a projected 6 percent from 2012 to $4.5 billion this year.
However some signals of inventory burnout started in the fourth quarter of 2012 also are expected to dampen semiconductor production revenue in the first half 2013.
Despite the reduced speed ahead, the automotive infotainment market overall remains immune to a downturn, unlike other markets that have been negatively affected by global economic uncertainties. The importance of automotive infotainment continues to increase as consumers clamor for built-in connectivity and telematics in cars, which now have become a major selling point of new vehicles. Used either alone or with mobile devices like smartphones and tablets, the infotainment systems in cars then allow occupants to access information, safety features and entertainment options at will, paving the way for a more seamless interaction with the outside world.
In the long run, however, technology changes in cars will not just be associated with new features and hardware integration into the vehicle, but will also be influenced by new hardware strategies.
For instance, automotive infotainment systems are quickly developing toward a PC-like architectural approach in which more functionality is dependent on a powerful main central unit, IHS Automotive believes. This means that software will acquire greater importance as a differentiator among brands seeking to make their infotainment products and features stand out. Applications previously implemented via hardware will be reconfigured instead into simpler programs reliant on a heavily centralized unit marked by strong processing power and memory capabilities.
On a semiconductor level, growth will be fostered not just by the implementation of more infotainment features into a vehicle, but also by broader technology diffusion among various vehicle segments, trickling from high-end luxury rides all the way down to entry-level pieces. Government regulations and mandates, including those relating to electronic stability control or tire-pressure monitoring, will also help boost semiconductor growth.
Within the automotive infotainment market, PNDs will be the only segment to decline in the coming years. Shipments of the once-popular devices will fall from 33.6 million units last year to 24.0 million by 2018. Meanwhile, the combined market this year for PND-related analog and logic application-specific standard product (ASSP) integrated circuits will be down 18 percent on the year to less than $330 million.
In contrast to PNDs, growth is forecast to take place in various other automotive infotainment segments, including in-dash navigation systems, connectivity in head units, telematics, and both satellite and terrestrial digital radio.
In-dash navigation systems, for instance, will enjoy increased penetration worldwide in vehicle head units, deepening from 19 percent last year to more than 32 percent in 2018. Total in-dash silicon revenues in 2013 will reach $290 million, up from $274 million in 2012.
For connectivity systems in head units, Bluetooth and USB remain the de facto standard for wired and wireless connectivity given a 35 percent attach rate for each in 2012.
Increased momentum will likewise be found in other technologies aiming to cover high-definition applications, such as High-Definition Multimedia Interface (HDMI) and Mobile High-Definition Link (MHL).
In telematics, General Motors’ OnStar and other similar systems continue to have the most mature and widespread market presence. OnStar-type embedded systems hauled in revenue of $480 million last year, with takings by 2018 expected to reach $1.8 billion. Telematics will grow quickly in Europe in the next couple of years as regulations become effective, making features like eCall mandatory in vehicles for summoning help during emergencies.
Automotive OEMs will also lend increasing support to satellite and terrestrial digital radio systems, such as HD Radio in North America and Digital Audio Broadcasting in Europe. In particular, automotive silicon revenue from terrestrial digital radio formats will rise sharply within a span of six years, climbing from $55 million in 2012 to more than $140 million by 2018.