29 March 2019, The Global Automotive Chip Market is expected witness a rapid expansion over the forecast period. Rising computerization and digitization of automotive parts are anticipated to fuel the industry growth. In addition, rapid incorporation of Engine Control Unit (ECU) in modern automobiles is also expected to augment the market demand over the next few years. These chips are required to monitor and control various functions of a vehicle as they use algorithms to direct the part to operate in a particular manner. Technological developments in the automobile industry have led to an active involvement of computers in the operations of automotive engines.
Manufacturers are harnessing the power of digital control equipment leading to high-performance delivery of automobiles. Ongoing research to discover the innovative use of automotive chip may act as a key factor for increasing the product demand. Manufacturers such as Renesas Electronics Corporation and NXP are actively eyeing automobile brands at collaborative manufacture initiatives. It follows a declining demand from the computer industry and manufacturers are now aiming at exploiting the growing automotive chip market. However, with only a few key players directing the market dynamics, the smaller companies may face challenges to sustain.
Manufacturers such as ARM Holdings, generating more than 40% revenue from smartphone industry, are actively developing products that may be required in future by the automobile industry. However, with elongated design cycles, the industry is still in pre-nascent stage and may begin rolling out products only after a few years. Further, the collaborative efforts of automobile manufacturers and chip makers are expected to fuel demand over the forecast period. The market can be segmented by type into after-market and Original Equipment Manufacturer (OEM) products. While the OEM sector accounts for a healthy growth, due to active development stage activities, the after-market sector is poised to witness a substantial growth over the forecast period.
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This growth may be attributed to increasing demand from the Asia-Pacific region where cost-effective after-market solutions are widely available and future demand for these components is expected to be high. The advent of hybrid vehicles and self-driven cars is also expected to spur demand owing to extensive computer-based operating systems used in them. The industry depends heavily on the global automobile production. Since most chip manufacturers are entering into agreements with automakers, smaller companies are facing challenges to sustain in the market, impeding the overall industry growth. However, with the varying product features, firms may develop competency for specific components, imposing market growth.
Ongoing usage in automobiles incentivizes manufacturers to integrate related functions in their existing offerings, creating new products with multi-function capabilities. Manufacturers are focusing on automobile sector more as compared to communications, medical/healthcare, government, and military owing to the maximum demand. Automotive chips find numerous applications in safety, performance, and infotainment-related requirements. While the infotainment sector exhibits a healthy growth, the security and performance-related chips are yet to capture the market, which may be attributed to the relatively simplistic nature of the infotainment systems chips.
The safety and performance related circuits require extensive R&D on the manufacturer’s end, often causing a delay in rolling out products to consumers. However, with the increasing demand for computer-controlled safety and performance, the growth is anticipated to be high. Some of the key companies in the global market include Texas Instruments, Inc.; Renesas Electronics Corporation; Infineon Technologies AG; STMicroelectronics; NXP Semiconductors N.V.; and Robert Bosch GmbH; North America currently accounts for the majority revenue share of the global market followed by Europe and Japan. Asia-Pacific, with its growing population and increasing automobile demand, is expected to grow at a healthy CAGR over the forecast period, providing ample growth opportunities for the companies.
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