Often left unsaid is that semis growth in autos is still fairly distant. Aside from companies who have been selling to auto makers for years, cars are.
Why it matters: Over the past few years the semis industry has become somewhat obsessed with autos. Every major chip company now dedicates a fair amount of coverage to cars in all their investor presentations. Or at least it seems that way. In part that reflects a genuine growth in auto semis, and in part the tapering of growth in many other categories like mobile, PCs, etc.
Often left unsaid is that semis growth in autos is still fairly distant. Aside from companies who have been selling to auto makers for years, cars are still less than 10% revenue for most chip companies. And so it is difficult to draw up reliable forecasts for the segment. In fact, one of the most important questions about auto semis remains a big mystery – who is going to be the ultimate decision maker for auto semis decisions?
There are really two pieces to this question. First, how will cars be manufactured in the future and secondly, who will control the software in those cars.
Editor’s Note:
Guest author Jonathan Goldberg is the founder of D2D Advisory, a multi-functional consulting firm. Jonathan has developed growth strategies and alliances for companies in the mobile, networking, gaming, and software industries.
From our point of view, the auto industry looks like it is poised for significant change. Traditionally, the auto industry has a high degree of vertical integration, and while that has changed, for the most part today’s big automakers still organize themselves around manufacture, or at least final assembly, of the cars they sell. This stands in marked contrast to the electronics industry where the ODM/OEM model has long separated manufacture from design, sales, and marketing. Auto companies still spend a lot, by electronics standards, on the capital equipment required to build auto assembly lines. But there are many companies looking to shift this model.
The leading example of this is Foxconn (Hon Hai), the group that among many other activities, does final assembly for the iPhone. Hon Hai has been in the news a lot lately, they are now offering five models of cars ranging from sedans to pick-up trucks.
