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More automakers are offering high-end information systems in their cars, spiking demand for infotainment modules in the electronics supply chain.
High-end applications, such as running smartphone applications on a dashboard console or dictating emails with voice commands, were previously limited to BMW, Mercedes, and other luxury brand cars. Now more advanced offerings have begun to trickle down into the mainstream car segment. Demand is ramping up from the likes of General Motors, Ford, Toyota, and Chrysler in the United States and PSA Peugeot-Citroen, Renault, and Volkswagen in Europe.
On average, when offering components to big-volume producers, electronic suppliers are also able to maintain margins similar to what they commanded for high-end cars, according to the European Association of Automotive Suppliers.
The margins are largely maintained by achieving supply chain operational efficiencies, often on a worldwide scale. System integrators must also often adapt their production capabilities, for example, so that they can produce and supply many components for information-related applications locally on a just-in-time basis whether in the United States, Europe, or elsewhere, the European Association of Automotive Suppliers says.
The focal point of in-car infotainment in the United States remains the smartphone and the in-car console on which smartphone apps run in the United States. US carmakers increasingly seek consoles that can run and display smartphone apps, often with voice-activated commands.
Electronic systems integrators such as Bosch, Continental, and Delphi supply the consoles with the components that they procure from component makers, in much the same way that PC makers do.
According to a Frost & Sullivan report (registration required), 25 percent of the cars sold in North America in 2011 ran smartphone apps on a car console. That percentage should more than double within five years.
Ford was the first mainstream automaker to roll out high-end systems that run smartphone apps in cars with its Sync system. Two years ago, it began to offer consoles that ran smartphone apps with voice-activated commands, such as email dictation, after luxury carmakers such as BMW and Mercedes began offering similar applications.
Following Ford's lead in the United States, other mainstream US carmakers have developed or are developing car systems that run smartphone navigation, communications, and a range of other apps. These systems include GM's MyLink, Chrysler's UConnect, and Toyota's Entune.
Rolling phablets
Europe's mainstream carmakers are taking a less smartphone-centric approach. For example, Renault is rolling out its R-Link system in its high-volume selling Clio, Captur, and other models. Car owners download apps directly to a tablet-style computer screen embedded in the console. In addition to the standard navigation and music apps, R-Link allows drivers and passengers to send and receive emails and tweets.
PSA/Peugeot-Citroen offers its Connect Apps in its Peugeot 208, 2008, and other models. The user plugs a connection key into a USB port to access content such as weather reports, traffic conditions, prices at nearby filling stations, parking lot locations, restaurant and hotel information, and even a Michelin guide.
Volkswagen, Europe's largest carmaker, offers a touchscreen system that features a WiFi hotspot that permits in-car Internet access for smartphones, tablets, and laptops.
For the European market, Bosch, Continental, Delphi, and Omega are the leading electronics system integrators.
The fact that drivers in the United States will increasingly be able to access and interact with information and applications raises obvious safety concerns. However, distracted driving is a subject of another discussion. Those involved in the automotive supply chain can expect significant demand for components that go into car entertainment systems in the near and middle term.
The development of auto infotainment has taken into account of driving distraction. For vehicle buyers, safety is the most important factor, and the voice command is a requirement of safety.
Safety always has to be Job 1 in auto manufacturing. Nobody wants to drive a family car that is more dangerous than another, unless they're nuts. Fortunately, hands-free phone systems are making it safer to drive while talking but the distraction factor remains high. Navigation systems that remain mute force the driver to look away from the road to see a map. And email is only practical if the system takes dictation (accurately!) and reads responses.
Collision avoidance systems and similar safety systems are great, but don't offset some of the new safety concerns above. Personally, this is why I don't have most of those features in my car, but please don't call me a luddite.
We already have too many hours of internet and emails at office and at home. Why not enjoy lovely nature when you drive? It is wonderful blue sky, green earth and forest on both sides. Look at kids playing and dog walking. I love to deeply watch nature while driving and give rest to my mind.
Infotainment is good to have but not many people use it and not many people should use it.
No, Lilly, I don't think that very much consideration has been given to safety in the design of all of those entertainment toys that are put into cars. The number one goal is maximum profit, which does require some effort to reduce liability. So some effort is put into providing the appearance of working toward safety, but at all times the primary target is maximum profit.
If safety were the number one consideration cars would be a whole lot different, and there would be real laws preventing the inclusion of all the distracting toys. But when you can see the situation from the inside, it becomes clear that profit is what is the single main driver. Sometimes safety features are added to improve sales, but not if they add to the cost. The safety gimmicks such as stability control are added because somebody who can profit from selling and licensing them has lobbied for laws to include them, not because they will actually be a real benefit to other than a small minority of inexperienced drivers.
This is such a refreshing story. I'm so tired of hearing people say there are no opportunities. That just doesn't stop entrepreneurs who can always find a need and fill it.
Some clever engineers can re-invent an existing product for new uses.
Its always good for the country's economy if the manufacturing is done locally. But if the minimum wages are much higher locally, companies are forced to outsource it globally. And of course the laws in many Asian countries are not that strict, so it can be played with safely.
This is a wonderful news for semiconductor industry. There are plenty of niche market areas with better margins and appreciation as compare to some of so called common man popular fields.
We did get few custom chips developed for Miltary and have paid $100K, $250K and more. There is lots of work there too. But my love will be Analog ASIC or like MCM replacing hybrids. This too has good potential for auto and medical electronics industries.
All success to them ! BRAVO
For 2 decades US technology has been siphoned off to the Orient ( the original and geographically correct definition of nations – Japan excluded – that now hide behind the appellation of Asia – Pacific ) with active persuasion from Wall St. It takes real Asians like Khosla the Billionaire VC ( and co-founder of Sun Microsystems ) to put up resistance to the eggregious IP theft. Khosla has put his money to where his mouth is – at TSI.
US technologists & start – ups should stop going to the Foundries in the East and lose their IP. Instead of being led to the slaughter like lamb they should take advantage of TSI. And TSI needs to add more Analog BiCMOS processes including Si – Ge & FD SOI to their process portfolio.
It is sincerely hoped that China-loving traitorous Wall St. run by Henry Kissinger's cohorts will not be able to derail Khosla's plans.
P.S. : just yesterday the BBC reported that for the last 2 weeks Kissinger was in China coaching the Chinese President how to bargain hard with Obama during their 2 day meet at Palm Springs starting tomorrow.
With “naturalized” citizens like Kissinger still on the loose it is silly of the US to even bother about “small fry” like the Al Qaeda. Through his 40 year long advocacy of China ( who are his paying clients ) Kissinger has caused 1000x harm to the US compared to Bin Laden. This is because they can operate above the Law as no one dare criticize him or his ilk.
Yes, I found this a very encouraging story as well. I hope there are more semi veterans out there who come up with new business models like this.
I agree, safety is not the main target of any of this efforts. Adding entertainment (or infotainment) to the main console has its risks, very high risks actually.
But car makers are catching up to the post-sale market, where people add multiple devices to improve their experience.
What I've seen recently is adapting the space in order to fit a already made and proved tablets (normally a 7″)… why aren't carmakers doing the same? I'd rather get a Nexus 7 than one made by the carmaker.
@Chipmonk: All of us do our best and soon, we will have better days like those golden years. Also, we look and take more aspriration from people and organizations doing good work and try to forget and forgive those not doing their part for USA. It may take some more time, but more innovation is in pipeline.
SP: Ibeg to differ. It's often better to buy manufactured items from elsewhere becuase it can give you an economic advantage. I think what you meant is that it is better to keep the manufacturing jobs you have rather than ship them overseas. I agree with that, but it's not the same thing. Why build a factory in the US to make chop sticks that cost $10 a pair when you can already buy Chinese-made chopsticks for 50 cents?
But computers? Better to keep the factory in the US than shut it down and ship the jobs overseas. We did that wrong. And now some companies are finding out when they try to repatriate their profits. They won't get much sympathy from the taxpayers they laid off.
SP: Ibeg to differ. It's often better to buy manufactured items from elsewhere becuase it can give you an economic advantage. I think what you meant is that it is better to keep the manufacturing jobs you have rather than ship them overseas. I agree with that, but it's not the same thing. Why build a factory in the US to make chop sticks that cost $10 a pair when you can already buy Chinese-made chopsticks for 50 cents?
But computers? Better to keep the factory in the US than shut it down and ship the jobs overseas. We did that wrong. And now some companies are finding out when they try to repatriate their profits. They won't get much sympathy from the taxpayers they laid off.
The reason that the space will not accomodate your own smartphone or smart computer is hat it would allow you to not purcgase one from the automakers, and that will be a very high markup item for them. BUT wait just three years and the universal approach will arrive, right after somebody in the aftermarket starts to offer the conversion.
@_hm, you can hardly shift blame this onto innovators or the universities for supporting inventions but everyone. We are all in it together. Isn't it? Unfrotunately reversal of this trend very difficult.
when companies take decisions to shut down manufacturing in US and move to their own subsidaries in say Mexico, the morale of the workforce gets severely affected. I witnessed the emotions of many manufactring engineers and technicians when suddenly after a few respins, the management decided to shut down the entire unit at Phoenix and moving to Mexico.
@Wale: Yes, may be this type of changes are cyclic in nature. After few years, people may prefer auto to be quiet place to relax when going to office, going to home or an errand with family.
Unfortunately, “enjoying nature” while driving can be just as distracting as using a cell phone or even text messaging. So don't substitute one fatal distraction for another. Driving is a full time task and while some can sometimes share attention with other activities, mostly dividing attention is quite unsafe. I do sometimes pull offof the road in order to safely focus my attention elsewhere, but I am one of very few who ever do that. PAY ATTENTION TO DRIVING!!! OK! Enjoying nature is just a different form of distraction.
@William: Yes, this happened to me when I was novice driver too. But as you graduate and gain experience, most auto driver enjot nature's bounty.
Yeh, I do agree the nature is as distracting as using any electronics device while driving. But at the same time the fun of drive will be lost if too many electronics come into thecar just like the way TV has taken away the good home talk and even reached to the level of medium for any communication between family members.
Electrnx, You are correct,and nature is certanly less distracting than those electronic devices, which are intended to be a focus of attention. That is the fundamental difference, which is that nature is just there for us while all of those other things are there to attempt to get us to pay attention to them.
BUT it is still vital to concentrate on driving, even after one has been doing it for many years, unexpected things still happen, such as falling rocks and runing children still pose a source of problems. So no matter how experienced one is, most of one's attention must be focused on driving.
SP: On the other hand, I'll bet the Mexican town that landed that plant was celebrating. Such is the nature of global trade. There are winners and losers in every business deal. The supply chain is win-win-win-win when producers, buyers, distributors, and customers all benefit. But, absent inflation, the continual improvements in margin suggest someone is losing somewhere. Yesterday, it might have been Phoenix. Next year, it could be Shenzen.
The driving experience today can seem fascinating if you look at all the aspects the automakers promote. It's great to have the comfort and the devices at your fingerprint. However some people miss the old cars, since they claim the driving experience is more intense in those cars. There are some reviews about that on this used cars for sale in Pittsburgh PA. They should be eye openers for the automakers today, shouldn't they?