Vol. 26, No. 1◆◆ hansenreport.com February 2013

VW Group and Tough Driver Interface Mercedes Committed Challenges Remain to MOST150 Carmakers are in a fix. The opportu- Consumer Reports is finding similar us- nity to bring numerous new features, ser- ability problems with the Cadillac User vices and sizzling graphics into the cockpit Interface (CUE), which replaces buttons Both Use MOST Ethernet Channel for IP has never been greater. The OEMs are and knobs with a touch screen and flush, Connected-car infotainment systems leaning heavily on user-interface engi- touch-sensitive switches. According to with their ever-increasing audio and video neering, but the state of that art hasn’t ConsumerReports.org, while “the system content require a reliable, scalable, high- taken us nearly far enough. Mistakes made looks extremely impressive in the show- speed data communications network that with the driver interface can be very room with the center dashboard a swath provides sufficient bandwidth and the costly: they can compromise safe driving, of glossy black and chrome accents,” re- ability to seamlessly integrate IP-based and they can confound and frustrate users viewers found the CUE’s controls “frus- applications. For the Volkswagen Group if the controls are not intuitive. trating” and “overly complicated.” and Mercedes the MOST150 high-speed Ford can surely attest to the danger of Ford has addressed reliability problems networking standard is the solution. Audi not getting the user interface right the with software updates and simplified was the world’s first carmaker to employ first time. Not only was its MyFord Touch MyFord Touch. GM is dispatching tech the MOST150 high-speed networking system glitch prone, but it was sharply specialists into the field to teach dealers standard in production in October 2012, criticized by car reviewers as being way how they might train Cadillac customers on the A3. The A3 has an Ethernet chan- too complicated to use. to become more agile CUE users. It’s not nel to all its infotainment system nodes. clear, though, how many customers are Golf and Skoda vehicles are also Best HMI Practices According to Preh going to want to spend more time at the launching with MOST150. Every vehicle dealer than they have to. “If the system ◆ in the Volkswagen Group that employs a Interfaces must be intuitive and self- isn’t intuitive, if you can’t learn it just standard or optional infotainment system explanatory. Customers shouldn’t have to from using it, you have a big problem,” based on the MIB (Modular Infotainment read manuals or require training. asserted Linda Boyle, associate professor of ◆ Baukasten, or platform) will make use of Driver distraction must be minimized. industrial and systems engineering at the MOST150, which runs on a plastic opti- Touch screens aren’t adequate for data University of Washington. “Older people, cal fiber physical medium. input in the car. Touch surfaces must be especially, shouldn’t have to relearn how As announced in 2011, Mercedes is enhanced with haptic feedback and feeling to use the air conditioner. These tech- also fully committed to MOST150. Start- aids so they can be operated while keeping nologies are designed to make things more ing with the S class this year, all Mercedes eyes on the road. The best place for the convenient, easier, safer to use, but are vehicles will get the high-speed network display is near the windshield. The best they really accomplishing that?” Professor with an Ethernet channel. place for manual input is near the center Boyle is presently working on a driver dis- armrest. Manual input devices such as traction project for NHTSA. Why MOST150 Audi’s MMI or BMW’s iDrive controller sup- The J.D. Power and Associates Naviga- MOST150 is a multipurpose network. port this concept. tion Usage and Satisfaction Study released ◆ The same physical layer can be used for Menus should be no more than two in January found that user-interface prob- many different applications. The first gen- or three levels deep. First-level functions lems go well beyond Ford and GM, and eration of the standard, MOST25, had should be clearly defined. A back button is well beyond car reviewers. According to a three different kinds of communications essential. J.D. Power press release, the owners of ◆ channels, noted Stephan Esch, Audi’s Multimodality: Drivers should be cars with embedded navigation systems head of vehicle networking technical de- given multiple paths to functions using a are “frustrated by the complexity of menu velopment. “One is for the control of combination of steering-wheel switches, systems, voice control commands and in- ECUs and other things within the info- center console controls, voice recognition putting destinations. ... Input and selec- tainment system. A second channel we and touchpad interfaces. tion controls accounted for six of the top ◆ could use for packet data, for example for User interfaces should adapt to dif- 10 most frequent problems.” The study is transmitting navigation graphics to the ferent driving situations and different users, based on 20,724 owners who recently pur- instrument cluster. A third channel was from unsophisticated to expert. chased or leased MY 2012 vehicles. Turn to MOST page 2 Turn to HMI, page 3 MOST... Continued from page 1 for synchronous transmissions of multiple Mr. Muyshondt is confident that the known as MOSTnG or Ethernet over audio streams, where you didn’t need any market for MOST150 nodes will blossom copper cable, possibly shielded or coaxial. computing power to transmit the data.” from tens of thousands of nodes in 2013 to Mercedes is also considering replacing its MOST150 has two additional channel tens of millions of nodes per year in the LVDS point-to-point camera connections types: One is an isochronous channel, 2018 to 2020 time frame as MOST25 us- with MOSTnG or Ethernet connectivity. which provides video streaming capability. ers transition to MOST150. Not only In addition to VW and Mercedes, “Now we can transfer video content from does MOST150 provide as much as seven MOST50 users General Motors and any source—TV tuner, DVD player, DVD times more bandwidth than MOST25 Toyota could also migrate to MOST150. changer or Blu-ray player—to the head (about 140 Mbit/s for MOST150 vs. 20 to According to Audi’s Mr. Esch, GM, unit or rear seat entertainment system 23 Mbit/s for MOST25) but MOST150 Hyundai and some other Asian carmakers over the optical ring. We save on cabling leverages the knowledge, tools and pro- have shown a lot of interest in MOST150. and silicon compared to the analog ap- cesses already in use on production lines Audi engineers are already thinking proach,” explained Mr. Esch. and at dealerships. about their next transition, sometime in The other new channel is an Ethernet Audi first launched MOST25 in 2002 the next three or four years, to an even channel for easy interfacing with IP in the A8, and over the next ten years higher bandwidth network. “The IEEE is (Internet Protocol) applications. “We installed the network across the entire working on a Reduced Twisted Pair Giga- have a lot of applications that are Internet Audi product line. Simultaneously, the bit Ethernet (RTPGE) standard,” wrote based where we transfer Internet data, for carmaker began working on a migration Mr. Muyshondt in an email. “I am in- example from a UMTS 3G modem and in strategy to a network that would provide volved with the IEEE. They are just start- the future from an LTE 4G modem,” said more capability and more bandwidth. ing to define the physical characteristics Mathias Halliger, who handles system ar- Audi and Mercedes engineers believe that of the channel before deciding what other chitecture for Audi. MOST150 is the first their transition to MOST150 will be less issues need to be tackled. From the time automotive bus system to seamlessly inte- costly than what BMW is doing with its actual silicon products are available, it grate IP applications, according to Audi. Broadcom BroadR-Reach automotive- will take the car industry several more Henry Muyshondt, senior manager for qualified Ethernet solution. years to get that into a production ve- Microchip Technology and technical liai- Peter Häußermann, director of tele- hicle. By then MOST will already offer a son for the MOST Cooperation, is an ex- matics for Mercedes-Benz, explained why multi-gigabit solution (on the order of pert on MOST technology and has long he favors MOST150 over the BMW ap- three to five gigabits per second). Late been involved with its development and proach. “With MOST we get the full ben- this year or early next year the first deployment. SMSC acquired Oasis Sili- efit of audio and video transmission, and MOSTnG nodes running at these speeds con Systems, one of the founders of the we get an Ethernet channel on top of will be available to carmakers.” ◆ MOST Cooperation, in 2005. Microchip that. Plus, we don’t have to change the Technology acquired SMSC in 2012. Mi- physical layer. Our optical fiber network is crochip Technology provides MOST sili- [electromagnetic] disturbance free. We get con, software and tools to the industry. the [cost] benefit of industrialization © 2013 Paul Hansen Associates, 150 In his informative white paper, “High within our large MOST community. The Pinehurst Road, Portsmouth, NH 03801 Speed Automotive Networking,” Mr. adopters of the automotive Ethernet ap- USA. Telephone: 603-431-5859. Fax: 603- Muyshondt makes the case for MOST150 proach do not have these benefits.” 431-5791. Email: [email protected]. in the context of IP communications: Volkswagen Group carmakers will use All rights reserved. Materials may not be reproduced in any form without written Most of the traffic in the IT world uses MOST150 throughout their infotainment permission. various protocols geared around IP pack- systems to connect head unit, audio am- The Hansen Report on Automotive Electron- ets, and many applications rely on this plifier, TV tuner and DVD player. Addi- ics is published at www.hansenreport.com standard to process the information that tionally they will attach the dashboard 10 times a year, monthly; July/August and can be flowing in and out of the car. ... instrument cluster to the MOST ring to December/January are combined issues. MOST150 has a dedicated Ethernet show such things as navigation maneuver Back issues are available for $50 each. channel. ... This channel can take a stan- and lane guidance graphics. But while Single- and multi-user electronic subscription dard Ethernet packet without any special camera applications for driver assistance information and a searchable index are avail- processing by the higher levels of the require high bandwidth, those won’t be able. Paul Hansen Associates is a strategy Ethernet management stacks and send it placed on the fiber optic bus. POF is not and market research firm consulting to the over the MOST network. MOST150 In- sufficiently robust nor is it sufficiently electronics industry. telligent Network Interface Controllers flexible to be run through the door to the (INICs) even have Ethernet-style MAC side-view mirror where the camera is Publisher/Editor Paul Hansen (Media Access Control) addresses so the mounted. Audi presently favors LVDS Managing Editor/ Brianne Wolfe Ethernet packets can be extracted at the (low voltage differential signaling) for Circulation Manager right location and passed on to other camera applications, but is also consider- Director of Marketing Michelle Long Ethernet devices. ing using the next generation of MOST, ISSN 1040-1105 Page 2, February 2013 The Hansen Report on Automotive Electronics, www.hansenreport.com HMI... Continued from page 1 According to the survey’s author, Mike or make menu selections. Manual inputs Voice control will be an integral part of VanNieuwkuyk, the problems users are are best made from the center armrest, future multimodal driver interfaces. having couldn’t be correlated with one while the display is best situated near the Albrecht Schmidt, professor of human- particular interface—voice, touch screen, windshield.” More multifunction control- computer interaction at the University of touch switches or knobs. “Users are hav- lers like the BMW iDrive and Audi MMI Stuttgart, has conducted research on com- ing problems with all of these. This is are coming to market, for example Mazda bining speech with 2D gesture inputs more an indictment of the complexity of has a rotary controller on its 2013 CX-5 made on a touch-sensitive steering wheel. these systems and the ability to use them, compact SUV and Kia has one in the new “The whole steering wheel is touch sensi- to interact with them, especially when the K9/Cadenza. tive, allowing you to use gesture input car is in motion.” Touchpads integrated into the center wherever your hands are resting. You Mr. VanNieuwkuyk continued, “We console make a lot of sense. Since 2010 might say ‘driver window’ and then move are adding complexity to navigation sys- Audi’s MMI has included a touchpad that your thumb up or down to adjust the win- tems, more information and services from recognizes hand-drawn letters and numer- dow opening.” He presented a paper de- outside that users can tap into. More is als. Preh developed and has begun pro- scribing the research at the fourth offered this year compared to last year, but ducing the latest generation iDrive International Conference on Automotive user satisfaction with embedded naviga- controller that integrates a circular User Interfaces in Portsmouth, New tion is actually going down. We’ve created touchpad into the iDrive knob. The Hampshire, in October 2012. a lot of value, but it’s hard to tap into that touchpad recognizes characters and 2D Convinced that the combination of value.” That is the big HMI challenge: gestures. First introduced in the 7 Series speech and gesture improves the interac- how to let drivers access all the features in China at the end of 2012, the new tion, Professor Schmidt and his research they want, safely, and with little effort. iDrive controller is likely to be rolled out partners plan to extend the approach with in more models later this year. further modalities, in particular eye gaze Manual Inputs and body posture. He does not see 3D ges- Ford has taken a lot of criticism over ture being widely used in automotive. the capacitive touch switches on its “You could put your hand in front of the MyFord Touch- and MyLincoln Touch- radio and raise or lower it to change the equipped vehicles, but these switches are volume or use a flapping gesture to go to here to stay, says Preh, the German com- the next song, but 3D gesturing makes pany that builds the Lincoln MKZ center people tired very quickly. That is why the stack featuring capacitive touch slider steering wheel will be there for a long functions for volume and HVAC blower time to come, because it supports the functions. “Capacitive switches will al- weight of your arms and hands,” he said. ways have a future in the automotive busi- Andrew Kun, associate professor of ness,” said Jochen Ehrenberg, Preh’s BMW iDrive Touch electrical and computer engineering at executive vice president in charge of Continuing Research on Speech the University of New Hampshire, who product development and purchasing. As we have written in the Hansen Re- chaired the October conference, has also “When you design these switches you port, consumers’ expectations of how an done research on the speech interface. have to have in mind the potential for automotive speech interface ought to “Speech provides opportunities because distraction; you shouldn’t have to look work have risen as a result of Siri, the in- it lets you keep your eyes on the road. directly at them with a lot of concentra- telligent personal assistant that iPhone 5 However, we know that speech can also tion. You need to provide a surface for the and other Apple device users can access be a problem. Talking on a cell phone ac- switch that you can easily recognize with using natural language commands. Given tually makes me four times more likely to your fingers, so you know where to touch. the shortcomings of voice recognition in get into an accident. Just plopping speech It is also good to provide additional help vehicles, it is not surprising that voice ac- interfaces into cars might not be good with haptic or acoustic feedback.” tivation in embedded navigation systems enough.” Professor Kun is interested in Mr. Ehrenberg recommends against received the lowest score of all of the fac- exploring the differences in the cognitive using only a flat surface like the 17-inch tors measured in the J.D. Power and Asso- processes involved in conversations over touch screen employed by Tesla in the ciates study. the phone versus the far safer conversa- center stack on its Model S electric ve- Despite their dissatisfaction, 80% of tions between a driver and passenger. hicle. When the vehicle is in motion it users said they want voice activation on Those findings could be a starting point to can be difficult to steady the hand to tar- their next embedded navigation system. create better speech interfaces, interfaces get what needs to be touched. He favors a They see the promise of speech, and they that behave more like interpersonal con- multi-modal approach that includes touch expect it will eventually be realized. The versations. and mechanical buttons or a rotary knob. U.K.-based IMS Research recently fore- Professor Kun is also very interested in “The best place to display information is cast that by 2019, 55% of new vehicles doing research on eye gaze, in particular not the best place to choose the functions sold globally will have voice recognition. continued on page 8

The Hansen Report on Automotive Electronics, www.hansenreport.com February 2013, Page 3 The Company Profile... Flextronics Automotive

Thumbnail Sketch Flextronics Intl. Sales and Flextronics Intl. Sales Operating Margin by Fiscal Year by Business Group Flextronics International Ltd. Address: 2 Changi South Lane, Singapore; 2008 to 2012 CAGR of Sales: 1.8% FY 2012 Sales Total: $29,388 million telephone (65) 6890 7188; flextronics.com High Reliability Solutions, 8% FY 2012 Sales: $29,388 million Automotive, 2.9% Interest and Other Expenses: 0.12% of in $ billions Integrated sales Network Industrial Operating Margin: 1.7% 27.4 30.8 24.0 28.5 29.4 Solutions, and Operating Cash Flow: $804.3 million 39% Emerging Employees: 159,000 as of March 31, 2012, Industries, including about 2,000 design engineers FY 2008 2009 2010 2011 2012 14% Sales per Employee: $184,830 Operating Margin by Fiscal Year High Velocity Solutions, 39% Market Capitalization: $3.90 billion as of January 29, 2013, 0.13 times sales 2008 (2.5%) 2011 2.1% High Reliability Solutions: Medical, Shareholders’ Equity: $2,453 million 2009 (19.9%) 2012 1.7% Automotive, Aerospace and Defense Working Capital: $2,017 million as of 2010 0.1% Industrial and Emerging Industries: September 28, 2012 Energy Management, Application and Total Debt: $2,200 million High Reliability Solutions Sales Lifestyle, Renewable Energy, Equipment Products: Electronics design and manufac- by Product Group and Automation turing services (EMS) account for 65% of High Velocity Solutions: Consumer, sales. FY 2013 HRS Sales: $2,800 million (est.) Mobile, Computing, Internet Access Flextronics Automotive Disposable Automotive Products (Datacards and MiFi) FY 2012 Sales: $850 million Medical Electronics, Integrated Network Solutions: Telecom, FY 2013 Sales Est.: $1.2 billion* Devices, 24% Networking, and Server and Storage Products: EMS, 65% of FY 2013 sales; 34% Flextronics’ in-house products, 35% Car High Reliability Solutions Sales Top Customers Ranked by Sales: Ford, by Fiscal Year Nexteer Automotive, S1nn, Automotive Connec- Lighting, TRW Medical tivity, 19% 2010 to 2013 CAGR: 26.5% Employees: more than 6,000, including Equipment, 19% Aero/Defense 4% about 300 engineers in $ millions FY 2013 Sales per Employee: about stock price declined 66% while during the $200,000 same period the S&P 500 grew by 10.5% Flextronics’ 2012 fiscal year ended March 31, 2012. and Flextronics’ peers grew by 10.1%. *All references to FY 2013 sales in this profile are 1,382 1,864 2,394 2,800 estimated figures. Final results were not released at Sales have declined for five consecu- the time of publication. tive quarters and the company lost a key customer, RIM, as of the quarter ending FY 2010 2011 2012 2013 (est.) Background December 31, 2012. In fiscal 2012, RIM Flextronics was founded in 1969 in accounted for more than 10% of Flex- supplier, a distant second behind Hon Hai Silicon Valley to assemble printed circuit tronics total sales. A major restructuring (Foxconn), but the number-one supplier boards for growing electronics companies resulted in charges of $103 million in the of electronics manufacturing services to that lacked sufficient in-house resources. last quarter and further charges, up to the auto industry, according to the com- The company began setting up Asian $125 million, are expected in the fourth pany. In 2007 they were number three in manufacturing facilities, in Singapore quarter, which ends March 31, 2013. automotive EMS. first, in 1981. After weathering major The company’s growth strategy has in- market downturns in the late 1980s and cluded dozens of acquisitions, including a Flextronics Automotive Background early 1990s, Flextronics went public first key rival, Solectron, in 2007 in a deal val- With decades of manufacturing experi- in 1987, and a second time in 1994. ued at $3.6 billion. At the time, Solec- ence in the communications and con- The company’s ordinary shares are tron’s sales were close to $11 billion, sumer electronics industries, Flextronics traded on the NASDAQ Global Select including 2.5% from automotive. has developed considerable technological Market under the symbol FLEX. From Flextronics today is the world’s second expertise and market knowledge that it March 2007 to March 2012, Flextronics’ largest electronics manufacturing services can apply in the automotive industry.

Page 4, February 2013 The Hansen Report on Automotive Electronics, www.hansenreport.com The Company Profile Continued

Flextronics Automotive Sales* Flextronics Automotive Sales Flextronics Automotive Sales Forecast by Business Type 2010 to 2013 CAGR: 58.7% FY 2013 Total: $1.2 billion, estimated Flextronics has been quickly building its By Region original design manufacturing (ODM) in $ millions Asia Pacific, 10% business through in-house development, acquisitions and by selling globally. North Original Design Manufacturing* 300 600 850 1,200 Europe, America, 35% 55% Electronics Manufacturing Services FY 2010 2011 2012 2013 (est.)

*Approximate 50% Consumer electronics markets can be By Product Type 35% volatile, while contracts with automotive Lighting, 15% 65% 50% OEMs and tier-one products tend to have long life cycles. Flextronics Automotive Clean operates 14 manufacturing facilities and technology, Smart Est. FY 2013 Est. FY 2015 six design centers in 11 countries, a foot- 20% electronics, $1.2 billion $1.7 billion** print that is appealing to global vehicle 65% *Flextronics’ own products makers. **Not including sales from acquisitions Flextronics Automotive was created as a business segment in 2005, part of the market. We are applying that experience Having lived in Asia [Shanghai] for five High Reliability Solutions Group, which in automotive as well, in back-up cameras years I was pretty comfortable that we also includes medical, aerospace and de- for example,” Mr. Vergin said. could grow the business over there. And fense products. It is estimated that 35% of Flextronics Automotive is also orga- we had no business in South America. So Flextronics Automotive’s FY 2013 sales nized regionally with managers respon- the idea that we came up with, and what will come from the company’s own origi- sible for North America, Europe, Asia and really was the springboard for a lot of new nal design manufacture (ODM) products. South America. The company’s market sales, is selling the whole product group Automotive products are grouped in development and engineering activities globally.” three major segments: Lighting Technolo- are well established in North America and Mr. Obey was formerly president of gies (exterior, interior and LED), Smart Europe, so the focus is on Asia (China Lear’s Asian operations in Shanghai and Electronics (rear-view cameras, head units and India) and South America. Flex- vice president of global purchasing. and connectivity modules, power door tronics Automotive today has roughly 50 Since FY 2010, well before Mr. Obey and lift modules) and Clean Tech (trans- people doing market development and joined the company, Flextronics Automo- mission and engine solenoids, DC/DC engineering in Asia, compared to zero a tive has seen remarkable sales growth— converters, recuperation modules, alumi- year ago. 58.7% per year through FY 2013. Some of num battery cables). The in-house busi- that growth was fueled by acquisitions, ness is managed by a product team with Fast Growth the most recent being the December 2012 global responsibility for portfolio strategy Chris Obey is president of Flextronics acquisition of Saturn Electronics and En- and M&A activity. Automotive. When he joined the com- gineering, a Michigan company with ap- Flextronics has been especially drawn pany from Lear in December 2011, he proximately $300 million in sales. Also to product segments shown to be growing found a small automotive business head- the 2007 acquisition of Sidler Automotive faster than car production, and product quartered in Germany with potential to led to significant new business in over- areas where it can leverage its strengths. grow. “When I got here we didn’t have a head console lighting with Mercedes, “From our Network Systems business, we global automotive strategy,” Mr. Obey BMW, Audi and Porsche. That European have experience in computing, Wi-fi, said. “We were very focused on German business began to take off in 2011. Bluetooth, cellular technologies and premium car makers and not on the rest of The bulk of the manufacturing services more. We apply that expertise in automo- the industry. The products we were devel- sales growth comes from some fast grow- tive,” said Bill Vergin, responsible for oping in Germany were not being picked ing products. Two of its fastest growing Flextronics Automotive product engineer- up by the rest of the world. The same was EMS products are a connectivity module ing and testing. “Connectivity and true for North America. We had a design Flextronics is building for Ford, and an infotainment—a lot of that is derived center in Toronto and those products electric power steering module for the from the consumer segment. Flextronics weren’t being proliferated to the rest of Delphi spinoff, Nexteer. Another growth also has a division that manufactures mil- the world. We had almost no sales in area is drivers for exterior LED lighting. lions of camera modules for the consumer Asia, the largest car market in the world. continued on following page The Hansen Report on Automotive Electronics, www.hansenreport.com February 2013, Page 5 Flextronics Automotive

Beyond EMS: Flextronics’ In-House Flextronics’ Technology Portfolio Automotive Business Lighting Technologies Power Controls Design Capabilities The trend to outsource more automo- Center high-mounted stop Motion control modules Full product design tive electronics manufacturing appears to lights Remote start antennas System engineering have leveled off for now, so Flextronics Overhead consoles Key fob & keyless entry PCB layout design Automotive’s future growth won’t come so Dome lights systems Software design much from the electronics manufacturing LED/RGB ambient lighting Instrument clusters/gauges Mechanical design services side of its business; rather it will Exterior lighting Electric Flow Control Component engineering come from companies it acquires and from Manufacturing services Components its own in-house developed products, the solutions High precision solenoids Engineering Capabilities original design manufacturing (ODM) Active Safety Electronics (engine & transmission) Quality engineering Rear view cameras Quasi diodes Test and process development side of its business. Blind spot detection cameras Electric relays Product verification and By 2015, Flextronics Automotive’s Truck/trailer brake ECUs Energy Converters validation ODM business will account for 50% sales, Adaptive cruise controls DC/DC converters Fast prototyping compared with 35% in FY 2013. “When Connectivity/Infotainment Start-stop voltage stabilizers Design for Excellence we look at our backlog, the business we Sound & connectivity modules Cold start modules Manufacturing have already booked, it is going to get to (Flextronics/S1nn) Recuperation modules Automation 50% in two years,” Mr. Obey said. “I think Media device interfaces Electronic Control Units Test you need that presence to be a key player (Flextronics/S1nn) Cooling fans Supply chain in the auto industry. And if you can get Vehicle system interface Power steering Disassembly modules Fuel pump controllers Reliability your products designed in by an OEM it is Rear seat entertainment Electronic Interconnects Costs not as easy for the OEM to take you out as modules High power battery cables Environmental it is if you are a contract manufacturer.” Telematics/GPS Specialized wiring harnesses Technical product documenta- As a tier-one or tier-two supplier, con- Head units (Flextronics/S1nn) Aluminum harnesses tion tracts can last five to seven years, at least. Audio systems (Flextronics/ Electric Motorcycles Intent on becoming one of the top S1nn) Brammo Bike electrical and electronics parts suppliers in the auto industry (though not nearly as especially,” Mr. Obey said. “Emerging medical and automotive) because prod- big as Bosch or Continental), Flextronics technology and emerging market trends, ucts associated with those markets have Automotive expects its double-digit an- where additional content is being put into significantly longer life cycles than other nual sales growth to continue, driven vehicles. That is where our focus is.” markets served by Flextronics, and poten- largely by new in-house products and ex- Flextronics International is focusing tially higher margins. Product turnover is panding sales of its existing products to investments in its High Reliability Solu- much faster in Flextronics’ consumer elec- customers globally. “We look at two things tions business group (aerospace, defense, tronics, smartphone and personal com- puter businesses. Flextronics exited its Automotive Acquisitions in-house PC business in 2012. Flextronics Automotive’s ODM business was built on five major acquisitions. Since they were acquired, the automotive businesses below have operated under the Flextronics brand. Saturn Electronics Year Acquired Products/Technologies Acquired in December 2012, Saturn Philips Lighting 2007 Design and manufacturing capabilities for LED lighting modules Electronics and Engineering, with annual Sidler Automotive 2007 Design and manufacturing capabilities for interior lighting products sales of roughly $300 million, makes sole- (overhead consoles, dome lamps), interior trim parts and exterior noids for automatic transmissions. “Each signal lighting. transmission has one on/off solenoid and Invotronics 2007 Sliding door, trunk lid and lift-gate power-module technologies one for every speed; a six-speed transmis- (Part of Solectron) sion has seven solenoids,” said Mr. Obey. Stribel Electronics 2009 Control modules for cooling fan and steering; DC/DC converters As carmakers improve fuel economy by used in start-stop applications adopting transmissions with more speeds, Saturn Electronics 2012 Design and manufacturing of transmission and the market for solenoids will grow faster and Engineering engine solenoids and specialty wire harnesses. than vehicle unit production. Flextronics Automotive is planning more acquisitions. It is interested in mid-market companies, those One of the things that appealed to with annual sales between $200 million and $500 million per year, particularly companies offering Flextronics about Saturn Electronics is its infotainment-connectivity solutions or components such as solenoids or sensors, of which car location near Detroit. “One of our goals penetration numbers are going up. “We are not looking for distressed businesses,” said Mr. Obey. “We has been to transfer our headquarters from want them to be accretive to earnings. We are not interested in safety related products as specialized Germany to the U.S. I didn’t add a lot of as airbags, for example.” infrastructure to the Detroit area in the

Page 6, February 2013 The Hansen Report on Automotive Electronics, www.hansenreport.com The Company Profile Continued last 12 months because I knew the deal the electronics developed and sold by Major Automotive Customers was going to take place,” Mr. Obey noted. S1nn, under the S1nn brand. “Saturn was primarily a North Ameri- Flextronics is working to develop an Tier-One Customers (alphabetically) can company. With the global Flextronics infotainment partner in Asia while it Automotive Kostal footprint, our goal now is to expand that looks at other potential partners in other Lighting Lear Corp. solenoid product line to the rest of the parts of the world. In China, for example, BorgWarner M/A-COM world. We are also looking at acquisitions Flextronics might seek joint venture part- Brose Minebea that would complement the Saturn busi- ners rather than acquisition candidates. Calsonic Kansei Nexteer ness,” he added. According to Mr. Obey, Flextronics is Continental Odelo Saturn also produces specialty wiring bringing a new integrated head unit to Dakkota Inte- S1nn harnesses. While Flextronics Automotive market. “These are pretty hefty modules,” grated Systems SMR is not at all keen to compete with major he said. “They would include voice con- Eberspaecher Stabilus suppliers such as Sumitomo, Yazaki, trol, GPS and wireless technology—ev- Faurecia Sumitomo Delphi and Lear for the vehicle’s main erything but the display.” Ficosa TRW wiring harness costing $500 to $800 each, Grupo Antolin Varroc it does see opportunities to produce $6 to Flextronics Automotive Strengths: Harman Becker Visteon $12 jumper cables, business the big players ◆ Flextronics International’s 220,000 Hi-Lex Wabash Technolo- might find unappealing. employees, 100 factories, 2,000 design en- IAC gies Since Flextronics took over, Saturn is gineers, rich experience building every- Johnson Controls Webasto no longer a certified Minority Business thing from smartphones and tablet Johnson Electric Yazaki Enterprise. That status provided tax in- computers, to equipment for cloud com- Keboda ZF Lenksysteme centives to Saturn’s customers to do busi- puting and high-reliability products for Knorr-Bremse ness with them. aerospace and medical markets ◆ More experience with consumer elec- Major End Customers Infotainment and Connectivity tronics than most of its automotive com- Audi Mercedes With a 40% stake, Flextronics is the petitors, says the company BMW Porsche Volkswagen number-two shareholder in the German ◆ Manufacturing scale: For example, Chrysler audio component and connectivity sup- Flextronics International operates more Ford plier, S1nn. (See the company profile of than 1,500 SMP (surface mount package) S1nn in the November 2011 Hansen Re- machines vs. a typical automotive elec- Ashok Tiwari, Flextronics director of op- port.) Flextronics manufactures 100% of tronics company that might operate only erations observed: “Customers see a lot of 20 or fewer. value coming from us because they don’t see us as just an automotive company. Flextronics Automotive Footprint ◆ Flexibility and “a willingness to do They see the value of our scale and the Asia anything an auto company wants us to footprint we have. When I buy some elec- Suzhou, China do,” says Mr. Obey, “from design concept tronic component—most of them are Shanghai (Pudong), China phase through logistics, services, refur- commodities—I leverage our global buy- Shanghai (Malu), China bishing, to after sale” ing power. Our scale allows us to develop Cebu, Philippines ◆ Global processes: all plants run with local supply bases, as we have in Asia.” Europe the same lean Flextronics manufacturing Flextronics’ scale also gives it the ability Frickenhausen, Germany processes. to ramp up manufacturing quickly and at Paderborn, Germany ◆ Flextronics offers unmatched pur- multiple sites. ◆ Althofen, Austria chasing scale and local supply network: Treviso, Italy Timisoara, Romania Flextronics Competitive Market Position Zalaegerszeg, Hungary Business Group Segment 2007 Market 2007-2012 2012 Market Sárvár, Hungary Rank CAGR Rank Americas Integrated Network Telecom 1 18% 1 Rochester Hills, MI Solutions Networking 4 12% 2 Southfield, MI Server & Storage 10 35% 3 Coopersville, MI High Reliability Automotive 3 27% 1 Toronto, Canada Solutions Medical 3 38% 1 Juarez, Mexico Aero & Defense >20 21% 6 Guadalajara, Mexico High Velocity Solutions Consumer 2 1% 4 Monterrey, Mexico Industrial and Emerging Ind. Industrial 2 12% 1 Manaus, Brazil Source: Flextronics and IDC The Hansen Report on Automotive Electronics, www.hansenreport.com February 2013, Page 7 Roundup of 2012 Auto Electronics Supplier Sales

Autoliv nates pedestrians near the road giving the Electronics and Safety sales declined 2012 Net Sales: $8,266.7 million driver time to avoid them. BMW’s earlier 3.3%; Thermal sales were down 5.2%. Change from 2011: up 0.4%. Sales of night vision systems also use Autoliv Overall, sales grew 11% in Asia and airbag products were flat and seatbelt technology. 6% in North America while declining 6% product sales decreased slightly. Active in both Europe and South America. safety product sales grew by 36.2%, but Bosch Automotive Technology In October 2012, Delphi completed those products comprise less than 3% of Preliminary Results—Detailed Report due the acquisition of FCI Group’s Motorized total sales. April 18, 2013. Vehicles Division, which added to Operating Margin: 8.5%, compared with 2012 Sales: €30.9 billion Delphi’s automotive connector product 10.8% the prior year Change from 2011: up 1.7% portfolio. Outlook for 2013: Consolidated sales Automotive Technology accounted for growth in the range of 2% to 4% is 59% of total Bosch sales in 2012. Bosch Lear Corp. forecast, but due to further vehicle reported particularly good growth, 50%, 2012 Sales: $14,567 million production cuts expected in Western in sales of gasoline direct injection Change from 2011: up 2.9% Europe especially, first quarter 2013 sales systems, while sales of diesel systems 2012 Operating Margin: 5.2% are forecast to come in 4% lower than in contracted due to lower production Outlook for 2013: Lear expects sales to Q1 2012. volumes by its European OEM customers reach $15.0 to $15.5 billion, with Compared with 2011, sales in Europe and commercial vehicle makers in China. operating income in the range of $725 decreased 15%, including currency In January 2013, Bosch outlined its million to $775 million. effects; organic sales were down 7%. In plans to expand its range of driver Sales in the Seating division grew by a the Americas, sales were up 12%, to $2.6 assistance products, progressing eventu- modest 1% last year, to $11,029.6 billion, thanks in part to increased ally to fully autonomous systems. The million. Adjusted segment earnings for production specifically by Honda, Ford first step, the “traffic jam assistant,” the business were $697 million, or 6.2% and Chrysler. which brakes and accelerates in stop and of segment sales, slightly lower than the Autoliv attributes $79 million of the go traffic at speeds between 0 and 50 prior year. $184 million decrease in operating kilometers per hour, is expected to go The Electrical Power Management income in 2012 to “higher costs for into series production in 2014. Systems segment saw healthy growth in capacity alignments and antitrust sales of 10%, to $3.5 billion, driven investigations.” In June, the company Delphi Automotive primarily by new business including pled guilty to U.S. Department of Justice 2012 Sales: $15,519 million incremental new programs for the Ford charges of conspiring to fix prices on Change from 2011: down 3.3% Ranger, BMW 3 and 6 series, Daimler’s airbags, steering wheels and seatbelts and 2012 Net Margin: 8.0%, well ahead of C class coupe, the Volvo V30 and Range agreed to pay a $14.5 million criminal 2011’s 7.3% net margin Rover. Earnings for the EPMS business fine. Autoliv projects an additional $25 Outlook for 2013: Delphi’s 2013 increased 40% from the prior year to million to $50 million in further capacity guidance puts sales in the range of $16.2 $259 million, or 7.3% of segment sales. alignment costs in 2013. billion to $16.6 billion North America and Europe accounted In January 2013, Autoliv announced Sales in the Electrical/Electronic for 39% and 35% of sales respectively in that its sensors and cameras underpin Architecture segment grew 5.3% in 2012. 2012. GM and Ford are Lear’s largest BMW’s new Dynamic Light Spot night The other three reporting segments saw customers. ◆ vision system which senses and illumi- sales decline: Powertrain sales lost 2.5%;

HMI... Continued from page 3 pupil diameter, which he feels is a good control speed and maintain a specified minds with other things besides driving. measure of cognitive load. “Pupil diameter distance from the car ahead. They brake One question we are interested in is how responds very quickly. It could be used in in an emergency, and they nudge the ve- can we keep the driver in the loop? Can the design phase to learn what driver in- hicle back into its own lane. we monitor him? And how much ad- terfaces people find more or less difficult “It is getting so boring to sit behind the vanced notice do we need to give that he to use.” wheel of a car that is doing everything needs to take more control of the car? As cars become increasingly autono- right,” Professor Schmidt told us. “It will Three-hundred milliseconds is not enough mous, Professor Schmidt is also thinking become increasingly unlikely that you will time. We probably need more advance about the potential problem of the driver keep both hands on the wheel and have a warning, more like 10 seconds,” he said. ◆ who is disengaged from the tasks of driv- fixed gaze on the street. Without more ing. Today’s high-end vehicles already challenge, humans will occupy their

Page 8, February 2013 The Hansen Report on Automotive Electronics, www.hansenreport.com