Spotlight on Automotive PwC Semiconductor Report Technology Institute Interim Update Global Semiconductor Trends – Special Focus Automotive Industry. September 2013 Launch Spotlight on Automotive PwC Semiconductor Report Report structure The global Automotive: Driving Summary and semiconductor market growth for the conclusion semiconductor industry Preface Semiconductor companies focusing Preface Why automotive? on the automotive industry as a After a strong recovery in 2010-2011, 2012 was a For a number of reasons, the key market will need to have a Table of figures automotive sector promises to be a difficult year for the global semiconductor industry. laser-sharp focus on quality from particularly dynamic driver of Due to continuing global economic challenges , product design through to Table of abbreviations growth for the semiconductor production and will require annual semiconductor billings in 2012 lagged by industry. Not only is the stringent programme change Methodology semiconductor content of cars US$8 billion or 2.7% behind the record sales of control in order to profit from the growing rapidly as they rely on growth opportunity the For more information US$300 billion achieved in 2011. The industry is greater intelligence, connectivity automotive sector offers. expected to resume growth in 2013 and is well and sophisticated electronics, but Authors positioned to register a healthy increase over the the nature of the automotive We would like to extend our next five years. industry model is also shifting in sincere thanks to Dr. Reinhard new directions. Concepts of Ploss, CEO of Infineon product ownership will give way to End markets that stimulate overall demand for Technologies, and Rick Clemmer, service propositions to deliver President and CEO of NXP semiconductors are expanding as silicon-led mobility to consumers who will Semiconductors, whose insights technology exerts its influence on many different pay only for what they use. have tremendously enhanced Creating and managing the our report. aspects of life. In this report, we examine global and systems to deliver that mobility regional trends, but focus most attention on one of will depend heavily on the faster growing segments: automotive. complex electronics. If you would like further information or to discuss any of the findings in our report and how they might impact your business, please do not hesitate to contact either of us ([email protected] or [email protected]) or any member of our global technology team listed at the end of this document. Raman Chitkara Global Technology Industry Leader Werner Ballhaus 1 German Technology, Media and Telecommunications Leader Spotlight on Automotive PwC Semiconductor Report Report structure The global Automotive: Driving Summary and semiconductor market growth for the conclusion semiconductor industry Table of f igures Preface Table of figures Figure 1: Global semiconductor billings – history Table of abbreviations Figure 2: Global semiconductor billings – forecast by component Methodology Figure 3: Global semiconductor consumption – forecast by region For more information Figure 4: Global semiconductor billings – forecast by application Authors Figure 5: Key drivers for future automotive growth Figure 6: Global light vehicle assemblies – forecast by region Figure 7: Growth in semiconductor content per vehicle and automotive electronics cost Figure 8: Emission targets requiring more powerful processing capabilities Figure 9: Electric vehicles forming part of the smart grid Figure 10: Challenges for semi producers and OEMs 2 Spotlight on Automotive PwC Semiconductor Report Report structure The global Automotive: Driving Summary and semiconductor market growth for the conclusion semiconductor industry Table of abbreviations ASIC Application-specific integrated circuit Preface ASIL Automotive Safety Integrity Levels Table of figures ASP Average selling price AUTOSAR AUTomotive Open System ARchitecture Table of abbreviations BRIC Brazil, Russia, India, China Methodology CAFE Corporate Average Fuel Economy CAGR Compound annual growth rate For more information CCID China Center for Information Industry Development Authors CMOS Complementary metal oxide semiconductor CPU Central processing unit DRAM Dynamic random access memory eTPU Enhanced time processor unit EV Electric vehicle GDI Gasoline direct injection HCCI Homogeneous charge compression ignition IC Integrated circuit ISO International Organization for Standardization LCD Liquid-crystal display LED Light-emitting diode MCU Microcontroller unit MCR 13 IC Insights, Inc. – The McClean Report 2013 MIPS Million instructions per second MPU Microprocessor unit OEM Original equipment manufacturer OSD Optoelectronics, sensors and actuators, and discretes SRAM Static random-access memory WSTS World Semiconductor Trade Statistics 3 Spotlight on Automotive PwC Semiconductor Report Report structure The global Automotive: Driving Summary and semiconductor market growth for the conclusion semiconductor industry Report structure Preface We start our review of the semiconductor industry Table of figures with an analysis of global growth and prospects, Table of abbreviations broken down into component, regional and application categories. We then focus on the Methodology automotive sector, examining the range of key drivers For more information that are together contributing to dynamic growth in this segment. Finally, we provide some suggestions Authors about the questions and issues that senior executives will need to consider as they address the opportunities for their businesses arising from the automotive sector. 4 Spotlight on Automotive PwC Semiconductor Report Report structure The global Automotive: Driving Summary and semiconductor market growth for the conclusion semiconductor industry The global semiconductor market More recently, a recovering global Overall market forecast The semiconductor industry continues to grow at a economy is reflected in industry rate faster than global GDP. However, as the industry billings – with particularly strong Growth by component matures, the fortunes of the semiconductor industry growth coming from Asia generally and China in particular. Growth by region closely follow those of the global economy. PwC’s According to World Semiconductor analysis (see Figure 1 below) shows how the shocks to Trade Statistics (WSTS), the global Growth by application the global economy in recent years have very rapidly industry posted near-record results shown up in semiconductor billings. The bursting of in 2012. There are, however, considerable variations between the ‘dot.com’ bubble in 2000 and the financial crisis components, regions and in 2008 are both easily traced in the data for global applications. In the following semiconductor billings. section we examine the likely drivers of demand across these for the next five years. Figure 1: Global semiconductor billings – history 350 298 300 300 292 256 248 249 250 227 226 213 204 200 166 149 bn US$ 144 150 137 139 141 132 126 102 100 77 60 49 51 55 50 45 26 33 0 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: WSTS 5 Continued Spotlight on Automotive PwC Semiconductor Report Report structure The global Automotive: Driving Summary and semiconductor market growth for the conclusion semiconductor industry Overall market forecast Figure 2: Global semiconductor billings – forecast by component Overall market forecast PwC’s analysis for the global 450 CAGR 2012-17 Growth by component semiconductor market suggests 6.5% 400.2 400 that between 2012 and 2017 379.0 13.6 11.2% 12.5 Growth by region billings will increase by some 355.5 43.2 10.6% 350 11.7 330.5 39.4 US$109 billion, representing a 11.2 35.5 30.0 9.4% Growth by application 305.1 28.0 compound annual growth rate 300 291.6 8.4 31.4 25.6 4.9% 8.0 27.8 50.0 26.2 22.5 47.8 (CAGR) of 6.5%. 20.4 45.5 250 19.1 43.0 40.9 5.4% bn US$ 39.3 200 101.6 106.1 Growth by component 96.0 89.9 83.9 Logic will remain the largest single 150 81.7 5.6% 79.2 segment, with a total of US$106 71.1 75.4 100 66.8 billion in 2017, followed by 60.2 62.8 50 microcontrollers (MCU) and 74.3 78.0 57.0 61.0 65.8 70.0 6.5% microprocessors (MPU) at US$79 0 billion and memory at US$78 2012 2013 2014 2015 2016 2017 billion. However, the strongest Memories MPUs and MCUs Logic Analog ICs Discrete semiconductors Optical semiconductors growth story will likely be in the Sensors and actuators smaller optoelectronics, sensors Source: WSTS, PwC analysis and actuators, and discretes (OSD) segments (CAGR: (ASPs) in the DRAM market. electronics will contribute most to The OSD market is forecasted to 10.2%, collectively). MPUs will remain the biggest growth in the logic segment, while grow faster than the IC market, and fastest-growing technology application-specific integrated propelled, for instance, by lamps Within the memory sector, NAND for micro components, driven circuit (ASIC) billings will remain and complementary metal oxide flash will surpass dynamic random mainly by rising tablet and fairly stable. Likewise, application- semiconductor (CMOS) image access memory (DRAM) in 2013, smartphone penetration, whereas specific analogue products for the sensors, acceleration and yaw with both technologies being MCU growth will be fueled by automotive and communications sensors and actuators and power driven by data processing communications, automotive, and markets will foster substantial