Market dynamics in automotive semiconductor markets

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17 November 2004 News

The automotive market has recently attracted new attention (and some re-visitation) from semiconductor suppliers around the globe. In 2001, when the worldwide semiconductor market dropped by 32%, the automotive semiconductor market dropped only 1%. This has been a very stable market over the last few years and suppliers have taken notice.

According to the latest research findings from industry analyst group, Databeans, semiconductors sales for products used in automotive applications are expected to reach $13 bn this year and $15 bn next year. While the market for cars and trucks is growing at a modest 3% annually (on average), the market for 'car chips' is advancing at a 9% pace from 2004 through 2009.

This is a highly competitive and, perhaps, a somewhat harsh market environment, it says. Automakers always seem to have more power and leverage than the automotive electronics suppliers. Every year they demand and can get price reductions of 3% or more on existing products. If suppliers say 'no', then they take business elsewhere.

That being said, Databeans adds that there has been an evolving trend that is adding more flexibility in the supply chain. Many of the automakers have fully divested electronics production, and there is an increasing movement toward outsourcing. The stability of demand in this industry makes this an attractive market opportunity for many electronics suppliers.

For more information contact Susie Inouye, Databeans, [email protected]

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