Smartware like engine control, navigation systems, sensors and door controls is creeping into automobiles from BMW and Mercedes Benz to the low-cost Tata Nano. As horsepower gives way to computing power, manufacturers have started integrating various applications on a single chip by reducing the board area and optimising performance. This spells vast opportunity for semiconductor majors who can work with automakers to create the next generation of irresistible devices.
As the small car battle steps up in India, automotive majors have intensified their efforts in implementing semiconductors into their vehicles. Not surprising, the use of micro control units (MCUs)which help maintain various functions of the motor vehiclehave nearly doubled in cars in the last five years and so is their contribution to the overall cost of the vehicle. For instance, less than five MCUs control Nano, claimed to be worlds cheapest car. At the same time, the number of MCUs go up to 10 in compact cars like the Maruti Swift or the Skoda Fabia; 25-30 MCUs are embedded in mid-segment sedans like the Honda City and Maruti SX4. Technologically advanced vehicles like the Mercedes and BMWs are controlled by as many as 80-90 micro control units with multiple semiconductors. Interestingly, the number of MCUs is 25-30% higher in hybrids like the Toyota Prius or the Honda Civic as two different engine control units come into play as compared to a conventional gasoline-driven vehicle.
Indian customers today expect car manufacturers to provide office or drawing-like experience in their cars. This has resulted in higher usage of IT and electronics in automobiles in the last few years. The phenomenon is more predominant in bigger cars. For example, while we need just one chip to run the engine of Maruti 800, a total of 6-7 chips are required to control the engine, power steering and air bag functions of Maruti SX4, says IV Rao, executive-director (engineering), Maruti Suzuki India.
During the last 15-20 years, the average speed of the vehicle has gone up by 30-35% resulting in a 15% lower fuel consumption, thanks to the greater use of semiconductors in the embedded micro control units, says Ganesh Guruswamy, executive council member of India Semiconductor Association.
Not surprising, the trend has resulted in higher revenues for the Indian IT companies. According to Praveen Acharya, vice-president, semiconductor solutions group, KPIT Cummins Infosystems, there has been a tremendous growth in semiconductors in cars over the last five years. It is estimated that the revenue from the automotive semiconductor market in India will increase 10 times in the next 10 years, from $1.5 billion now to nearly $15 billion by 2020. Currently, 20-35% of the total cost of a mid-sized sedan is constituted by electronics as against just 10% five years back. This is expected to go up to as high as 50% over the next five years as technology grows by leaps and bounds, he says.
The use of semiconductors is not cheap. With an average cost of $300-$400 for all semiconductors used in any car, the total cost of semiconductors range from $100 in small and compact cars to $1,000 in luxury cars and even more in hybrids or electric vehicles, says Guruswamy, who is also the vice-president and country manager of semiconductor major, Freescale Semiconductor India.
The growing significance of IT and electronics in the automobile sector in India can be made out from the fact that people here still prefer a low-cost car, ranging between Rs 2 lakh to Rs 5 lakh. Automotive industry in India is still at a very nascent stage as compared to other developed markets when it comes to the use of IT and electronics as well as the usage priorities as people here prefer small and compact cars. Since nearly 50% of the total car price goes into government kitty under different taxes, it remains a challenge for us to provide high technology at low costs to satisfy the growing demands of highly price-sensitive markets like India, says Ashok Chandak, senior director, NXP Semiconductors India.
Probably this explains why IT companies are now working on low-cost products to cater to the growing demand from developing countries like India where people are getting more aware about engine efficiency, car security and safety and are consequently willing to pay some premium for the same.
The Indian automobile industry is still evolving. We are still at the lower end of the curve, considering that there is a huge potential in the low cost and the middle segment of cars. As Indian car buyers are now willing to pay for the technologies that can ensure the safety and security of the passengers, we are doing frugal engineering on chip designs and electronically control units to ensure that we come up with low cost products that meet the customer expectation at a price affordable to even buyers of compact cars or sedans, says Acharya.
While most Indian automobiles come loaded with standard systems like engine management system, power steering and keyless lock system, the developed nations are a few steps ahead. Most of the automobiles in the West now come equipped with advanced mapping equipments and cameras that replace the traditional side and rear-view mirrors.
Automobile analysts say that these requirements will become mandatory in the Indian scenario too. Technologies like warning systems for tyres or alcohol sensors are yet to make inroads into the Indian automobile industry. A Mumbai-based car analyst says, There is no concept of lane driving in India and the use of cameras to replace the front and rear view mirrors is still far from being a reality here. While the authorities need to increasingly invest in infrastructure development, there is also a need to bring in legislation for alcohol sensors and warning systems for tyres in all cars to prevent the huge of number of road accidents every year.
In addition to the embedded chips and control units, the technologically advanced gadgets are also becoming popular among Indian car enthusiasts. Predictably, IT companies in India are leaving no stone unturned to cater to this segment. NXP Semiconductors, for instance, is working on advanced telematics and hopes to introduce the product in next six months. We are currently working on advanced telematics wherein, small computer control units have facilities like GPS, displays, smart cars and can control fleet management. It is in the advanced testing stage and we hope to introduce it in the market within six months, informs Chandak. By 2011, all cars above Rs 15 lakh will have the system in-built, he adds.