Car of the future propels chip industry
The chip industry is changing and we are seeing major takeovers. This is due to the growing demand for chips driven by the automotive industry. Stricter emission standards, the electric car and autonomous driving are responsible for this growth.
The Japanese chip company Renesas offers 6,7 billion dollar for Integrated Device Technology (IDT), a California-based industry peer. With this acquisition, the Japanese company wants to strengthen its offer in semiconductors for the next generation of cars, which are becoming increasingly electric and self-propelled and therefore need more chips and sensors.
Race for chips
The deal fits in with the race among chip manufacturers and technology companies to position themselves as favourably as possible on the automotive market. The semiconductor industry has long been teeming with major mergers and acquisitions. Last year, Intel, the world’s largest chip maker, bought Israeli Mobileye, specialized in camera systems that can drive cars autonomously, for 15 billion dollar.
Even Belgian players want a share of the market. The Belgian company Melexis is number 13 worldwide, with a turnover of 512 million euro last year. The company of CEO Françoise Chombar is particularly strong in sensors: each car contains on average ten Melexis sensors (mainly for tyre pressure or exhaust gas circulation). Melexis works for major automotive suppliers such as the German Bosch group.
The chip industry expects that car chips will become the largest growth pole on the semiconductor market in the coming years, together with chips for the Internet of Things. This branch will even be more important than chips for electronic devices, such as smartphones or tablets. The analysis agency, IHS Markit, predicts that by 2022 the market for car chips will grow by 51% compared to last year.
Automotive sector is at the origin of growth
An average car contains 355 dollar worth of semiconductors. That might double in the next five years, due to three major trends. Car manufacturers have to meet increasingly stringent emission standards, which means the implementation of more accurate sensors. The breakthrough of the electric car is also an important factor. Finally, the increasing degree of autonomous driving plays a major role.