Intel Chases Sales on Silicon Road to Driverless Cars – Bloomberg
Intel Corp., Qualcomm Inc. and
Nvidia Corp. — pioneers in the production of chips for
computers and phones — are finding it harder to make inroads
into the auto industry.
Consider Hyundai Motor Co. (005380)’s new 2015 Genesis, a luxury
sedan brimming with semiconductors that handle everything from
automatic braking and lane-keeping sensors to blind-spot
detection. Other chips enable the car to open the trunk when it
senses the owner’s arms are full, and to sniff for carbon
dioxide to decide if the cabin needs more fresh air.
While the Genesis represents the forefront of the auto
industry’s use of chips, only a handful of the vehicle’s
thousands of semiconductors is provided by Intel. Qualcomm and
Nvidia don’t even make the list. The main hurdle is the
industry’s safety and reliability standards, which far exceed
those for computers or phones. Instead, most of the electronic
components are provided by longtime suppliers, like Freescale
Semiconductor Ltd. (FSL), Renesas Electronics Corp. and
STMicroelectronics NV, which have proven track records.
“We don’t get a beta test with our products — they have
to work from the first one,” said Mike O’Brien, a U.S.-based
vice president of product planning for the Korean automaker,
explaining the company’s cautious approach to chips in its cars.
“We can’t say, ‘Oops, we didn’t do that right.’”
Hyundai’s Genesis illustrates the obstacles for Intel,
Qualcomm and Nvidia — whose chips dominate in computers and
phones — as they try to crack a potentially lucrative market.
Cars are increasingly filled with complex computing and
communications systems and driverless vehicles are getting
closer to becoming a reality.
The market for automotive chips is projected to grow 6.1
percent to $27.9 billion this year, according to IHS Corp.
Within that business, sales of chips for automated driver-assistance systems, or ADAS, will increase an average of 13
percent a year through 2020, making it the fastest-growing area.
Even as the systems proliferate and software developers
such as Google Inc. and others roll out plans for connected
entertainment and mapping systems, carmakers have been slow to
switch to unproven chip suppliers because their products are
governed by rigorous safety requirements. When a computer
crashes, a user might lose some data. When a car crashes, people
can get hurt.
For autos, chips have to withstand temperatures as low as
minus 40 degrees or as high as 160 degrees Celsius (minus 40 to
320 degrees Fahrenheit). They need to be available to carmakers
for up to 30 years and have a zero failure rate, according to a
study by PricewaterhouseCoopers LLP. By comparison, consumer-device chips only need to be around for a year and are built to
fail less than 10 percent of the time.
“Experience in automotive is something that you don’t grow
in one day,” said Luca De Ambroggi, an analyst at IHS. “The
requirements are still tough.”
The newcomers are initially going after in-vehicle
entertainment and driver-assistance functions by touting their
strengths — Intel’s processing, Nvidia’s graphics capabilities
and Qualcomm (QCOM)’s wireless communications. As consumers come to
expect their cars to get better at the same rate as their
smartphones, tablets and laptops, the demand is there, yet it
takes time to bring new technology to market while keeping the
driver safe and free from distraction, Hyundai’s O’Brien said.
For example, deciding that automated steering requires too
much effort to turn the car and adjusting software to lighten it
could take two months of testing. When Hyundai was building a
reversing system with lasers and cameras, it found that the
technology initially couldn’t tell the difference between
obstacles and steep driveways.
All of this complexity and expense needs cooperation from
component suppliers, O’Brien said. Carmakers are looking for
chips that they can tune to do the job of many, he said.
Supercomputers in Cars
That should be good news for Intel, Qualcomm and Nvidia,
which make some of the fastest processors available. All three
say they’ve got products in the market or coming that meet the
most stringent automotive requirements.
Nvidia said its processors are now powerful enough that
they can be partitioned — devoting part to functions that must
work no matter what, and others to information and
entertainment, where hiccups are less dangerous.
“We’re seeing a lot of interest in the industry in the new
technologies,” said Danny Shapiro, Nvidia’s senior director of
automotive. “Ultimately every car is going to have a
The ability to quickly capture and process images allows
vehicles’ computers to know what’s going on around them and to
alert drivers to potential hazards. Shapiro said that requires
massive parallel processing — something that Nvidia’s graphics
chips excel at.
Qualcomm, meantime, sees more of that processing going on
in data centers requiring speedy and reliable wireless
communication, Senior Vice President Kanwalinder Singh said. The
company has won the majority of orders to add the latest
wireless modems into cars, and expects that by 2017 as many as
60 percent of cars will have cellular connections.
“It all comes from the cloud,” Singh said. “Otherwise
you have to put terabytes of data into the car’s trunk.”
Audi and other automakers are now using both Qualcomm and
Nvidia to connect cars to the Internet and make them aware of
their surroundings. Top-of-the line Audi AG models use more than
6,000 semiconductors. A demonstration version of the A7 sedan
running an Nvidia Tegra processor drove itself onto the stage at
the graphics chipmaker’s annual conference in March.
“This is a new architecture to solve a challenge that is
becoming increasingly urgent –- innovations in consumer
electronics and rapid gains in computing power are being
introduced much faster than the product cycles of automotive
manufacturers,” said Tim Fronzek, a spokesman for the
Ingolstadt, Germany-based automaker.
Of the three newcomers, only Nvidia has so far brought in
enough business from the automotive market to register on its
earnings. Intel has announced Bayerische Motoren Werke (BMW) AG,
Hyundai and Infiniti, the luxury arm of Nissan Motor Co. as
customers, and on June 25 unveiled a research partnership with
Ford Motor Co. to explore new applications for connected cars.
Still, the chipmaker has a way to go before automotive makes an
impression on its more than $50 billion in annual revenue. In
2013 it had $51 million of automotive revenue, a jump of 65
percent from a year earlier, according to VDC Research.
“Make no mistake — my objective is to drive this into
volume, not just luxury German vehicles,” said Elliot Garbus,
Intel’s vice president of automotive. “We need to drive it into
Intel is aiming to win more orders by offering carmakers
whole systems — software and computers built on its chips —
that it says can cut the time and cost it takes to build
features into cars. New functions such as tracking eye movement
to monitor a driver’s attention will require faster processing,
For Qualcomm, supplying tens of millions of modems for
connected cars will provide a boost, though it’s not enough to
add noticeable revenue to a company that dominates the
smartphone market, which passed more than a billion units last
year. The company is working on chipsets that provide multiple
functions for cars, including cellular connections, and expects
that to be the basis for an expansion of its revenue in the
industry, Singh said.
“It’s going to hinge on all cars getting connected,” he
said. “We are building this in steps. We understand it takes a
lot of effort in the nascent stage.”
To contact the editors responsible for this story:
Pui-Wing Tam at
Jillian Ward, Reed Stevenson