With the smartphone and PC/tablet markets reaching maturity, where’s the next big opportunity for growth for semiconductors?
Cars, says CFRA’s Angelo Zino. Zino believes that while auto sales may not be growing by leaps and bounds, but that the semiconductor content per vehicle will rise dramatically, thanks to demand for infotainment systems, driver assist systems (ADAS), adoption in lower priced vehicles, and government regulation.
Zino writes that autos are the biggest long-term growth opportunity for the semiconductor industry, with infotainment looking especially promising, given its components: include a microprocessor, audio processor, radio frequency, satellite, Bluetooth and USB interfaces, and an interface to the in-car network and memory.
IDC expects infotainment shipments to grow at a 19% compound annual growth rate, coupled with growing demand, boosted by requirements for rearview cameras, video systems, and lower prices for display screens.
More from his note:
Global infotainment units shipped were 22.5 million in 2016 and were included in about 1 out of every 4 vehicles sold (27%). The U.S. represents the largest market at 9.5 million (42.5% of the total in 2016 but declining to 34% by 2021), which is seen growing 28% in 2017 and an additional 22% in 2018. The U.S. market is by far the most mature, with about 54% of vehicle sales currently being enabled with an infotainment system, and thus is expected to witness a below market five-year CAGR of 14%. Japan represents the biggest geographic opportunity, as infotainment shipments are seen rising from 3.9 million in 2016 (17% global share) to 15.6 million in 2021 (29% share), representing a five-year CAGR of 32%.
Zino writes that a number of tech companies should benefit. Intel (INTC) has a dominant market position in the PC processor and data center server markets, but it will launch its next generation processors in the coming quarters for connected car—and its…