The Automotive Electronics Market Article...Automotive electronics has become a major player in an...

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The Automotive Electronics Market P.12

JUNE 2017

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The automotive electronics market: A view from a material supplierDR. JEAN-CHARLES CIGAL and GREG SHUTTLEWORTH, Linde Electronics, Taipei, Taiwan

With the increasing sophistication of future vehicles, new and more advanced semiconductor technologies will be used and vehicles will become technology centers.

Large efforts are being deployed in the car industryto transform the driving experience. Electricalvehicles are in vogue and governments are encour-aging this market with tax incentives. Cars arebecoming smarter, capable of self-diagnostics, and

in the near future will be able to connect with each other.Most importantly, the implementation of safety featureshas greatly reduced the number of accidents and fatal-ities on the roads in the last few decades. Thanks toextensive computing power, vehicles are now nearingautonomous driving capability. This is only possiblewith a dramatic increase in the amount of electronicdevices in new vehicles.

Recent announcements regarding acquisitions ofautomotive electronics specialists by semiconductorgiants and strategic plans from foundries highlightthe appetite from a larger spectrum of semiconductormanufacturers for this particular market. Automotiveelectronics has become a major player in an industrialtransformation.

Automotive electronics is, however, very different fromthe consumer electronics market. The foremost focus ison product quality, and the highest standards are usedto ensure the reliability of electronics components invehicles. This has also an impact on the quality andsupply chain of materials such as gases and chemicalsused in the manufacturing of these electronics devices.

Automotive electronics market: size and trendsWhen you include integrated circuits, optoelectronics,sensors, and discrete devices, the automotive electronicsmarket reached around USD 34 billion in 2016 (FIGURE 1).

While this represents less than 10% of the total semicon-ductor market, it is predicted to be one of the fastestgrowing markets over the next 5 years.

There are several explanations for such growth potential:

• The vehicle market itself is predicted to steadily growon an average 3% in the coming 10 years and will beespecially driven by China and India, although otherdeveloped countries will still experience an increase insales.

• The semiconductor content in each car is steadilyincreasing and it is expected that the share of electronicsystems in the vehicle cost could reach 50% of the totalcar cost by 2030 (FIGURE 2).

While it is clearly challenging to describe what the drivingexperience will be in 10 to 15 years, some clear trends canbe identified:

DR. JEAN-CHARLES CIGAL is the Market Development Manager and GREG SHUTTLEWORTH is Technical Quality Manager, Linde

Electronics, Taipei, Taiwan

FIGURE 1. Compound annual growth rate for electronics systems (2015-2020).

Automotive

Communication

Consumer

Source: IC Insights

4 530 1 2

4.9%

Compound annual growth rate for electronics systems (2015-2020)

Computer

3.9%

2.8%

1.5%

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•Safety: The implementation of integrated visionsystems, in connection with dozens of sensors andradars, will allow thorough diagnoses of surroundingareas of the vehicles. Cars will progressively be able tooffer, and even take decisions, to prevent accidents.

•Fuel efficiency: The share of vehicles equipped with(hybrid) electrical engines is expected to steadily grow.For such engines, the electronics content is estimatedto double in value compared to that of standardcombustion engines.

•Comfort and infotainment: Vehicle drivers areconstantly demanding a more enhanced drivingexperience. The digitalization of dashboards, the soundand video capabilities, and the customization of thedriving and passenger environment should heightenthe pleasure of time spent in the vehicle.

In order to coordinate all these functions, communi-cation systems (within the vehicle, between vehicles, andbetween vehicles and infrastructures) are critical andlarge computing systems will be necessary to treat largeamount of data.

Quality really makes automotive electronicsdifferentAutomotive electronics cannot be defined by specifictechnologies or applications. They are currently

FIGURE 2. Electronic systems as % of total car cost.

2030 F

2010

2000

50%

Electronic systems as % of total car cost

1990

35%

22%

15%

1980

Source: Freescale/NXP

40 50300 10 20

1970

10%

5%

Electronic fuel injection

AirbagABS/ESP

Advanced driver assistActive-passive safetyPowertrainRadar / visionInfotainment

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characterized by a very large portfolio of productsbased on mature technologies, spanning from discrete,optoelectronics, MEMS and sensors, to integratedcircuits and memories.

Until now, the automotive electronics market has beenthe preserve of specialized semiconductor manufac-turers with long experience in this field. The reasonfor this is the specific know-how required for qualitymanagement.

A component failure that appears harmless in a consumerproduct could have major safety consequences for avehicle in motion. Furthermore, operating conditionsof automotive electronics components (temperature,

humidity, vibration, acceleration, etc.), their lifetime,and their spare part availability are differentiators towhat is common for consumer and industrial devices(FIGURE 3).

Currently, some of the most technologically advancedvehicles integrate around 450 semiconductor devices.As they become significantly more sophisticated,the semiconductor content will drastically increase,with many components based on the most advancedsemiconductor technology available. Introducingartificial intelligence will require advanced processorscapable of computing massive amount of data stored inhigh-performance and high capacity memory devices.This implies that not only the most advanced semicon-ductor devices will be used, but that these will needto achieve the highest degree of reliability to allow aflawless operation of predictive algorithms.

FIGURE 4. There are essentially two fields where the material supplier can support its customer: quality and supply chain.

Quality

Supply chain

Long qualification time

Thorough material qualification

High and stable specifications

Traceability

High-quality products from established sources

Long-term supply schemes

Advanced quality/process control

Business continuity plan

FIGURE 3. Typical operating conditions for different electronics market segments.

0 to 40°CTemperature

Operation time

Humidity

2 to 5 years

Low

-40 to 160°C-10 to 70°C

5 to 10 years

Environment

Up to 15 years

0% to 100%

Average 1 year

<10%

2 to 5 years

<<1%

Up to 30 years

Target: 0% failure

Supply

Tolerated failure rate

Consumer Industrial Automotive

Typical operating conditions for different electronics market segments

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It is expected that smart vehicles capable of fully auton-omous driving will employ up to 7,000 chips. In thiscase, even a failure rate of 1ppm, already very low byany standard today, would lead to 7 out of 1,000 carswith a safety risk. This is simply unacceptable.

The automotive electronics industry has thereforeintroduced quality excellence programs aimed at azero defect target. Achieving such a goal requires a lotof effort and all constituents of the supply chain mustdo their part.

The automotive electronics industry is one of the mostconservative in terms of change management. Long estab-lished standards and documentation procedures ensuretraceability of design and manufacturing deviations.Qualification of novel or modified products is generallycostly and lengthy. This is where material suppliers canoffer competence and expertise to provide material withthe highest quality standards.

What does this mean for a material supplier?As a direct contact to its customer, the materialsupplier is responsible for the complete supply chainfrom the source of the raw material to the deliveryat the customer’s gate. The material supplier is alsoaccountable for long-term supply in accordance withthe customer’s objectives.

There are essentially two fields where the materialsupplier can support its customer: quality and supplychain (FIGURE 4).

Given the constraints of the automotive electronicsmarket, material qualification must follow extensiveprocedures. While a high degree of material purity isa prerequisite, manufacturing processes are actuallymuch more sensitive to deviations of material quality,as they potentially lead to process recalibration. Beforequalification starts, it is critical that candidatematerials are comprehensively documented. This

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includes the manufacturing process, the transport,the storage, and, where appropriate, the purifi-cation and transfill operations. Systematic auditingmust be regularly performed according to customers’standards. As a consequence, longer qualificationtimes are expected. Any subsequent change in thematerial specification, origin, and packaging mustbe duly documented and is likely to be subject to arequalification process.

Material quality is obviously a critical element thatmust be demonstrated at all times. This commandsthe usage of high-quality products with a provenrecord. Sources already qualified for similar applica-tions are preferred to mitigate risks. These sourcesmust show long-term business continuity planning,with process improvement programs in place. Puritylevels must be carefully monitored and documentedin databases. State-of-the-art analysis methods mustbe used. When necessary, containment measuresshould be deployed systematically. Given the longoperating lifetime of automotive electronic compo-nents, failure can be related to a quality event thatoccurred a long time before.

Because of the necessary long-term availability ofthe electronics components and the material quali-fication constraints, manufacturers and suppliers willgenerally favor a supply contract over several years.Therefore, the source availability and the supplychain must be guaranteed accordingly.

Material suppliers are implementing improved qualitymanagement systems for their products in order tofulfill the expectations of their customers, in terms

of quality monitoring and trace-ability. Certificate of analysis(COA) or consistency checksare not sufficient anymore;more data is required. In casedeviation is detected, the inves-tigation and response time mustbe drastically reduced and allowintervention before delivery tothe customer. Finally, the wholesupply chain must be monitored.

Several tools must be imple-mented in order to maintain

a reliable supply chain of high-quality products(FIGURE 5): statistical process and quality controls(SPC/SQC), as well as measurement systems analysis(MSA), allow systematic and reliable measurementand information recording for traceability. Imple-menting these tools particularly at the early stagesof the supply chain allows an “in-time” response andcorrection before the defective material reaches thecustomer’s premises. Furthermore, some impuritiesthat were ignored before may become critical, evenbelow the current detection limits. Therefore, newmeasurement techniques must be continuously inves-tigated in order to enhance the detection capabilities.

Finally, a robust supply chain must be ensured. It isimperative for a material supplier to be prepared tohandle critical business functions such as customerorders, overseeing production and deliveries, andother various parts of the supply chain in anysituation. Business continuity planning (BCP) wasintroduced several years ago in order to identify andmitigate any risk of supply chain disruption.

Analyzing the risks to business operations is funda-mental to maintaining business continuity. Materialssuppliers must work with manufacturers to develop abusiness continuity plan that facilitates the ability tocontinue to perform critical functions and/or provideservices in the event of an unexpected interruption.The goal is to identify potential risks and weaknessin current sourcing strategies and supply chainfootprint and then mitigate those risks.

Because of the efforts necessary to qualify materials,second sources must be available and preparedto be shipped in case of crisis. Ideally, differentsources should be qualified simultaneously to avoidany further delay in case of unplanned sourcingchanges. Material suppliers with global footprint

FIGURE 5. Several tools must be implemented in order to maintain a reliable supply chain of high-quality products.

Measurement systems

Gas distribution systems

Traditional quality focus

Measurement systems analysis (MSA), Statistical process/Quality control (SPC/SQC)

Receiving

Prep

Purification

Fill

QA/QC/Lab

Delivery

Final product quality

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and worldwide sourcing capabilities offer additionalsecurity. Multiple shipping routes must be consideredand planned in order to avoid disruption in the case,for instance, of a natural disaster or geopolitical issueaffecting an entire region.

Material suppliers need to be aware and monitorregulations specific to the automotive electronicsindustry such as ISO/TS16949 (quality managementstrategy for automotive industries). This standardgoes above and beyond the more familiar ISO 9001standard, but by understanding the expectations ofsuppliers to the automotive industry, suppliers canensure alignment of their quality systems and thedocumentation requirements for new product devel-opment or investigations into non-conformance.

Future of automotive electronicsWith the increasing sophistication of future vehicles,new and more advanced semiconductor technologieswill be used and vehicles will become technologycenters. These technologies will allow communicationand guidance computing. Most of these components

(logic or memory) will be built by manufacturersrelatively new to the automotive electronics world—either integrated device manufacturers (IDM) orfoundries.

In order to comply with the current quality standardsof the automotive industry, these manufacturers willneed to adhere to more stringent standards imposed bythe automobile industry. They will find support frommaterials suppliers like Linde that are capable of deliv-ering high-quality materials associated with a solidglobal supply chain who have acquired global experiencein automotive electronics.

For more information about this topic or LindeElectronics, visit www.linde.com/electronics or contactFrancesca Brava at [email protected]. �

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