Car infotainment spurs semiconductor demand

Infotainment systems are driving the market for automotive semiconductors in Europe, says Bernd Lienhard, vice president of automotive sales and marketing at Infineon Technologies AG.

"Infotainment has now left the gadget era and entered the industrialization era," he said.

Car radios, compact disc or tape players will be superseded by digital versatile disc systems with on-screen displays, Lienhard says.

Telematics driven by in-car computers will find their way into mainstream models.

As a result, Infineon, based in Munich, Germany, expects the silicon content of the average car to expand from $250 in 2000 to $300 in 2005.

But Lienhard says safety is not proving to be a big factor in the growing demand for auto semiconductors. "We believed safety would go much faster," he said.

Lienhard says carmakers are approaching the opportunities for improved safety through electronics with caution. "It's not a matter of the availability of electronics; it's mostly to do with regulations," he said.

Plenty of chips

Integrated safety systems could take some control and responsibility away from the driver. This could have legal implications in an accident, Lienhard says.

Infineon is the leading European-owned semiconductor supplier to the automotive industry. It is second in the European automotive semiconductor market behind Motorola Inc.

Europe leads the world in automotive electronic applications. More than cars in other parts of the world, typical European models are full of convenience items such as power seat controls, sunroofs and door mirrors.

Semiconductors are the main electronic processors - or hearts - of such systems.

Lienhard says the auto industry has overcome the semiconductor shortages that it suffered last year, when computer chip manufacturers could not keep up with demand.

During the shortages, the semiconductor industry concentrated on making sure none of the carmakers was forced to shut down, he says.

Changing relationships

The slowdown in telecommunications and wireless applications has reduced capacity. But the auto industry also has changed the way it works to avoid problems. The semiconductor suppliers work more closely with the carmakers, as well as their Tier 1 customers.

"Our contacts have been extended from the pure engineering side," Lienhard said. "We now have more contact with purchasing departments."

The closer relationships mean "we now know when new-model production begins and what the run rates are," he says.

"If carmakers are looking more than two or three years into the future, then they must tie up with technology leaders in semiconductors," he said.

In the last two years, Infineon has moved toward helping customers develop systems solutions.

For resident Infineon engineers at companies such as Robert Bosch GmbH, Lienhard says, "the issues have changed from a pure product to a more systems approach."

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