While technology companies are increasing their role in advanced vehicle components, two major suppliers say they aren't worried about losing their Tier 1 status.
Manufacturing cars and trucks is too tough and complex for tech companies to take over, they reason.
"To make 12 million or 13 million turbochargers, so that every few seconds one comes off the assembly line, and every one of them has to be bulletproof — that's not an easy thing to do," said Chris Thomas, chief technology officer of BorgWarner Inc. "And that's why there are only a few companies in the world that can do it."
Thomas discounted the threat. But the idea of tech company encroachment is in the air.
In earnings calls after quarterly reports this year, Wall Street analysts have expressed concern about Silicon Valley chip makers disrupting the auto industry in general, and the supplier business in particular.
Kevin Clark, CEO of Delphi Automotive, expressed confidence in automotive suppliers during a conference call with analysts last month.
"I think one of the recognitions from both the technology players outside of the industry as well as the industry itself is the complexity of performance, complexity of quality, the complexity related to how you need to 'architect' a vehicle to do all the things that the industry and consumers are asking vehicles to have, whether it be autonomous driving, or active safety, or infotainment, or more clusters in a car," Clark said. "All that requires more signal distribution, higher computing powers. And those are areas where typically those players don't have those capabilities. Players like us do."
In a separate phone interview, Mary Gustanski, Delphi's vice president of engineering and program management, echoed Clark's point. Getting multiple systems integrated and operating faultlessly in a vehicle is easier said than done, she said.
"They are great at doing the silicon wafer," she said of the tech companies. "But you have to put it in something."
She pointed out that engineers and manufacturers must physically connect the supplied computing devices. Engineering decisions have to be made about what connectors to use and how they should be mounted on a circuit board that will go into a casting that must withstand high operating temperatures and meet vehicle specs for noise, vibration and harshness.
"Many Silicon Valley companies — the Intels, the Nvidias — might feel they could be the Tier 1. It's their chip that's being used to do the actual computing, and computing is their game. But I respect their capability, is what I would say."
