How Qualcomm, Nvidia, Mobileye are winning the lucrative battle for smart car tech supremacy

Chip companies are waging a multibillion-dollar battle over who will deliver the intelligence inside tomorrow's smart-thinking, autonomous-capable, software-defined car. Qualcomm, Nvidia and Intel's Mobileye are vying for the biggest contracts.

September's IAA Mobility show in Munich highlighted the importance of the three technology giants and their automaker partnerships. Qualcomm CEO Cristiano Amon joined a conference stage with BMW; Nvidia shared a stand with Mercedes-Benz; and Mobileye showcased Volkswagen's latest robotaxi efforts.

Perhaps with the exception of global electric-vehicle battery makers, automakers acknowledge no suppliers by name as frequently as that trio of chipmakers. All three companies claim billion-dollar order pipelines from the automotive industry.

A year ago, Qualcomm touted $30 billion of forward contracts, a figure it hasn't updated. In January, Mobileye said it had a $17 billion pipeline to 2030. Nvidia said in September it has locked in $14 billion in automotive contracts over the next six years.

The biggest slice of the pie is in advanced driver-assist systems. Automakers see them as steppingstones to autonomous systems and a potential source of subscription revenue from consumers seeking automated driving.

At its investor day last year, Qualcomm identified a $59 billion addressable market for driver-assist technology.

Mobileye is the undisputed driver-assist hardware and software leader.

"Mobileye was the earliest adopter and at the moment simply has the advantage because they have the most mileage on board. Everybody trusts them," said Joerg Grotendorst, senior vice president, corporate R&D at Magna International.

As a key Tier 1 supplier, Magna packages and integrates chips and sensors for automakers.

Even Qualcomm, which is building its own intelligent driver-assist software "perception stack," acknowledges Mobileye's advantage.

"We all know all the Mobileye product competition. So, we have a reference data point," Qualcomm Europe president Enrico Salvatori said at IAA.

Mobileye shipped 34 million EyeQ chips with a front-facing camera for use on new vehicles globally last year.

But the Israeli company has its sights set on the far more valuable driver-assist market with its SuperVision package. The system raises Mobileye's content per car to $1,500 from $45 to $50, according to estimates from the investment bank UBS.

SuperVision uses 11 cameras and a radar-based sensing system to allow hands-free operation under some conditions, starting with highway driving. Porsche is a SuperVision customer, as are Zeekr and Polestar, which are part of Chinese automaker Geely Automobile Holdings.

But rivals are challenging Mobileye's leadership.

Rather than pitching themselves as a replacement for Mobileye, Qualcomm and Nvidia pitch themselves as partners that supply the compute power and tools, while leaving the automaker in control of the final product.

"There is a concern that automakers are losing control of their product and becoming sheet metal vendors," Danny Shapiro, Nvidia's vice president of automotive, said at IAA. "Our approach is a collaboration. We provide a solid foundation of the hardware and software for others to build on."

UBS calls this a "picks and shovels" approach.

"The onus is on automakers or others to create the software on that hardware to develop a robust, cost-effective ADAS solution," UBS analyst Joseph Spak wrote in a recent report for investors.

Shapiro highlights Nvidia's work with Mercedes-Benz. The German automaker will base its next generation of cars — highlighted by the next CLA sedan — on Nvidia's Drive platform for autonomous cars. The two will co-develop the intellectual property and split the revenue from the software features, Shapiro said.

Qualcomm is also having success with this approach.

It ousted Mobileye to develop driver-assist features for BMW's Neue Klasse platform. Vehicles based on the platform will use a combination of Qualcomm's computer vision and BMW's own work. Qualcomm and BMW plan to jointly sell the resulting software to other brands.

In another win over Mobileye, Qualcomm said in January that Volkswagen Group would use its Ride driver-assist platform for unnamed future models.

Qualcomm, best known for smartphone chips, started out in automotive by providing in-car modems. It has since carved out a significant business providing its Snapdragon chip and associated software framework to power the increasingly power-hungry infotainment systems in new cars.

Adding Ride to Qualcomm's Digital Chassis offerings provides car companies a complete platform on which to design their new software-defined cars to compete with digital-first companies such as Tesla.

Giving the car companies the freedom to define that relationship has helped Qualcomm quickly challenge Mobileye's domination.

"That openness I think creates a lot of opportunity and we are seeing that expand significantly," said Nakul Duggal, Qualcomm's senior vice president and general manager for automotive and cloud computing.

UBS named Qualcomm as Mobileye's "closest competitor" in its report, but the Jerusalem company is supremely confident it can defend its dominant driver-assist position.

"No one else can offer this, many have tried, many have failed," Mobileye's senior vice president of autonomous vehicles, Johann Jungwirth, said at IAA. "Competitors can offer [a system on chip] but basically no content."

Jungwirth, a former VW, Mercedes and Apple executive, said steering systems represent an analogous hardware component that automakers brought in-house, but found it was easier to outsource.

"They see how much value is created in software so it's natural that they at least want to try," he said. "But in the last few years most of them have scaled that back because they realize how complex it is."