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Global Race for Self-Driving Cars Spurs Demand for ‘Brainy’ Chips

On Our Radar: Deals we are paying attention to for their impact on industry.


The global race to build “the brains” behind driverless cars is accelerating, even as different international players have various motivations and visions of the self-driving future.


The latest event occurred Wednesday when Dutch NXP Semiconductor NV, which supplies chips to the automotive industry, said it had invested in the Chinese company Hawkeye Technology Co Ltd.


NXP, which dominates the automotive chip market for features like keyless entry, emission control and car radios, now has access to new research and technologies, including a long-range sensing radar that enables cars to accurately detect potential obstacles that could cause a crash. The financial terms were not disclosed.


NXP has been ramping up its efforts in the self-driving vehicle space. Earlier this year, the company announced a partnership with the French firm Kalray to develop a central computing platform for automated driving applications. NXP also offers a BlueBox platform to help automakers build and test autonomous vehicles.


“If you look at automotive, our position, we're really focused on autonomous driving,” which is expected to be the significant growth driver over the next five to seven years, NXP’s chief executive officer Rick Clemmer told industry analysts during a conference call in November.


The global autonomous vehicle market may grow from $54.23 billion in 2019 to $556.67 billion in 2026, according to Allied Market Research estimates.


As competition to get driverless cars onto public roads speeds up, internet giants, chipmakers and automakers are developing the nascent technology, spurring deal and partnership frenzy.


Intel Corp last year purchased Mobileye, an Israel-based maker of self-driving car hardware, for $15.3 billion and plans to supply millions of European cars with its technology. Graphic chip designer Nvidia in a March announcement said it will partner with Toyota Motor Corporation “to develop, train and validate self-driving cars.”


Meanwhile, Alphabet Inc.’s Waymo and General Motors' Cruise are preparing to roll out ride-hailing services in major US cities, and Tesla is developing new self-driving computer chips.


Fragmented Market
Despite the disruptive changes, no one company makes all the different chips required to power the smart car of the future, says industry analyst Linley Gwennap, founder of the Linley Group.


According to Gwennap, the market is segmented: While Intel and Nvidia power artificial intelligence features for companies like Tesla and Waymo, Qualcomm dominates the wireless modem chips connecting cars to the Internet, and Mobileye is known for its sensors that give a driverless car “eyes”.


“It’s kind of funny, semiconductors will provide the chips, the internet giants will provide software, radar companies could be either one of those bits and pieces,” Jim Handy, semiconductor analyst at Objective Analysis, told Karma Network.


And the timeline for the widespread use of autonomous cars remains elusive.


Earlier this month, Ford Motor Company’s CEO Jim Hacket said the company overestimated the arrival of autonomous vehicles, and while the company’s first driverless car is still scheduled for 2021, the next stage of development is not straightforward.


“(Self-driving) applications will be narrow, what we call geo-fenced, because the problem is so complex,” Ford’s Hacket said.


Uber’s chief scientist Raquel Urtasun echoed the sentiment, saying that scaling up the industry could take a long time.


Nevertheless, the development of smart cars will continue to drive demand for automotive chipmakers, analysts say. The automotive semiconductor market reached $41.8 billion last year and may total $65.5 billion by 2025, according to an IHS Markit report.


NXP’s investment in Hawkeye dovetails with the company’s plans to establish itself in the booming Chinese market, said Handy from Objective Analysis. The deal came less than a year after Qualcomm abandoned its $44 billion bid for the Dutch company amid rising tensions between China and the US.


NXP said in the statement that its deal with Hawkeye demonstrates its “confidence in the Chinese market” and “determination to continuously invest in the country”. Under the agreement, Hawkeye will provide NXP with its technical expertise, including an engineering team, a research lab within Southeast University in Nanjing, China, and its 77Ghz automotive millimeter-wave radar technologies.


China, which last year laid out national guidelines for testing self-driving cars, may emerge as a leader on the global autonomous vehicle market, says Handy. Tech giants like Tancent, Alibaba and Baidu have been taking advantage of the favorable government regulations and partnering with vehicle manufacturers. And while US technology companies operate under strict safety rules, Chinese competitors are often more likely to take chances on new technology.


“You have very strong differences in motivation,” says Handy.


Anastasia Ustinova is a freelance business writer based in Seattle with more than 10 years of experience reporting around the world. Her stories were featured in Bloomberg News, Businessweek, the San Francisco Chronicle and the Houston Chronicle.

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