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Electronics Production | March 05, 2009

Europe is next engine for Auto-Sensor-Growth

The European Union is following the lead of the United States in mandating the use of key safety technologies including Electronic Stability Control (ESC) and Tire Pressure Monitoring Systems (TPMS), reports iSuppli.
Both technologies have been key aspects of the U.S. National Highway Traffic Safety Administration’s campaign to reduce the number of deaths on America’s roads stemming from the loss of control of vehicles during rapid changes in trajectory or due to low or fl at tire pressure. Europe now is waking up to the savings in lives, not to mention in precious oil reserves.

Europe finally weighs in on safety
A proposal issued in mid 2008 was the first sign that the European Commission was considering mandating installation of TPMS, ESC and other safety-related measures like Lane Departure Warning systems starting in 2012. This came several years after such measures were adopted in the United States. Until now, shipments of ESC systems grew organically, but penetration rates were still patchy in the various European Union countries, with the feature available only as an option or not at all on many lower-end models.

Clearly, correct tire pressures improve traction and can help avoid accidents. But the TPMS mandate is partly driven by environmental concerns with incorrect tire pressures also leading to lower fuel economy. The TPMS mandate has been coupled with a requirement for low-resistance tires, which also can knock a few percent off the gas bills.

Direct or Indirect, That is the Question!
With appreciable volumes expected in the next few years, TPMS is the bright spot in the Microelectromechanical Systems (MEMS) pressure sensor market. A possible fly in the ointment for sensor makers is the threat of nonsensor solutions that use algorithms to interpret the measurements of wheel-speed sensors available in Anti-lock Braking Systems (ABS). So far, two companies are promoting this approach: Continental, with its Deflation Detect System and Nira Dynamics, which already provides such systems for Audi. Indirect TPMS use a low-cost chipset placed in the benign central ECU, and amount to about 10 percent of the cost of an direct TPMS module, with its
need for robust packaging, pressure and temperature sensors, RF antenna, battery, etc.

However, for correct operation, indirect systems need calibration by the user once the tire pressure is altered, and customer acceptance of such procedures will be an important aspect of the system’s acceptance in the United States. OEMs would like to adopt indirect systems due to their lower costs. In contrast, TPMS system and sensor suppliers would prefer more stringent regulations, specifically regarding the percentage drop in pressure that must be measured in any of the individual tires, which would squeeze indirect systems out of the running. Because each indirect system would eliminate an average of 4.5 direct pressure systems per vehicle, it is easy to see why.

And in Europe, everyone is awaiting the outcome of the regulation committees and the commission decision this November. The direct TPMS suppliers have a vested interest in seeing stringent regulations that would favor direct measurement of pressure. Until the regulations are known, uncertainty hangs over the opportunity.

By 2013, iSuppli estimates that acceptance rates for indirect systems of about 30 percent, amounting to about 8 million units, are possible with a favorable regulation and customer acceptance. This would shrink the TPMS pressure sensor market to $100 million, down from about $150 million.

ESC still a major positive force in sensors
There is no uncertainty in the ESC market. While emission and fuel reduction undoubtedly will play an increasingly important role for pressure sensors,vehicle dynamics remain the other high flyer in an otherwise mature automotive MEMS market historically dominated by engine monitoring sensors and airbags. Shipments of many of these sensors are growing slowly and their progress is subject to the whim of car sales. But shipments of ESC systems and associated sensors are expected to grow at a 12 percent Compound Annual Growth Rate (CAGR) during the next five years, even amid the current weak car sales backdrop.

In particular, ESC drives penetration of MEMS accelerometers, gyroscopes and high-pressure brake sensors. These components are difficult to manufacture and command relatively high prices, which makes the market attractive to newcomers. And newcomers are needed, as some entrenched suppliers already are falling by the wayside and leaving a vacuum for companies offering novel ways to reduce costs.

The problem is that once a technology is mandated, it’s no longer an option and the customer expects it for free with the vehicle, like a seat belt. This is putting tier-1 suppliers under tremendous pressure to produce the same ABS braking systems with the additional inertial sensors for ESC, not to mention precise magnetic steering angle sensors, for nearly the same price. This requires considerable ingenuity to reduce costs.

Some of the ways this can be done include reducing the numbers of packages or individual sensors or even leveraging lower-cost consumer sensors adapted to automotive specs. Panasonic has done a good job of extending its gyroscopes beyond digital cameras and into ESC using economies of scale, and others surely will follow.

In summary, the automotive market needs mandates and legislation to inject new life, and Europe now is
stepping up as the new engine of the sensor economy.

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