Electronics Production | July 27, 2007

Big Suppliers dominate the auto<br>infotainment silicon market

Nearly 50 percent of total automotive infotainment semiconductor revenues were generated by the world's Top-5 suppliers to this segment in 2006, according to iSuppli Corp.
The Top-5 suppliers, STMicroelectronics, NXP, Renesas, Sanyo and SiRF, accounted for 48.9 percent of global automotive infotainment revenue in 2006.

The Top-2 suppliers—STMicroelectronics and NXP Semiconductors of Europe—accounted for nearly 30 percent market share. Both companies are capable of supplying a broad range of automotive-grade silicon to tier-one suppliers, including amplifiers, terrestrial and satellite
tuners and simple AM and FM tuners. These tuners remain a default technology in most vehicles, with this area dominated by silicon from STMicroelectronics and NXP.

STMicroelectronics in particular had a strong year in 2006, recording nearly 13 percent revenue growth year on year compared to 2005, which boosted its infotainment silicon market share to more than 15 percent.

The hottest segment of the automotive infotainment market is the Portable Navigation Device (PND) market, which uses the Global Positioning System (GPS) to guide motorists.

“The year 2006 was another bumper period for Portable Navigation Devices (PNDs), and this market is set to grow by 78 percent in 2007 compared to 2006, with the main European and U.S. regions displaying an increased appetite for all things GPS," said Richard Robinson, principal analyst
for automotive electronics at iSuppli. “iSuppli's latest navigation shipment forecast projects that the market will triple to more than 65 million units between 2006 and 2012, with the competition for both GPS silicon and Internet Protocol (IP) solutions heating up."

The star of the GPS silicon show in 2006 was SiRF, which is currently the dominant GPS solution provider. SiRF registered the most dramatic market movement between 2005 and 2006, with revenue increasing by 70 percent, moving it from the seventh position to fifth in theautomotiveinfotainment silicon supplier rankings. iSuppli believes that SiRF's revenue jump could have been much greater, particularly with the explosion in demand for PNDs in 2006. However, competition from other GPS solution providers put considerable pressure on SiRF to cut Average
Selling Prices (ASPs) by between 12 percent and 14 percent.

Future winners in the automotive infotainment market will be the successful suppliers of silicon to PND brands. However, the Tom-Toms and Garmins of the world are shopping around to avoid getting stuck with a single source for their silicon. In 2006, Tom-Tom—previously a major
customer for SiRF—switched its purchasing to Global Locate, another rising GPS star from San Jose, Calif. Global Locate was recently bought by Broadcom.

This supplier switch by the No. 1 PND vendor inevitably will exert negative pressure on GPS silicon ASPs, with prices expected to fall to less than $5 per unit by 2010.
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