When it comes to determining new and upcoming technologies, the industry looks not just to unit sales, but to the sales of the components that make up an electronic device. New reports indicate that, for the first time, amid years of declining sales, the personal computing market is about to be overtaken by the auto industry when it comes to the demand for semiconductors.
Personal computer sales have been declining for years on end. Originally attributed in part due to smartphones and other ultra-portable devices gaining market traction, the industry has taken quite a hit. As a result, other emerging areas have been beginning to overtake the growth of computer-related components, including one surprising area: The automotive sector.
Market research firm IC Insights believes that the automotive market will drive semiconductor sales higher than ever, and continue the trend through 2021. Within the next four years, the firm predicts that the expected compound annual growth will reach a record high of 5.4 percent.
The reasoning behind the change is none other than more complex cars in the automotive sector that demand more computing power in order to keep up with the ever-increasing connected and autonomous technologies that are emerging. Technology like Vehicle-to-Vehicle communication, Vehicle-to-Infrastructure synchronization, and autonomy are forcing cars to consume computer resources at a faster pace than in the past. Paired with general convenience features and the growing market presence of electric cars, it becomes clear just why cars are the electronic industry's answer of the future.
IC says sales are expected to continue to increase throughout 2017, ultimately ending the year with a 22 percent increase, with the automotive sector making up about 9.1 percent of that figure. The industry expects the increase to continue strong in 2018 as well, racking up an additional 16 percent of growth. By 2021, the automotive industry is expected to account for nearly 9.8 percent of all global electronic system sales.
A recent influx in the demand for electric cars account for a large increase in semiconductor purchases, says investment firm McKinsey & Co. Moving from a traditional car to a hybrid platform increases the valuation of semiconductors included in a vehicle from just $330 to more than $900. Increasing even more in a battery-powered vehicle, the cost of semiconductors alone is expected to reach well over $1,000 per unit. As cars themselves advance in technology, the need for supporting technology and components will undoubtedly increase with it. Personal computers and other consumer electronics being overtaken by vehicles is a huge step, especially considering the 300 percent increase in component cost per unit when compared to a traditional gasoline-powered vehicle.
With the automotive industry going through quite a few disruptions at once, it's no surprise that the technology industry is seeing the biggest trickle-down as a result. In the past, auto manufacturers made use of new technology in order to make vehicles more appealing to consumers. Now, vehicles are getting a near-complete overhaul to fight for industry supremacy. In the coming years, cars need to become the most connected, use battery power most efficiently, and perfect self-driving before its counterparts.