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Race to China's automotive victory lane

Posted: 16 Sep 2004 ?? ?Print Version ?Bookmark and Share

Keywords:philips semiconductors? automotive?

Germany's Schumacher may be the darling of the Formula 1 track, but in the street race, China shines as the fastest rising star for automotive market players. Today, China holds the third largest automotive market position and is fourth in vehicle production according to industry analyst Global Insights Inc. Although electronic content is still rather low, this sector is growing at a rate from $1.6 billion in 2002 to $5.5 billion in 2007; while car sales is projected to grow from $4 million in 2003 to $8.6 million in 2014.

All-star lineup of automotive giants in China conjures up images of a car-driven nation; and Philips Semiconductors is making sure not to miss out on the fun. The company is one of the largest foreign investors in China with a total investment exceeding $3.4 billion.

"Automotive electronics makes up 17 percent of our semiconductor sales," said Drue Freeman, VP for global automotive marketing and sales at Philips Semiconductors. "The average for other semiconductor companies is about 8 percent, so you can see that Philips is quite heavily involved in the automotive segment."

China's automotive industry can be divided into two factions: purely Chinese companies and Chinese companies working under multinational automotive groups. The Chinese automotive sector is strong in several aspects, said Freeman. First, China will become the world's largest consumer of automobiles in the 21st century. Second, China has international technological levels equivalent to those of the 1990s. Third, some imported models have been highly localized, showing the effectiveness of learning from foreign carmakers. Fourth, cheap labor is a weapon that China can use to fight off foreign competitors.

Freeman believes that Chinese intellectual property in the area of human interface, styling body and interior designthings that drivers and passengers touch and feel that will make the car experience more comfortable and natural--will be the key to its success in the automotive market.

"Human interface such as car radio systems, passenger entertainment systems, in-car DVD and navigation systems should feel uniquely 'Chinese'," he added.

In the area of radio, Philips has worked together with iBiquity Digital Corp. in the United States to launch a terrestrial digital radio solution. Moreover, it is also investigating leading interoperable solutions that would enable different standards to operate on the same radio. "This is something that we believe would be good to bring to the market and this is what we would bring to the market in China," said Freeman.

Playing catch-up

China's automotive industry has witnessed rapid growth since the country opened up to the outside world and adopted economic reforms.

"China will follow a similar course taken by Japan 30 years ago and Korea 15 years ago," Freeman said. "Initially, China is being looked at as a no. 1 market to sell cars, but is also a place where people think that maybe they can make cars more cheaply and export them. China is clearly advancing very quickly. You see that already with the things that are going into the Chinese cars."

In the area of safety, security and environment solutions, the regulations in China will soon be on par with similar regulations in Europe, Japan and North America. This will drive solutions such as ABS, airbags and anti-theft systems.

Product development is aimed at achieving "smart vehicles" with remote keyless ignition/entry, driver information systems and voice recognition. Quoting a report from Strategy Analytics, Freeman said that "tire pressure monitoring will become the fastest growing automotive electronics system over the next few years."

Philips has joined an industry consolidation of global automakers and automotive electronics suppliers called the FlexRay Consortium. The group is developing an advanced networking protocol that will be useful for electronic applications in future cars when mechanical functions are replaced with electronic solutions.

Advances in the automotive industry will make the cars of the future safer, lighter and more efficient. And as giant automakers and automotive electronics suppliers rev up their engines in the region, China is becoming the true darling of the road.

- Denice Obina

Electronic Engineering Times - Asia

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