Autonomous Vehicles Disrupt Tier 1 Supplier Roles as ADAS Ecosystem Expands

Oyster Bay, New York - 16 May 2016

ABI Research, the leader in transformative technology innovation market intelligence, finds Tier 1 suppliers are losing their roles as system innovators and developers in the nascent autonomous vehicle market. This is occurring as more OEMs engage directly with software developers and hardware and semiconductor vendors.

“It is becoming increasingly evident that no single Tier 1 supplier can deliver a complete autonomous driving system,” says James Hodgson, Industry Analyst at ABI Research. “As a result, OEMs are increasingly engaging directly with component vendors, and becoming more aligned with product roadmaps from across the value chain. But Tier 1s will not disappear completely and still hold an important role in functional safety, one which requires a more overarching and holistic view than any component vendor can hold.”

In fact, the growing engagement of OEMs with component suppliers may prove more of a help than a hindrance to Tier 1s. This will be as OEMs increase their awareness of the capacities of the various components that constitute ADAS systems and the level of functionalities that they can feasibly achieve.

Evidence of OEM commitment to autonomous driving is apparent from recent M&A activity. This includes the purchase of HERE maps by Audi, BMW, and Daimler and GM’s purchase of Cruise Automation, showing that, where necessary, OEMs are willing to own parts of the ADAS value chain in order to secure the necessary assets to enable autonomous driving.

The ADAS ecosystem will be further disrupted by the entry of new comers to automotive, as the increasing sophistication of ADAS necessitates greater processing power, attracting vendors such as NVIDIA, Qualcomm and Intel to join the ADAS semiconductor market currently dominated by NXP and Renesas. Such vendors have a clear strategy of entering the vehicle via the infotainment system, before building the relationships and demonstrating the competency required for safety-critical applications in ADAS. However, this approach is not unique to new comers, as Hodgson explains:

“There is a growing trend in which incumbent players reposition or widen their automotive product portfolios to extend beyond infotainment,” concludes Hodgson. “For example, recent hires and product launches by Visteon and Harman, vendors traditionally known for their infotainment offerings, signal an attempt by these companies to improve their growth through entry into ADAS.”

These findings are part of ABI Research’s Automotive Safety and Autonomous Driving Service, which includes research reports, market data, insights, and competitive assessments.

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