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The wave of intelligent car is unstoppable to usher in the new market of trillions
The rise of smartphone-integrated car electronics is like a powerful wave, sweeping through the automotive industry with unstoppable momentum. Smart driving is now at the core of the new era in automobiles, and the trillion-dollar market for automotive electronics is about to open up, marking a new phase of growth for traditional automotive technology.
**First, unlocking a trillion-dollar market**
Automotive electronics has opened the door to a trillion-dollar market, earning it an "overweight" rating for the first time. The ultimate goal of car development is full autonomy, and automotive electronics is the foundation that makes this possible. As the share of electronic systems in vehicles continues to grow, the rapid expansion of the electric vehicle industry is further boosting demand for automotive electronics. We estimate that China’s auto electronics market will surpass 500 billion yuan in 2017, and by 2020, it will reach the trillion-yuan level. This emerging sector is set to become the next big opportunity in the electronics industry, with early adopters being rewarded with strong investment potential.
**Second, entering a favorable situation**
Cars are following the same evolutionary path as smartphones, moving from basic functions to partial intelligence and eventually to full smart integration. This transformation is creating both volume and pricing opportunities. In 2017, global car sales exceeded 93.5 million units, with China alone selling nearly 30 million. The auto electronics market is experiencing a strong upswing in both scale and value.
The intelligent cockpit is revolutionizing how people interact with their vehicles, while ADAS (Advanced Driver Assistance Systems) is paving the way for fully autonomous driving. The cockpit has significantly enhanced user experience, and its industrial chain closely resembles that of consumer electronics. As a result, many consumer tech companies are now entering the automotive space. The number of displays in vehicles is expected to rise from 1 to 6, with the market growing from 10.32 billion yuan in 2016 to 26.24 billion yuan in 2019—a CAGR of 36.5%. The streaming media rearview mirror is also opening new opportunities for main control chips.
ADAS is the cornerstone of the intelligent car era, and its market is expanding rapidly due to technological progress and supportive policies. China’s ADAS market is projected to grow from 27.5 billion yuan in 2017 to 54.2 billion yuan by 2019, with annual growth rates of 34.8%, 35.3%, and 45.7% respectively. ADAS consists of sensing, decision-making, execution, and connectivity layers, with domestic companies finding most of their opportunities in the camera and decision-making components of the sensing layer.
**Third, the industry chain benefits**
Electric vehicles continue to thrive, and the entire industry chain is reaping the rewards. Supported by government policies, EV sales are growing explosively. The shift from fossil fuels to electricity has increased the share of electric vehicles in the market, creating new opportunities in batteries and electronic control systems. The EV supply chain is flatter than the traditional one, allowing electronics companies to make significant strides. Key beneficiaries include power batteries, passive components, and power semiconductors, which are playing a crucial role in shaping the future of the automotive industry.