Autos to substitute smartphones as major tech driver
KUALA LUMPUR: Automotive is expected by the research arm of Hong Leong Investment Bank Bhd (HLIB Research) to substitute smartphone as the major growth driver for global tech sector.
According to HLIB Research, increasingly, new vehicles are embedded with more semiconductors for safety (airbag system), autonomous (park assist system), positioning (GPS navigation), comfort (stability control system), lighting (LED), communication (Bluetooth), infotainment (LCD screen) and more.
“Hybrid and electric cars are expected to generate even higher demand for integrated circuit (IC) components as adoption rise in the wake of environmental awareness.
“Coupled with its stable and marginal expansionary market, semiconductor demand from automotive is projected to be vigorous,” the research arm said.
It added that Gartner estimated automotive semiconductor market size to grow within six to eight per cent year on year (y-o-y) from 2017 till 2020, outpacing global semiconductor average sales growth assumption (excluding memory).
In turn, the research arm opined that tech firms with exposure to automotive will have an upper hand not only to cushion the much anticipated slowdown in smartphone, but also better growth prospect.
On to smartphone, HLIB Research highlighted that 2017 was considered an important milestone as many features became mainstream, including dual-lens camera, OLED screen, full / besel-less display, wireless charging and fast charging.
With the uprising of Chinese brands, the research arm strongly believed that they will gradually source their components domestically as the local ecosystem advances supported by government and enormous investments.
It thus noted that outsourced semicounductor assembly and testing (OSAT) providers with China presence such as Unisem (M) Bhd and Malaysian Pacific Industries Bhd may benefit from
Hybrid and electric cars are expected to generate even higher demand for integrated circuit (IC) components as adoption rise in the wake of environmental awareness. HLIB Research
this development going forward.
As for the PC market, HLIB Research pointed out that it has been witnessing shipment declines over the past few years and does not seem to be out of the woods yet.
“With over 69 per cent of shipments in emerging markets going toward traditional notebooks and slate tablets in 2021, price points remain very sensitive in countries once pegged as ripe for growth,” the research arm said.
“Conversely, while convertibles and ultra-slim notebooks have found increased favor in developed markets, China will be the only developing market among the top 10 markets for these devices in 2021.”
With the Internet of Things (IoT) or machine-to-machine (M2M) market, HLIB Research noted that it is expected to swell and potentially succeed as the main driver of the semiconductor sector in years to come.
“IoT has a vision of all devices being connected intelligently yielding higher efficiency, improved productivity and better quality way of life.
“M2M’s application is limitless and multidimensional ranging from agricultural, financial services, manufacturing logistics to security.”
The research arm further noted that based on Ericsson’s November 2017 Mobility Report, number of IoT devices will almost triple from 7.1 billion in 2017 to 19.8 billion units in 2023, surpassing mobile phones.
“Although M2M device generally has lower IC content compared to smartphones, the sheer forecasted volume suggests that this market is too big to ignore.”