The speed at which the Taiwanese electronics industry can move from design to production could be key as it strives to take an increasing share of the automotive electronics market. Though the country has been a major player in the automotive parts industry for many years, it has only been in the past three or four years that it has woken up to the fact that its long standing skills in electronics could open up the growing vehicle electronics market.
The country is therefore in the middle of a transition period as it moves its abilities from the shrinking computer and ICT market and marries those skills to its knowledge of the automotive industry. And given the intimacy with which electronics is now embedded into modern vehicles it is also realising that its traditional model of building replacement parts for the aftermarket will no longer work unless it builds closer ties with the car manufacturers themselves.
This, of course, could be a problem given the extremely small nature of the island’s own car manufacturing industry, but it has been boosted due to the rapid growth in vehicle making in its close neighbour China.
These trends were on public view at last month’s Autotronics show in Taipei, part of the much larger Taipei Ampa automotive parts exhibition, with more than 1,300 exhibitors - nearly 200 of them from overseas.
A shift in focus
While once upon a time, the electronics section was mostly dominated by smaller components and a speciality in tyre pressure monitoring systems, now the emphasis has shifted to Advanced Driver Assistance Systems (ADAS) and the goal of autonomous driving.
A good example is Cub Elecparts, which started doing research into tyre pressure monitoring systems in 2003 and developed an aftermarket device that could be programmed for nine out of ten vehicles in the US. This year it is about to launch into the aftermarket a radar-based ADAS that can handle lane departure warning, forward collision alert, door open alert, blind spot detection and rear cross traffic alert to warn of pedestrians or vehicles when reversing out of a parking space.
“There are a couple of car manufacturers who are going to use it for model year 2018,” said Sales Manager Lily Chen (below). “We will launch it as an aftermarket retro-fit system in July.”
ADAS such as this are seen as the first step towards having fully autonomous vehicles, and their appearance at the show has created a buzz about the direction the industry is taking.
“Everyone has started talking about driverless vehicles and autonomous driving,” said Paul Chou, Secretary General of the Taiwan Telematics Industry Association (above right). “We are now focussed on the development of autonomous driving, though this will not come very quickly.”
What has already arrived though is the ADAS market as it increases the vehicle’s computing power to take more control away from the driver, and it is here that Chou believes the speed of the Taiwan electronics industry will give it a competitive advantage.
“Taiwan’s semiconductor industry is very strong,” he said. “Taiwan is also very big in meeting customer requirements. If anyone wants something, we can put it together. We are putting together our strengths in ICT and semiconductors, and we can do this very quickly. We don’t develop the complete car, but when it comes to specialised components we can go from design to production very fast.”
He said the industry could take two to three days doing initial preparation work that would take months elsewhere. “People do not want to wait three months for a sample for testing,” he added. “They want it in two to three weeks. We can do that. That means Taiwan is in a unique position and why we dominate the world’s electronics industry.”
He believes that this will become crucial in the next five to ten years as the amount of electronics doubles from around 30% of a vehicle’s value to more than 60%. This will see electronics move from being a third of Taiwan’s automotive output today to more than half.
“The connected car will become a dominant industry,” said Chou. “Taiwan will be involved in a major way in the move towards autonomous driving.”
Even products that have been the bread-and-butter for Taiwan’s replacement parts industry are including more electronics. Take headlamps, for example. The country has been churning out replacement headlamps for decades but the rise in popularity of LEDs and the integration into
ADAS has meant these can no longer be produced in isolation but have to be strongly integrated into the whole car. This involves a much closer relationship with the car makers themselves.
“Most new cars now have LEDs,” said Michael Hu, Executive Vice General Manager at Depo Auto Parts (bottom). “It used to be only high end cars, but now even medium cars have LEDs and in the next five to ten years they all will. They are now becoming very complicated and can adjust lighting in response to road conditions. We now need 300 components to assemble one headlamp.”
Even though 95% of the company’s output goes into the aftermarket, Hu said they were having to work very closely with the car manufacturers.
Chuang Suo-Hang (above), Vice Chair of Taitra, Taiwan’s external trade development council, said: “Our automotive industry is integrating Taiwan’s edge in IT to develop very advanced products. Taiwan’s automotive industry has been developing for 50 years but recently has been faced with competition from China and other markets, but our industry is growing because we are good at what we do.”
And Winner Yu (left) from the Taiwan Electrical & Electronic Manufacturers’ Association (Teema) added: “Automotive electronics is under the spotlight right now and Taiwan is at the top in that. We have to make the most of this and plan our future direction. There is a huge opportunity in this market.”
The country’s industry, Chou said, had strengths that Japan and the US did not have, and that would manifest itself in key components and specialist modules. “We will work in partnership with tier ones and the large automotive OEMs,” he said. “Semiconductors are the key components in everything from ADAS and artificial intelligence down to tyre pressure monitoring systems and sensors for radar and lidar. The vehicle electronics industry is going to double in the next five years. We can supply the Continentals, the Boschs and so on.”
However, as with everywhere else, there is a certain nervousness about the move towards autonomous driving. “Even the government does not want to say driverless car,” said Chou. “They want to say smart car.”
But Jan-pei Juang (below) from the Taiwan Transportation Vehicle Manufacturers Association (TTVMA) said: “Autonomous driving is still very tricky but that is the future direction of the industry and what our companies in Taiwan are striving towards. We can use our long history as leverage to help us do that.”
He added that though the country did not have many tier ones, it could make the important components for them. “How to be smart is really what we have to consider,” he said. “We have to take this smart technology to the next level and we are working very hard in Taiwan to do that.”
According to the TTVMA, the output value of Taiwan’s auto parts industry in 2015 was nearly $13bn, of which $6.75bn was exported, figures more than three percent higher than 2014. The top four countries exported to were the US, Japan, China and the UK.
However, Chou knows that one of the country’s limitations is the software side, something with which he is happy to let others deal with.
“Software is a nightmare business in Taiwan,” he said. “There have been a lot of resources put in by government but it is still not good enough. Software is our weak point, but we have to leave something for the other countries to do.”