The mandates apply to MEMS sensors needed for Electronic Stability Control (ESC) and Tire Pressure Monitoring Systems (TPMS).
iSuppli research shows that automotive MEMS revenues for ESC and TPMS in those countries will increase at a Compound Annual Growth Rate (CAGR) of 24.3 percent and reach $122.2 million once the South Korean and Japanese regulations are fully in force by 2014—up from $41.2 million in 2010. iSuppli’s earlier view, based on organic growth alone, would have yielded $54 million by 2014—a CAGR of just 5.5 percent over the same time frame.
The new mandates mean that cars fitted with ESC and TPMS in these regions now account for 16 percent of associated revenues compared to 7 percent without regulation.
Korean Mandates to Kick in; Japan Expected to Follow Suit
With mandates in South Korea expected to take effect on Jan. 1, 2012 for new cars and on Jun. 30, 2014 for existing vehicles, a total about 1.7 million passenger cars weighing less than 4.5 tons will be affected by 2014, according to iSuppli’s Automotive Practice. The Japanese mandate is not yet public, but multiple iSuppli sources indicate that Japan is likely to follow South Korea’s example, with as many as 5.3 million vehicles impacted during the same time period.
“The mandates underscore the current trend toward international harmonization of automotive safety standards, following those developed for markets in the United States, Europe, Australia and Canada,” said Richard Dixon, senior analyst for MEMS and sensors at iSuppli. ESC has been recognized in numerous safety studies as highly significant in saving lives by sensing car trajectories and accelerations, computing these against inputs from magnetic sensors that monitor the driver’s intention, and then making the necessary corrections via the brakes if so required. TPMS first began in the United States following the TREAD Act and has been a legal requirement since 2007.
For Japan, a move to ESC will carry significant implications for the country’s small-car segment, which makes up one-third of the market in the region. At present, such vehicles in Japan have a very low ESC penetration of less than 1 percent, compared to 16 percent on average for small cars in Europe. In comparison, cars in the Japanese luxury segment cars are already fully penetrated, while the much more voluminous mid-range cars exhibit—significantly—fitment rates in common with Europe of more than 80 percent. ESC has the greatest market impact as the contribution to system cost of the MEMS sensor—including accelerometer, gyroscope and one or more pressure sensors—amounts to approximately $21 per vehicle.
As for TPMS, systems based on the most prevalent direct measurement located in the valve of a rim add an average of 4.2 MEMS pressure sensors per vehicle, or around $8 worth of sensors. In such a system, the pressure sensors communicate information wirelessly to an indicator warning light on the dashboard if tire pressure drops below specified limits.
Challenges Lie Ahead for Manufacturers
With the adoption of automotive safety mandates on the increase worldwide, system suppliers and sensor companies find themselves preparing to meet some challenges.
Already, considerable price pressure exists on the components used in these mandated systems. And to remain competitive, manufacturers will need to find ways to produce the critical safety systems for the new markets at the lowest cost possible.
In response, companies like TRW are producing TPMS in the valve with even fewer parts for 2011 models at lower cost. Other major Tier 1 entities, such as Continental and Bosch, are already deploying multi-sensor combo packages containing both gyroscopes and accelerometers to lower package costs and reduce footprint.
For its part, Japanese Tier 1 giant Denso has recently added a gyroscope to its inertial sensor armory and will likely follow suit with a multi-sensor combo package of its own. iSuppli analysis shows that about one-third of all vehicles with ESC will feature this solution in five years’ time.