February 23—TrendForce, a global market intelligence firm, predicts demand for automotive DRAM will increase by a compound annual growth rate (CAGR) of 30 percent through 2024.
The organization named the increasing popularity of self-driving car technology as a main driver of the trend. It also anticipates that the market segment represents a major opportunity for chipmakers despite its unusual manufacturing requirements.
The Tesla Factor
According to TrendForce, the automotive sector only represented 1.8 percent of the global DRAM market in 2019. However, it anticipates the segment will expand significantly in the next three years due to shifting consumer preferences. The group indicated Tesla, the world’s most valuable car company, is the trend’s forerunner.
The manufacturer utilized 8GB GDDR5 DRAM components to increase the functionality of its earliest electric vehicles. The firm marketed its fleet on the strength of its digitally enhanced capabilities, which its memory modules enabled.
In the early 2010s, it began embedding its personal transports with an advanced driver assistance system (ADAS) called Autopilot. The feature wowed consumers by giving Model X and S sedans robust quasi-autonomy.
Over time, Tesla increased the chip content of its offerings, installing 14GB high-performance components in its Model 3 sedans. It has also made Autopilot more multifaceted with new features like Smart Summon and traffic light/road sign recognition. The carmaker’s next-generation of offerings will feature 20GB memory modules to enable even greater self-directed functionality.
As Tesla has become an increasingly prominent player in the global auto market, other providers have sought to replicate its products’ most appealing features.
Chipmaker Nvidia has inked an agreement with leading Chinese vendors Li Auto, Xpeng, and Nio with self-driving SoCs. In addition, BMW, General Motors, Mercedes-Benz, Nissan, Toyota, and Volvo equipped their 2020 model year vehicles with semiautonomous operation systems. Those manufacturers will need to buy lots of high-bandwidth DRAM to support their future onboard computing platforms.
As IHS Markit predicts global car sales will grow from 75 million in 2020 to over 90 million in 2024, the automotive DRAM market expansion will be a long-term growth trend.
Challenges and Rewards of Manufacturing Vehicle DRAM
The automotive DRAM segment represents a major opportunity for chipmakers because of its explosive growth potential. However, TrendForce notes the unique manufacturing requirements of the sector are very different than other commercial fields.
Vehicles have considerably longer operational life cycles than other consumer products, so component makers need to make their memory products similarly durable. In fact, DRAM suppliers must ensure their car offerings can remain functional for 7 to 10 years to meet maintenance and replacement standards.
That category of electronic parts also requires wide temperature thresholds to be commercially viable. Automobile chips must be ruggedized for deployment in extremely high and low temperature conditions to entice international car manufacturers.
However, TrendForce states that the vehicle memory modules sell for 30 percent more than components intended for other end-markets. The organization further remarks that Winbond and Nanya Tech earn a double-digit percentage of their income by making the specialty hardware.
Given the global DRAM market’s volatility, more chipmakers could benefit from expanding their presence in the automotive segment.