Infotainment systems are driving the market for automotive semiconductors in Europe, says Bernd Lienhard, vice president of automotive sales and marketing at Infineon.
'Infotainment has now left the gadget era and entered the industrialization era,' he says.
In the future, simple car radios, compact disc or tape players will be superseded by sophisticated DVD (digital versatile disc) systems with on-screen displays, Lienhard predicts.
Telematics systems driven by complex in-car computers will increasingly find their way into mainstream models, he adds.
As a result, Munich, Germany, -based Infineon expects the silicon content of the average car to grow from a value of about $250 (E280) in 2000 to around $300 in 2005.
But Lienhard says safety is not proving to be a big factor in the growing demand for auto semiconductors.
'We believed safety would go much faster,' he says.
Lienhard says carmakers are approaching the opportunities for improved safety through electronics with plenty of caution.
'It's not a matter of the availability of the electronics, it's mostly to do with regulations,' he says.
Integrated safety systems could take some control and responsibility away from the driver. This could have legal implications in the event of an accident, says Lienhard.
Infineon is the leading European-owned semiconductor supplier to the automotive industry. It is second in the European automotive semiconductor market behind Motorola of the USA. Europe leads the world in automotive electronic applications. More than cars in other parts of the world, typical European models are full of convenience systems such as electric seat controls, electric sunroofs and electric door mirrors.
Semiconductors are the main electronic processors - or 'hearts' - of such systems.
Lienhard says the auto industry has now fully overcome the semiconductor shortages that it suffered last year, when computer chip manufacturers could not keep up with demand.
During the shortages, the semiconductor industry concentrated on making sure that none of the carmakers were forced to shut down, he adds.
The slowdown in telecommunications and wireless applications has now released capacity. But the auto industry has also changed the way it works to avoid problems in the future.
The semiconductor suppliers now work more closely with the carmakers, as well as their direct Tier 1 customers.
'Our contacts have been extended from the pure engineering side,' says Lienhard. 'We now have much more contact with purchasing departments.' The closer relationships mean 'we now know when new-model production begins and what the run rates are,' he says. 'If carmakers are looking more than two or three years into the future, then they must tie up with technology leaders in semiconductors.'
Over the last two years, Infineon has moved toward helping its customers develop systems solutions.
For resident Infineon engineers at companies such as Bosch, says Lienhard, 'the issues have changed from a pure product to a more systems approach.
'The Tier 1s are looking much more for a partner to help them solve their problems rather than someone who says, 'This is the right product.''
For significant contracts such as the 2005 Mercedes-Benz S class or the new 42-volt electrical systems, carmakers need early information on what semiconductor capacity will be available, says Lienhard.
'People always say that that innovation begins at the top end of the car industry and then filters down,' he adds. 'But that is not the only pattern for electronics use. Innovation can also be driven by cost.'
A low-end car can be highly innovative, says Leinhard, citing the growth of electric steering among superminis in Europe.
Lienhard says: 'This is something we have seen happening much more over the last 18 months.'