A multi-billion dollar battle is being waged over who gets to deliver the intelligence inside tomorrow's smart-thinking, autonomous-capable, software-defined car, with U.S. chip companies Qualcomm, Nvidia and Intel's Mobileye vying for the biggest contracts.
Meanwhile the automakers themselves are trying very hard to keep some of that value in-house.
The importance of the three tech giants was evident at the IAA Mobility show last month in Munich, where Qualcomm CEO Cristiano Amon shared a conference stage with BMW head of development Frank Weber; Nvidia shared a stand with Mercedes-Benz; and Mobileye showcased Volkswagen's latest robotaxi development.
Perhaps with the exception of global EV battery makers, no suppliers are publicly acknowledged by name as frequently by the automakers as they redesign their future models around powerful computers and software supplied by the three.
All three companies claim billion-dollar order pipelines from the automotive industry.
- A year ago, Qualcomm touted $30 billion of forward contracts, a figure it hasn't updated.
- In January, Mobileye said it had a $17 billion pipeline to up 2030.
- Nvidia, meanwhile said in September it has locked in $14 billion in automotive contracts over the next six years.
The biggest slice of the pie is in advanced driver assistant systems (ADAS) that can move automakers toward offering full autonomous driving.
At its investor day last year, Qualcomm identified a $100 billion total addressable market on the digital side by 2030, of which by far the biggest chunk -- $59 billion -- was taken by ADAS. Giving more driving control to the car is a key plank by which the automotive companies hope to boost profit margins.
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The undisputed hardware and software leader in terms of ADAS now is Mobileye, which solely focuses on this technology.
"Mobileye was the earliest adopter and at the moment simply has the advantage because they have the most mileage on board. Everybody trusts them," said Joerg Grotendorst, senior vice president, car of the future at Magna International.
As a key Tier 1 supplier, Magna packages and integrates chips and sensors for the automakers.
Even Qualcomm, which is building its own intelligent driver assistance software "perception stack," acknowledges Mobileye's advantage.
"We all know all the Mobileye product competition. So, we have a reference data point," Qualcomm Europe boss Enrico Salvatori said at the IAA.
Mobileye last year shipped 34 million of its EyeQ chips with the front-facing camera for use on new vehicles globally, it said.
But the Israel-based company has its sights set on the far more valuable semi-autonomous and partially autonomous market with its SuperVision package that will increase its content per car to $1,500 from $45 to$50, according to estimates from the investment bank UBS.
SuperVision expands the number of cameras to 11 to offer eyes-on, hands-off Level 2 Plus capability and hands-off, eyes-off Level 3 autonomous driving.
After launching the solution in the 001 from Chinese automaker Zeekr, Mobileye this year announced Porsche would also use SuperVision in car underpinned by its new PPE electric platform.
Mobileye founder and CEO Amnon Sashua has touted SuperVision as "the redefinition of premium."
But Mobileye's leadership is being challenged.
Automakers, although impressed by the product, are worried that reliance on it will deprive them of a revenue stream that will only grow larger as the tech side of the business becomes more dominant.
"The competitors are the OEMs themselves," Sashua said during Mobileye's second-quarter earnings call earlier this year.
This is where Qualcomm and Nvidia come in.
Rather than pitching themselves as a replacement for Mobileye, they are pitching themselves as partners that supply the compute power and tools, while leaving the automaker in control of the final product, if that is what they want.
"There is a concern that automakers are losing control of their product and becoming sheet metal vendors," Danny Shapiro, head of automotive at Nvidia, said at the IAA. "Our approach is a collaboration. We provide a solid foundation of the hardware and software for others to build on."
UBS calls this a "picks and shovels" approach.
"The onus is on automakers or others to create the software on that hardware to develop a robust, cost-effective ADAS solution," UBS analyst Joseph Spak wrote in a recent report on Mobileye.
Shapiro highlights Nvidia's work with Mercedes-Benz, which will base its next generation of cars -- highlighted by the Concept CLA Class sedan that debuted last month -- on Nvidia's Drive platform for autonomous cars. The two will co-develop the intellectual property and split the revenue from the software features, Shapiro said.
Qualcomm is also having success with this approach.
It successfully ousted Mobileye to develop semi-autonomous features for BMW for its Neue Klasse platform using a combination of Qualcomm's computer vision derived from its purchase of Veoneer's autonomous driving software unit Arriver and BMW's own work. Qualcomm and BMW plan to jointly sell the resulting software to other brands.
Qualcomm also announced in January that Volkswagen Group would use its Ride semi-autonomous platform for unnamed future models -- another win that came at the expense of Mobileye. Qualcomm noted that the business has been unaffected by the recent upheaval at VW Group's software unit, Cariad.
Qualcomm, best known for its smartphone chips, started out in automotive by providing in-car modems. However, it has since carved out a significant business in the industry providing its Snapdragon chip and associated software framework to power the increasingly power-hungry infotainment systems in today's new cars.
Adding Ride to Qualcomm's so-called Digital Chassis offerings gives car companies a complete platform on which to design their new software-defined cars to compete with digital-first companies such as Tesla.
Giving the car companies the freedom to define that relationship has helped Qualcomm quickly challenge Mobileye's domination.
"That openness I think creates a lot of opportunity and we are seeing that expand significantly," Nakul Duggal, head of automotive at Qualcomm, said at the IAA.
UBS named Qualcomm as Mobileye's "closest competitor" in its report.
Right now, Mobileye is supremely confident it can defend its dominant ADAS position.
"No one else can offer this, many have tried, many have failed," Mobileye's head of autonomous vehicles, Johann Jungwirth, said at the IAA. "Competitors can offer an SoC [system on chip] but basically no content."
Jungwirth, a former VW, Mercedes and Apple executive, gave the example of steering systems as an analogous part on the hardware side that has been done in-house, but proved a lot easier to outsource.
"They see how much value is created in software so it's natural that they at least want to try," he said. "But in the last few years most of them have scaled that back because they realize how complex it is."
The reach of all three chipmakers in China is another plus for automakers, as local suppliers start from a low base.
A recent teardown of the BYD Seal electric sedan overseen by UBS, for example, found almost no Chinese-supplied semiconductor content in the ADAS system, despite BYD being one of the most vertically integrated car companies in the world.
"Given the current lack of credible alternatives from Chinese semis, we expect ADAS-exposed names such as Nvidia and Mobileye to gain share of the overall auto semis revenue pie," the bank said in its report.
"China is a very big market for us," Qualcomm's Duggal said, citing his company's smartphone business. "So, we are very familiar with the digital ecosystem there."
Mobileye is hampered in China, where data-gathering is highly regulated, therefore it has had to start from scratch with its signature REM mapping system in the country.
In the West, cars with Mobileye's later generation EyeQ chips have been harvesting millions of miles of information about road layouts for the company, which then goes back to inform the car about road positioning.
In China Mobileye has contracted Geely's ECARX unit, a rival to Qualcomm in the infotainment space, to help harvest map data.
Further global competition in the space comes from Tesla. CEO Elon Musk has said Tesla wants to offer its Full Self-Driving technology (its version of Mobileye's SuperVision) to other automakers.
Mobileye, meanwhile, is closely watching BMW's and VW's strategy of partnering with Qualcomm to gain some of the control of the data -- and revenue. VW, in particular, felt it was giving away too much control to Mobileye.
"I think there will be new opportunities to work together again," Mobileye's Jungwirth said of BMW. "Let's stay friends."
