Qualcomm Dives Into The Connected Car Market With Its Drive Data Platform

At CES recently, Qualcomm (NYSE:QCOM) introduced its Drive Data Platform, which the company claims is designed to intelligently collect and analyze information from vehicle’s sensors. In addition, the Drive Data Platform can assist smart cars in accurately detecting location, monitoring and learning driving patterns, perceiving surroundings, and capturing and sharing this data. Clearly, the Drive Data Platform should help Qualcomm to tap into connected and autonomous car market, which has a huge growth potential. According to a research by Boston Consulting Group, the autonomous car market could be a $42 billion market by 2025, which could be around 12-13% of the total auto market. ^[1] Given the potential to impact the huge number of people, this market is a highly attractive market opportunity for any company to want to enter.

Qualcomm Can Fit Into The Supply Chain Involved In Development of Connected Cars

As more and more customers look for improved digital experience in the car, in addition to other parameters, car companies are banking on technological advancements in their interiors to compete with each other. This has led to an exponential increase in the semiconductor content per vehicle. The growth in the semiconductor content in automotives is likely to further increase with the rise in the autonomous car market.

However, any company looking to cement its position in the new ecosystem of autonomous cars will have to master three key technology areas: an operating system for self-driving, routing technology and mapping services. Given that all three sub-segments revolve around gathering data, learning from data and developing systems to deal with real life problems, there is a huge opportunity for chip making and software companies that can provide a viable solution to these problems. If one considers the end-to-end supply chain of the products and services involved, the most valuable component here is software and machine-learning capabilities. Auto companies have an urgent need to level up their software capabilities, failing which they could remain as hardware vendors or OEM providers in this business in the long run. Qualcomm with its Drive Data Platform can easily fit into the supply chain of the products and services involved in the evolution of self-driving cars. Additionally, since Qualcomm is offering a deep-learning software development kit (SDK), it is indicative of the fact that the company’s Drive Data Platform is targeted at enhancing the machine learning capabilities in autonomous cars.

Qualcomm Likely To Face Strong Competition From Other Players

Qualcomm’s expansion into the connected and autonomous car market will not be easy, because of the presence of other established players offering similar solutions. Intel and Mobileye have partnered, in particular with BMW and Delphi, in developing solutions for self-driving vehicles.  In addition, Nvidia has its DRIVE PX 2 automotive supercomputer which has been strongly adopted by Tier 1 OEMs, start-ups and research institutions to develop autonomous driving technologies. Nvidia claims to have shipped the DRIVE PX 2 automotive supercomputer to around 80+ car companies. Nvidia’s DRIVE PX 2 platform is capable of understanding in real time what’s happening around the vehicle, by constantly processing the data coming in from the vehicle cameras and sensors to produce complex images of objects around the vehicle.

Nevertheless, Qualcomm is likely to have an advantage in the automotive semiconductor market because of its acquisition of NXP Semiconductors’ aquisition, which it announced in 2016. This acquisition should help Qualcomm become the largest supplier of chips used in cars. It must be noted that NXP Semiconductors acquired Freescale Semiconductor for over $10 billion in 2015, as a result of which, it became the largest semiconductor supplier to the automotive industry. The companies were originally the captive semiconductor businesses of Philips and Motorola, respectively.

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1. The Autonomous Vehicle: The Car of the Future, Boston Consulting Group Report, April 2016 [↩]