With growing consumer demand for connectivity, safety and in-car entertainment, vehicle electronics has become one of the most compelling – and competitive –markets among automotive suppliers. However, there is plenty of business to go around, and various Tier 1s have been reporting strong sales in recent quarters.
Delphi
Delphi Chief Executive Kevin Clark noted in a call on 4 February that the company’s performance during the fourth quarter of 2015 was a “really nice finish to a challenging year.”
Revenue was up 3%, or 11% adjusted for currency and commodity effects, whilst operating income grew 1%, or 12% excluding foreign exchange (FX). What’s more, operating income came in above guidance at a record US$503m. “Organic revenue growth was a robust 11% for the quarter and 6% for the full year,” added Clark, “driven by just under 20% growth in China and roughly 13% growth in our electrical architecture and electronics and safety segments during the quarter.”
In January, Delphi made its 20th appearance at the Consumer Electronics Show (CES), “which seems to have a larger automotive presence each year,” noted Clark. During that time, its customers, suppliers, and investors had the chance to travel the streets of Las Vegas in its autonomous vehicles and experience first-hand some of its latest vehicle-to-everything (V2X) technologies. “We returned from the show optimistic about the tremendous opportunities in active safety, automated driving, and vehicle connectivity, which is further validated by roughly US$1.2bn of active safety and US$2bn of infotainment bookings during 2015,” he added.
Harman
Harman released “solid results” for Q2 2016 according to Chief Executive Dinesh Paliwal in a call on 29 January 2016. Excluding the impact of FX, net sales increased 19% to US$1.8bn. EBITDA was up 20% and earnings per share grew 9% year-on-year. “This is now our 11th consecutive quarter of top and bottom line growth,” he pointed out.
The supplier has been making moves to expand its connected car business, and recently launched its embedded infotainment solutions on a number of new vehicle models, including Hyundai’s new Genesis brand. In addition, a strategic partnership with Microsoft was announced in January, which will see elements of Office 365 integrated into cars. As Alon Atsmon, Vice President of Product Strategy at Harman, told Automotive World, “Productivity will be relevant for professional drivers that are on the road for a lot of time and need some basic functionality.”
NXP Semiconductor
NXP has been expanding its automotive business in an effort to capitalise on growing interest in the connected car. In a call on 4 February, Rich Clemmer, Chief Executive of NXP, remarked that Q4 2015 results were “quite momentous, marking a major milestone in our evolution as a company.”
Full year 2015 revenue was US$6.1bn, up 8% from 2014, including a month’s revenue contribution from recently acquired market competitor Freescale. This merger has created a “powerhouse,” according to Clemmer, and positions NXP as the leader in multiple strategic markets. “The company emerges as a clear market leader in the areas of automotive, microcontrollers, and security semiconductor solutions,” he explained.
Chief Financial Officer Daniel Durn added in the call, “Day one was a major success across the globe, and we’re off to a fast start as a new company.”
Qualcomm
Wireless communications supplier Qualcomm has a vested interest in all things connected, and is currently finding automotive business to be particularly strong.
Fiscal Q1 2016 revenue (ending 27 December 2015) came to US$5.8bn, with automotive business helped along with the announcement that its Snapdragon 602A processors will be used in 2017 Audi vehicles.
“We also introduced our next-generation Snapdragon 820 automotive processor, as well as several other products, including our wireless charging technology,” explained Steven Mollenkopf, Chief Executive of Qualcomm, in a call on 27 January. “Design traction for our new 820 processor continues to be strong, and we expect improving trends in our chipset business in the second half of fiscal 2016,” he added.
TE Connectivity
TE Connectivity designs and manufactures various sensor solutions for a range of connected systems, including industrial equipment, data communications, aerospace and increasingly, automotive.
The company states it had a “continued strong performance in transportation with sales above expectations.” Delving into this in more detail, company President Terrence Curtin explained in a February call to analysts: “Overall segment organic growth of 1% was driven by automotive and sensors. Our auto sales organic growth of 1% in the quarter was driven by Europe growing 6% and North America by 3%, offsetting the expected reductions in China.”
Chief Executive Tom Lynch highlighted that changing consumer lifestyles in emerging markets are a positive trend for automotive suppliers in general. “If you look at the emerging markets and how many people are coming into the middle class, the trends include getting a nicer place to live and buying a car. Content growth is consistent in every part of the vehicle, and we don’t see that slowing.”
