COVID-19 Impact on Pharmaceutical Packaging in Chemicals and Materials Industry

COVID-19 Impact on Automotive Software in Semiconductors and Electronics Industry

  • Semiconductors and Electronics
  • Apr 14, 2021

COVID-19 Impact on Automotive Software in Semiconductors and Electronics Industry

ANALYSIS ON IMPACT OF COVID-19 ON THE MARKET

Automotive software is defined as an operating system that is used for the interactions of the user and electronic devices available in the vehicles. With the advent of IoT and smart & connected vehicles, this software has seen its growth rate increased significantly, due to the requirement of an interactive solution between the sensors embedded on the vehicles and users of these vehicles.

Increasing adoption of connected car services is a crucial factor accelerating the market growth, also rising intervention of innovative technologies for advanced UI, rising levels of connected vehicles due to the prevalence of IoT, high levels of demand for adoption of electronics in the vehicles requiring integration and operating systems for its usage, rising adoption of connected car services and rising investment in auto-tech and autonomous vehicles are the major factors among others boosting the automotive software market. Moreover, the rising future potential of 5G and AI, rising developments in semi-autonomous and autonomous vehicles, rising data monetization in the extended automotive ecosystem, and rising SOTA updates to reduce vehicle recalls will further create new opportunities for the automotive software market.

The pandemic started with its epicenter in China in 2019 and has been spreading ever since to all over the world, around 216 countries and territories have been affected with COVID-19, the U.S. being on the top with cases reaching about 10.1 million, followed by India, Brazil, and several European countries. The COVID-19 cases reaching to the big named countries with a strong dominance in the market which has adversely affected the economy globally.

The spread of Coronavirus has led to an economic crisis and many companies are being bound to take stringent actions of laying off their employees, small businesses are being shut and manufacturing facilities are being put on hold. There has been a disruption in the supply chain of many industries due to restrictions in logistics and the closing of manufacturing facilities. The U.S. witnessed a decline of 4.8% on an annualized basis in the first quarter of Q1-2020. Besides, the slowdown in the economy has also lowered the spending capability of individuals and people are saving money for emergencies.

The automotive industry has seen a devastating decline in the production and sales of vehicles. As a result, the automotive software market has also shown a major dip in 2020 because of the Covid-19 outbreak, as it interrupted the test and development of new software technologies in the market. Asia-Pacific is the most affected region across the world as China is the largest producer of the vehicles, and all the production process has shut down because of the Coronavirus pandemic. It is anticipated by industry experts that the market will have a short-term effect owing to the pandemic, but will register a growth again in 2021 because of the inclination of the passenger to use high-end technology and connectivity solution in their vehicle, which will boost the automotive software market in the coming years.

AFTERMATH OF COVID-19 AND GOVERNMENT INITIATIVE TO BOOST THE MARKET

The pandemic is bound to bring new trends in the market such as the increase of digitalization, increasing automation, high adoption of e-commerce, and low dependency on human labor. The pandemic led to several innovations in the field of automotive software such as advanced features for self-driving software to face the pandemic that will help in boosting the market. Government needs to incorporate these innovations so that social distancing can be followed with more ease, and automation can flourish globally.

STRATEGIC DECISIONS FOR MANUFACTURERS AFTER COVID-19 TO GAIN COMPETITIVE MARKET SHARE

The companies require taking a strategic decision to sustain their development in this pandemic crisis. Companies had delayed any sort of acquisitions and cut short the capital expenditure to maintain their financial conditions, besides they also need to set the sales projection to limit their production and avoid any extra spending. Companies need to align their strategies with the changing market; they need to operate the factories according to the present safety norms of government to bring the production back to pace. Companies need to innovate and develop technologies according to the changing trends of society. The healthcare sector should be given priority and innovations should be adopted. The COVID-19 pandemic is forcing tech companies to re-examine their priorities in light of reduced bottom lines. However, after few months of the COVID-19 outbreak, the key players are collaborating with automotive industry players and innovating their offerings to pace up themselves for the future demand of autonomous vehicles.

For instance,

  • In October 2020, a new automotive software was developed by a team of engineering students of KLE technical university, India. The new automotive software is developed for supplying food and medicines to the patients affected by the Coronavirus. This will help in protecting the frontline such as nurses, doctors and family members. The companies can use innovations like these and adopt into their technologies to increase the sales of their automotive software.
  • NXP Semiconductors, a Dutch chipmaker on Tuesday said it had entered a strategic relationship with Amazon’s cloud computing unit to help cars communicate with data centers. The companies said the partnership would involve making a new NXP chip designed to aggregate data from a car’s systems and send it over the internet to work better with Amazon’s data centers.

IMPACT ON DEMAND

The sales of automotive software have been highly affected by the delay of both new project commissioning and new project signoffs due to social distancing measures. However, the changing patterns in the market and increasing need for automation due to restrictions and the need for social distance will eventually double the growth of automated vehicles in the coming years which will increase the demand for automotive software.

The pandemic has also created a new window of opportunity for automotive software in the logistics and commercial sector. Several companies are developing new products by the pandemic to increase the sales of their products.

IMPACT ON SUPPLY CHAIN

The supply chain of automotive software was adversely disrupted globally as several manufacturing facilities were closed down, labor was cut short and transportation and logistics were restricted.

CONCLUSION

As the COVID-19 prevailed the initial period saw a disruption in both supply and demand of the market. Some of the manufacturing facilities were closed bringing down the production of automotive software manufacturing companies. However, the market will see a rapid increase in its growth due to several changing trends in the market such as the increasing need for social distancing, growth in the e-commerce sector, and high growth in the healthcare industry. Automotive software is being equipped with vision guidance through the integrated camera which can even help in several security purposes.