Increased computing capabilities in automotive electronics is good for Tegra processors
With each passing day, manufacturers equip cars with increased computing capability in both the drive train and the dashboard. Dashboard functionalities within cars, including the infotainment system, digital cluster, and automatic driver assistance, are rapidly being computerized. Thus, all these developments point towards a transition in the automotive electronics market, which already is a huge market.
According to Strategy Analytics, as the above chart shows, the market for Advanced Driver Assistance Systems (or ADAS) is expected to be worth around $15 billion by 2016, growing at a CAGR of 23%. In Nvidia’s (NVDA) Tegra business, the automotive segment is the fastest growing subsegment. Apart from being a fast growth segment, it offers higher gross margins as compared to the devices. In 4Q15, Nvidia’s automotive segment revenue almost doubled on a year-over-year basis.
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Long standing presence in the automotive space along with partnerships give Nvidia an edge over its peers
According to Nvidia, the company’s automotive platforms appear to be on a sharp upward trajectory. In 2015, over 7.5 million cars are using Nvidia’s technology, up from 4.7 million in 2014. For the past decade, Nvidia has been working on building its automotive computing platform, and therefore is in a strong position to leverage this growth. The company’s customers include prestigious automobile companies like Volkswagen, Honda (HMC), BMW (BMW), and Audi (AUDVF).