New Delhi: Increased focus of automakers on connected vehicles is likely to spur demand for embedded sims (e-sims) by as much as 3 million over the next 12-18 months. This, industry experts said, would drive growth in enterprise business for telecom operators.
Experts predict the widespread adoption of e-SIMs in automobiles will quadruple the demand for semiconductor chips by 2025.
“We believe that the number of OEM (original equipment maker) fitment connected vehicles could increase by around 2-3 million over the next 12-18 months,” a spokesperson for Bharti Airtel said, adding that demand for e-sims is led by manufacturers’ focus on launching internet-enabled vehicles with connectivity and smart features at the core of the product offering.
Currently, the e-sim market for telcos is just less than 1% of enterprise revenues of telcos, according to industry estimates. However, with the rollout of 5G enterprise and increased uptake of Internet of Things (IoT), the share is expected to grow multifold over the next few years.
Along with e-sims, the growing popularity of connected vehicles will also lead to a further increase in demand for semiconductor chips.
Sunjay Kapur, chairman, Sona Comstar, said both regulations and customer preferences are changing, leading to increasing use of semiconductor chips in vehicles, and opening up more opportunities for component manufacturers.
“Four years back, people were apprehensive the shift to electric will render obsolete the components required for internal combustion engine vehicles. But today, 40% of the vehicle is software and this change has happened so rapidly,” said Kapur.
For instance, as much as 47% of the 50,000-odd customer orders for the facelift of Kia India’s Seltos sport-utility vehicle, launched in July, are for variants equipped with Advance Driver Assistance Systems (ADAS), indicating a growing preference for cutting-edge safety and technology features among buyers.
“The integration of technologies will intensify with the evolution of smart cars and 5G technology expansion. 5G will bolster semiconductor usage in vehicles, especially with the rise of 5G Standalone (SA) networks enhancing operations,” said Aditya Joshi, chief executive at OpalForce, a technology, semiconductor, and talent solutions company.
As per industry estimates, demand for semiconductor chips will grow fourfold to USD 100 billion by 2025, with the advent of IoT and 5G in India. According to the experts, a connected vehicle can have between 1400-3000 chips, clearly indicating that as demand for connected vehicles rises, so will the demand for chips.
Gaurav Gupta, deputy managing director at MG Motor India, agreed the company too has received a strong response to variants equipped with connected and autonomous technologies. “As much as 50% of our customers refer to ADAS. Customers today are willing to pay for safety and opt for spec-rich variants even at higher price points.”
MG Motor India offers ADAS features in its SUV models–Astor, Hector and Gloster.
While semiconductor chips form a part of the hardware that provides vehicle telematics, e-sims provide integration with the telematics unit and have a longer lifespan as they can withstand harsh environmental variations such as temperature and humidity, thus making them more preferable over physical plug-in sims.
The transmission of telematic data like vehicle diagnostics to computers or mobile devices is facilitated by telecom operators, which is where the likes of Airtel, Reliance Jio, and Vodafone Idea can participate. “In the automotive segment, analytics around real time driving patterns and driver behaviour are helping OEMs build capabilities aimed at improving driver and passenger safety,” according to Airtel.
Jio and Vodafone Idea did not respond to requests for comment at press time.
The key to sustained growth in e-sim adoption in the automotive industry would be in ensuring supply chain efficiencies, experts said.
“With the challenge posed by the pandemic, there is a clear gap between demand and supply. Initiatives like lower import tax, single window clearance, and better warehousing will be crucial to sustain momentum,” said Pankaj Sharma, co-founder at Log9 Materials, an Indian nanotechnology company.
