Kimi Lin, Senior Analyst at IHS Markit | Technology
While the global market for automotive display touch modules is stalling in 2019, the longer-term outlook is revving up, with shipments expected to rise in the coming years due to improving economic conditions and rising demand from autonomous vehicles.
Worldwide shipments of automotive touch modules are expected to increase by a negligible 1.1 percent in 2019 to reach 64 million units, according to IHS Markit | Technology, now a part of Informa Tech. Growth will remain tepid during the next two years, with increases of 1.4 percent and 2.4 percent in 2020 and 2021, as noted by the Automotive Touch and User Interface Report.
However, stronger growth will resume in 2022, with a 7.2 percent annual expansion. The market’s rise will continue in 2023, with shipments increasing by a healthy 7.8 percent to reach 77 million units.
Automotive touch module market set to shift into higher gear
“The major factors behind the automotive touch module market’s near-term weakness are the global economic downturn, slowing demand and the U.S./China trade dispute,” said Kimi Lin, senior analyst, touch and user interface research, at IHS Markit | Technology. “However, the market will rebound in 2022 due to a resumption in economic growth and increasing sales of autonomous vehicles.”
Projected capacitive touch technology dominates the automotive market
Projected capacitive became a mainstream touch solution in the smartphone market in 2011 because of its multi-point touch capability and its fast response time. However, embedded touch replaced add-on projected capacitive touch solutions as the dominant technology starting in 2016 due to its advantages in areas including its thin form factor and narrow border size.
Things have evolved more slowly in the automotive market, where it took until 2016 for projected capacitive technology to become a mainstream technology. Projected capacitive adoption now is rising rapidly in the automotive segment, with almost every new passenger car sold since the start of 2016 using a center stack display equipped with a projected capacitive touch display. Resistive touch technology now is used only in trucks.
While the auto market is playing catchup with the smartphone segment, the development schedule in the automotive business remains five years behind that of smartphones, as the chart below shows. The next major question is when embedded touch will replace add-on touch as the dominant technology in the automotive market.
The coming evolution of the automotive supply chain
The increasing prominence of touch technologies could reshape the automotive supply chain.
Tier-one suppliers play a critical role in the automotive supply chain, serving as the gatekeepers for access to car OEMs. Panel makers are not satisfied with acting as mere component providers. Instead, they want to become tier-one suppliers themselves in order to develop their own close relationships with OEMs.
Panel makers are more likely to promote embedded touch solutions. Touch suppliers have begun focusing on image capture, augmented reality, touch upgrades—such as suspension touch—and other features, hoping to add revolutionary capabilities to displays.
Overall, touch makers want to be at the leading edge, but it’s not easy for them to bypass the tier-one suppliers. The tier-one suppliers are much more capable of system integration and software development than the panel and touch makers.
However, electric vehicles (EVs) represent a major opportunity for panel and touch suppliers. Sales of electric autos are limited, and the user group is relatively uniform. Therefore, OEMs are willing to try out cutting-edge systems in EVs.
Some OEMs are even willing to skip over tier-one suppliers to develop their own central control systems for EVs. These initiatives represent the best opportunities for panel makers and touch makers to get close to the automotive OEMs.
The IHS Markit | Technology Touch Panel Cover Lens & CPI Report
The IHS Markit Automotive Touch and User Interface Report provides a variety of in-depth analyses on automotive touch market, including shipment tracking, supply chain, market dynamics and emerging trends.