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Evolving E/E architecture will drive the adoption of new hardware based on domain and zone controllers, and eventually, central computers. According to recent research by S&P Global, addressable markets for control units will amount to an estimated $40 billion of new ECU business in 2033 for Tier 1s—mostly for autonomy-, cockpit-, and vehicle-domain controllers. Below the line, the total market is offset by the consolidation of existing ECUs as their functions are eventually absorbed into these more powerful units. The result is still a net market plus, but the replacement of existing ECUs will hit some suppliers harder than others.

What's at stake? S&P Global research shows that the electronic ECUs in the various domains in the vehicles will start to coagulate into fewer, larger hardware boxes with powerful computers inside that address hardware in several or even all domains. The cross-domain nature of these devices will challenge suppliers—a zone controller integrates ECUs from various domains based on location. Companies with narrow product offerings such as cockpit or body ECUs that do not make ADAS ECUs will need to partner with other tier 1s. This leads to revenue sharing and is less attractive to OEMs seeking single solutions.

These "domain controllers" will thus cross domains in the future, and the ability to serve several domains depends on the knowledge base of the supplier. An example might be a powerful Vehicle Domain Controller with a combined body, powertrain, and chassis functions, or a central computer, e.g., with combined ADAS and infotainment domains. These integration roadmaps will mean specialized Tier 1s with single domain coverage must cooperate to remain relevant—such as Magna (pure ADAS) and LG Electronics (pure Infotainment) while others Bosch, Continental, Denso, or Aptiv benefit from wider tool kits.

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This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.