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Robot cars spell chip sales for Europe's Infineon, STMicro

[BARCELONA] Two of Europe's biggest chipmakers are targeting futuristic cars that drive themselves and have wireless connections as a new revenue growth opportunity.

Infineon Technologies AG, which makes sensors including those that enable autonomous driving, is predicting rising car- chip sales even if total vehicle purchases decline, Chief Executive Officer Reinhard Ploss said Wednesday in Barcelona. As cars become more like robots - more automated, and connecting to each other and to their surroundings - STMicroelectronics NV expects "very strong growth" in demand, CEO Carlo Bozotti said at the same event.

"The number of semiconductors in the car is growing and customers are willing to pay extra for some features," Ploss told investors at a conference hosted by Morgan Stanley. "We are focused on everything that makes the car like a driving robot." Carmakers including BMW AG, Tesla Motors Inc. and Daimler AG are loading their luxury models with technology. The average car had US$333 (S$472) worth of chip content as of 2014, an increase of 11 percent in the past four years, according to Bloomberg Intelligence. Hybrid and electric cars have higher dollar content per car, as do higher-end models such as the Mercedes S- Class compared with smaller budget models.

Infineon has been building out its business focused on what's known as power-management chips, which are used to handle the flow of power in electronics, from mobile phones to automobiles. Betting that demand for these chips will keep rising, Infineon bought International Rectifier Corp. for about US$3 billion in cash in a deal completed in January. It's developing a radar sensor chip with Google that may go into car safety applications.

Meanwhile at STMicro, Bozotti has turned to cars to make up for falling sales in other segments like some smartphone parts. He said his company has a 70 per cent market share in products that help vehicles detect their surroundings, process that information and behave accordingly.

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