The former ADAS chip overlord stalled!

Around 2019, Mobileye became very popular in the early driver assistance (ADAS) field, accounting for up to 90% of the global market. However, when the trend of smart driving came, faced with the pursuit of emerging competitors, customers were lost in the fierce competition, and the market share continued to shrink. Its current ADAS market share is about 70%. Especially in China, a market where new energy vehicles and autonomous driving are popular, it is even more difficult for Mobileye to squeeze into it.

The development of ADAS is very fast, but also very slow. The fast thing is that almost all new cars today are equipped with ADAS systems, and ADAS chip players are rapidly gaining momentum. Previously, only Israeli ADAS chip manufacturer Mobileye was in this field, and now there are nearly 10; the slow thing is that, The dream of fully autonomous vehicles that was once imagined by the industry has not been realized within the next five years or even within the next ten years as previously hoped. Intelligent driving cars are at the L2 level and have begun to continue +++. The industry currently believes that L5 fully autonomous driving may not be achieved until 2050.

Mobileye has almost swept the market in the field of L1 (including adaptive cruise, lane keeping assist, braking and other functions). At that time, the assisted driving market was just emerging, and Mobileye used a combination of cameras and sensors to provide semi-autonomous and autonomous driving functions. These systems were powered by Mobileye's EyeQ computer vision chip. Its ADAS software and hardware coupling solution quickly attracted the first wave of early adopters. Car companies can quickly deploy it into cars in a short period of time, and the cost is cheaper than self-research.

At its peak, Mobileye occupied 90% of the assisted driving market. New car-making forces such as Tesla, NIO, Ideal, and Xpeng, as well as traditional cars such as BMW, Mercedes-Benz, and Audi, are Mobileye's customers. According to a report by Auto2x, Mobileye's ADAS revenue has a compound annual growth rate of 34% from 2015 to 2021, making it the fastest growing ADAS supplier.

However, times have changed. Starting from Tesla, it switched to Nvidia in 2016. In 2019, Tesla’s self-developed FSD chip was put on the car. Not to mention Wei Xiaoli and other new car-making forces. They travel lightly and pursue speed. Naturally, they don't want to be controlled by Mobileye. In 2019, Xpeng P7 started to use NVIDIA’s Xavier, and later it mainly used Orin. The 2021 ideal One was replaced by Horizon Journey 3, and NIO chose Nvidia Orin. Great Wall and Xiaomi also belong to Nvidia’s Orin camp. Even Europe's traditional auto giants are choosing Mobileye's competitors, such as Mercedes, Volvo and Jaguar signing up with Nvidia, and BMW signing up with Qualcomm.

Therefore, among China's mainstream car companies, only Geely's high-end electric vehicle brands Zeekr and FAW are still using Mobileye's solutions. However, Jikrypton will also be equipped with Nvidia Thor chips in 2025. Mobileye, which has few customers left, can no longer hide its decline.

In addition, this year, as Tier 1 automotive manufacturers are in a period of inventory digestion, automotive chip manufacturers are having an even harder time. This also makes Mobileye worse. Specifically, the company's revenue in the first quarter of 2024 was $239 million, a decrease of 48% compared to the first quarter of 2023, mainly due to a 58% decline in EyeQ SoC-related revenue, partially offset by an increase in SuperVision-related revenue Part of it went down. The average system price in the first quarter was US$61.0, compared with US$53.9 in the same period last year, mainly due to the increase in the proportion of revenue related to SuperVision, but also caused the gross profit margin to decrease by nearly 23% compared with the same period last year. Their overall revenue forecast for 2024 is also lower, with revenue expected to be between US$1.83 billion and US$1.96 billion in 2024. For comparison, Mobileye's full-year revenue in 2023 will be US$2.08 billion.

Mobileye lags behind not only due to its own technical path problems, but also due to factors such as the rapid rise of competitors.

First, success depends on Xiao He, and failure depends on Xiao He's black box strategy.

In the early days of ADAS development, the black box strategy was favored by major OEMs. However, with the evolution of smart driving to domain control and the rapid development of new energy vehicles, competition among OEMs has intensified. In order to compete in the competition To stand out in the fierce market, OEMs hope to customize chip solutions according to their own needs and create more distinctive products. Mobileye's black box solution is difficult to modify and customize, and it takes a long time. If you do not have autonomy in your own hands, it will be difficult to gain a foothold in the market. Therefore, Mobileye’s black box solution gradually received a cold reception.

For Mobileye itself, this strong coupling of software and hardware has resulted in a long iteration cycle for its new products, making it difficult to meet rapidly changing market demands.

Second, Mobileye mainly focuses on visual perception technology and has limited chip computing power. In 2004, Mobileye released the first-generation EyeQ series chip, EyeQ1. So far, EyeQ6 has been mass-produced. In April this year, Mobileye just released the EyeQ6 Lite chip, which has a computing power of only 5TOPS. EyeQ6 High, the highest computing power model in the EyeQ6 series, has a computing power of 34TOPS and will enter mass production early next year. NVIDIA focuses on deep learning and artificial intelligence and can provide higher-level autonomous driving functions of more than 200TOPS.

The rapid rise of new energy vehicles has promoted the rapid development of ADAS technology, and L2 autonomous driving has become a mainstream configuration. At the same time, smart cockpits have also become a selling point promoted by car companies. The implementation of these technologies places higher demands on the computing power of intelligent driving chips. Traditional ADAS chips based on visual perception like Mobileye are no longer able to meet demand, and general computing chips with high computing power have become a new trend. Mobileye's disadvantage in terms of computing power is gradually emerging.

In the Chinese market, the rapid development of new energy vehicles and the rise of local chip companies have caused Mobileye to face fierce competition from local manufacturers.

At the current stage of the development of new energy vehicles, China's transformation from a major automobile country to an automobile power has already emerged. China ranks first in the world in terms of market share and export volume. The rise of domestic smart electric vehicles will inevitably lead to the rise of local supply chains . Mobileye's ADAS chips focus on basic assisted driving, and most of their computing power is around a few TOPS. In the past two years, local start-up automotive chip companies such as Horizon, Black Sesame, and Xinchi Technology have stood out as they have set their minds and made products seriously. They have continued to encroach on Mobileye's market in the basic ADAS field, and many car companies have already turned their backs. Local automotive chip manufacturer.

Local chip manufacturers have geographical, cost and policy advantages in the Chinese market: local chip manufacturers can be closer to the needs of Chinese car companies and provide better services. The production costs of local chip manufacturers are usually lower than those of overseas manufacturers and they can provide more cost-effective products. The Chinese government has introduced a series of policies to support the development of the chip industry in recent years, providing good development opportunities for local chip manufacturers.

There is also the reason why car manufacturers develop their own chips . The car manufacturers’ core manufacturing and involvement in upstream chips have been very popular in the past few years. In the field of ADAS, Tesla and Geely (Xinqing Technology) are two representatives. Needless to say, Tesla has become the "Apple of the automobile industry" and will most likely use its own chips in the future. Geely's Xinqing Technology starts from the smart cockpit and is developing towards the trend of "cabin, parking and travel integration", and may also become an important player in driving assistance in the future.

In the field of high-end ADAS chips , NVIDIA uses GPU-accelerated deep learning technology to realize perception and decision-making in complex scenes. From the early Xavier to Orin and then to Thor, almost all car manufacturers with high-end smart driving needs have rushed to Nvidia's arms.

除此之外，还有 华为 这样的强势厂商，通过零部件、HI（Huawei Inside）和鸿蒙智行（原智选模式）三种模式跑马圈地。东风、比亚迪、吉利、上汽、奔驰、宝马、广汽、长城等都是华为的零部件采购商。华为还为长安阿维塔提供自动驾驶软硬件解决方案。此外，华为与赛力斯合作开发问界M7、M9系列，与奇瑞合作研发智界S7，还与北汽合作推出了极狐。在今年的北京车展上，华为发布了新一代智驾解决方案——乾崑智驾，有望进一步开拓市场。

Ambarella , which is gradually transitioning from consumer electronics to security and automobiles, is also a competitor of Mobileye. Ambarella mainly produces image processing SoCs and computer vision chips. The essence of smart cars is largely based on AI applications under visual images. In addition, it has acquired VisLab in the field of perception systems and autonomous vehicle research, so Ambarella can Smooth transition to the automotive market. Ambarella has been developing rapidly in recent years, aiming at ultra-high computing power ADAS and autonomous vehicles. It launched the CV3 domain controller chip to compete with NVIDIA Orin and Qualcomm's high-performance intelligent driving chips. Compared with Mobileye, Ambarella's solution is more open, and new products and software can be combined in a variety of ways. In the future, Ambarella is expected to occupy a larger share of this market and compete more intensely with giants such as Mobileye.

Faced with dual internal and external pressures, how Mobileye can gain a competitive advantage in this highly competitive market deserves in-depth discussion.

Mainland China has become the world's largest automobile market and one of the regions with the fastest development of intelligent driving technology. Dan Galves, chief communications officer of Mobileye, said in an interview with Investors News during CES 2024: Autonomous driving assistance technology will really take off in China in 2023. He believes that China's demand for self-driving cars is a potential bellwether for demand in other parts of the world.

The former ADAS overlord also refused to be abandoned by the Chinese market and initiated a series of changes.

The previous article mentioned Mobileye’s two major internal reasons. Mobileye is naturally aware of the problem. Therefore, in July last year, Mobileye opened up its software ecosystem and released the EyeQKit Software Development Kit (SDK), aiming to break the curse of the black box. Mobileye allows car companies to develop software systems based on existing hardware and supports embedding of third-party application software.

The next step is to move towards high-end intelligent driving systems. Mobileye's smart driving solution currently has five levels, namely basic ADAS, cloud-enhanced ADAS, SuperVision, Chauffeur and Driver (L4). Among them, basic ADAS and cloud-enhanced ADAS are Mobileye's fundamentals and the main source of revenue. SuperVision (no hands required but maintaining vision) and Chauffeur (no eyes/hands required) are high-end ADAS solutions that Mobileye is currently developing.

Mobileye’s ADAS solution

At the chip level, the sensor on the EyeQ6 Lite includes an 8-megapixel camera, which can provide a 120-degree lateral field of view and can also detect environmental conditions and objects at longer distances. EyeQ6 Lite supports cloud-enhanced ADAS. Domestic Tier1 manufacturer Hengrun Technology announced that it will mass-produce the Mobileye EyeQ 6 LiteADAS system in the second quarter of this year.

Since Chauffeur is still in the development stage. Therefore, SuperVision is one of Mobileye’s most advanced driver assistance systems currently, and will also become a key weapon for Mobileye to capture the high-end ADAS market. Judging from the current situation, SuperVision's high-end smart driving solution first broke out from the active and highly receptive Chinese market, and has yet to be promoted in the U.S. and European markets. This shows that China has become the most important market for autonomous vehicle technology. However, so far, SuperVision has only captured the hearts of two Chinese automakers, Geely and FAW. Most other manufacturers have already chosen Nvidia, and it is difficult to turn the ship around and choose Mobileye. The road ahead is still difficult.

These ADAS solutions are driven by Mobileye's EyeQ chip, so Mobileye is also improving the computing power of the chip itself. At this year's CES, Mobileye announced its latest EyeQ7 series of chips, 5nm, 67TOPS. At present, its highest performance is the EyeQ Ultra chip, which integrates the performance of 10 EyeQ5s in one package with a computing power of 176TOPS. It is expected to achieve full automotive-grade mass production by 2025. But even so, there is a bit of a gap compared to NVIDIA's Orin with 254 TOPS, let alone Thor which is eight times more powerful than Orin.

There is a saying that although Mobileye is difficult to enter the Chinese automotive industry, it is still highly recognized in Western markets. As the saying goes, the east is not bright, but the west is bright. The shipment volume of SuperVision in 2023 is slightly more than 100,000 units. Compared with 1 model in production at the beginning of the year and 9 models in future production, there are 4 models in production by the end of the year, and the total number of models in future production is about 30.

On March 20, 2024, Volkswagen also strengthened its cooperation with Mobileye, which added to Mobileye's capital increase. The two parties will cooperate on three levels of technology: hands-free, visual driving; hands-free, eyes-free systems and fully autonomous vehicles, which seems to be relatively far-reaching. In the future, the Volkswagen Group's Audi, Bentley, Lamborghini and Porsche brands will use these technologies to quickly introduce new high-end driving features into their powertrain-type model portfolios. However, CARIAD, a software company owned by Volkswagen, has established a joint venture with Horizon to form a strong tie.

In addition, the first vehicles equipped with Chauffeur have also entered production from Porsche, FAW Group, Mahindra and a large global Western OEM. Mobileye expects Chauffeur sales to reach 600,000 units in the future.

As the global automotive market continues to change and competition intensifies, staying close to the local market has become the only way for major automotive chip suppliers. Especially in the era of software-defined cars, OEMs are increasingly demanding differentiated chips, and chip suppliers need to have a deeper understanding of local market needs to better meet customer needs and provide customized solutions. It can be seen that even traditional European automotive chip giants such as STMicroelectronics, Infineon, and NXP have become increasingly intensive in their deployment and investment in the mainland in the past two years.

On March 10 this year, Mobileye announced that it will conduct key technical verification and testing of advanced products and solutions at the Jiading Technology Testing Center.

Another small thing worth mentioning is that on March 18, 2024, Mobileye announced that it would close its after-sales solutions department and lay off 130 people.

This division is responsible for providing rear-mounted advanced driver assistance systems (ADAS) to vehicles, including the installation of cameras and sensors in vehicles to monitor driving behavior and the surrounding environment. These solutions were early promoters of Mobileye and even rose to become important solutions for automotive safety in Israel. But they have also come to be criticized by most drivers for beeping when they veer out of their lane or approach another vehicle too quickly.

As automakers increasingly integrate ADAS features into new vehicle factory configurations, demand for aftermarket solutions is declining. Additionally, the development of more advanced ADAS features is outpacing existing rear-mounted solutions to keep up. The segment's revenue has declined significantly, to about $40 million annually, and has not contributed positively to Mobileye's profitability in recent years.

By closing this unit, Mobileye may be able to free up resources and devote more energy and funds to the research and development and promotion of advanced autonomous driving technology.

China's huge automotive market demand has attracted the attention of global chip suppliers. Competition among smart driving chip suppliers will continue to be fierce, and the market will usher in more changes and innovations. Shopping malls are like battlefields. In the era of technological change, the fast fish often eat the slow fish. If Mobileye cannot speed up its pace, it will only struggle in the Chinese market.

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