Qualcomm2 Aug 2022 19:05
How are your relationships with OEMs on technology development for electrified and autonomous driving?
The business model with automakers has evolved quite a bit as well. One thing that OEMs have realised in the last 5-7 years — as the competition really heightened for them and as electrification became important — is that they started to compete with a new set of players which didn't really have the legacy or the burden of having to run a combustion engine business.
So, a lot of the new players started off with a clean sheet design, and a software-first approach. What became very apparent to automakers was that they needed to have technology partners that they could rely on and build long-term relationships with, such that they would not have to think as much about how to modernise the platforms that they are building as opposed to the traditional Tier 1-based model, which calls for a new design every three years.
Today, most of our prized relationships with automakers are directly with them. Of course, we work with Tier 1s because even they have a very important role to play, but we work in a triangular relationship where the OEM is at the top and Qualcomm, as well as the Tier 1 work together, but directly with the OEM to be able to make these things happen.
I think it has worked quite well, because what we are seeing is that automakers are bringing in-house, a lot of capabilities that they were relying on Tier 1s for. This allows them to invest in a platform that lives much more than one generation.
It makes a huge difference because we too are able to partner with the automakers on a multi-generational basis and think about continuity in our designs, as we now focus on selling our entire digital chassis, as opposed to looking at the opportunity component by component.
Will this proximity of technology providers to OEMs pose a risk to the existing Tier 1 ecosystem?
If the car is modernising and at a pace that it has to keep up with the smartphone, one needs to have access to partners that can move at that pace. And the way that I would describe it is that the role of the Tier 1s is to really be a very complex system integrator, which they still are. While in the past, automakers used to rely on Tier 1 suppliers for bringing in differentiation, today they are experimenting with potential business models around differentiation and finding more residual value once the vehicle is sold.
This mandates the automaker to be directly involved in the conversation, as opposed to leaving it to a very traditional ecosystem. And I think Tier 1 suppliers are still going to be very relevant in areas where it doesn't make sense for the automaker to change anything.
However, in cases where automakers are looking to own the intellectual property, they would work with the technology partner directly, which is really true for any ecosystem. I think it's just a sign of the times.
https://www.autocarpro.in/interview/nakul-duggal-%E2%
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