Japanese chipmaker Renesas said on Tuesday it will buy SAN Jose-based chipmaker IDT for $6.7 billion as it prepares to enter the autonomous driving sector, foreign media reported.Copy the code

IDT is not known to provide chips for cars, but it has sensors and wireless technology that could help Renesas break into the market for chips for self-driving cars.

“Renesas and IDT have complementary technologies,” said Jim Handy, an analyst with Objective Analysis. “Renesas can push IDT into automotive products, and IDT can help Renesas handle extremely high frequency, low latency digital electronics.”

Renesas is buying IDT because chip giants like Intel, Nvidia and Qualcomm are taking a growing share of the auto market.Copy the code

With sales levels of smartphones and laptops falling, semiconductor companies are looking to the “Internet of things” as the next big growth market, and cars could be one of the most lucrative.

Last year, Intel bought Mobileye, which makes cameras and chips for cars, for $15.3 billion. In 2016, Qualcomm tried to buy NXP, the world’s largest automotive chip maker, for $44 billion, but the deal collapsed due to regulatory issues in China.

“The auto market is becoming the new battleground for the semiconductor industry,” Handy said. “Companies want to be invincible in the future, and that’s driving them to do mergers and acquisitions.”

More and more Internet connectivity is driving demand for more chips in cars. But industry analyst Linley Gwennap, founder of the Linley Group, said: "No one company can sell all the different chips that power this new vehicle."Copy the code

Gwennap divides the automotive semiconductor market into four categories: first, microcontrollers for traditional automotive functions, such as emissions control and anti-lock braking systems, where NXP and Renesas are the market leaders; Second are wireless modem chips that connect cars to the Internet, a market dominated by Intel and Qualcomm. Then there are two autonomous chips: the camera chip, which gives the car its “eyes”, and the sensor chip, which gives the car its “brain”. Mobileye is a major player in sensor chips, while Intel and Nvidia provide powered AI features for companies like Waymo and Tesla.

Meanwhile, AI-chip startups like Mythic are on the rise, seeking their own self-driving car market.Copy the code

“It used to be very difficult for new companies to enter the auto industry because automakers had established strong relationships with companies like NXP and Renesas,” Gwennap said. “Autonomous vehicles create opportunities for new companies to integrate.” Because other companies like Tesla want their own chips.

Renesas’s acquisition of IDT shows that traditional car chip makers will not be content to stick to their existing market. Gwennap expects NXP and Renesas to acquire more companies over the next few years, especially AI-related startups.

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