Comprehensive market overview tailored to provide context for FESCARO

Based on the presentations from the Korea-Europe Semiconductor Summit (KES) 2025, particularly highlighting insights from BMW, Infineon, ZVEI, and Bayern Innovativ, here is a comprehensive market overview tailored to provide context for FESCARO.

Executive Summary: The European Shift to Resilience and Direct Control

The European automotive landscape is undergoing a fundamental structural shift driven by three factors: Technological Sovereignty (reducing reliance on China), Architectural Centralization (Zonal Architecture/SDV), and Supply Chain Transparency (Directed Buy).

For a company like FESCARO, the environment is favorable. European OEMs and Tier 1s are actively seeking “trusted partners” outside of China to fill critical gaps in software ownership, cybersecurity, and resilient hardware supply.

1. Macro-Trends: Geopolitics & Semiconductor Sovereignty

According to Clemens Otte (ZVEI) and Dr. Malte Kohring (Bayern Innovativ), Europe is moving from a mindset of pure efficiency to one of resilience.

The “Wake-Up Call”: The pandemic-era chip shortage cost Germany alone €102 billion. The political stance has shifted from “Why make it here when China is cheaper?” to “We must control our supply chain.”
Gaps in the Ecosystem: While Europe is strong in sensors, power semiconductors (Infineon), and equipment (ASML), it has critical weaknesses in Algorithms, Advanced Packaging, and PCBs.
The “China Risk” in Wireless: BMW (Hyun Jung-jo) explicitly stated that starting March 2025, vehicles sold in the U.S. cannot contain wireless communication products (Wi-Fi, Bluetooth, 5G, GPS) produced in China or software implemented by Chinese nationals.
- Implication: OEMs are actively dual-sourcing to create “China-free” supply chains for Western markets. This creates a massive opening for Korean companies to replace Chinese suppliers in connectivity and security modules.

2. Automotive Architecture Trends: The Rise of the SDV

BMW and Infineon highlighted a technical migration that directly impacts how security must be implemented.

Zonal Architecture: The industry is moving from distributed ECUs to Zonal Architecture with a Central Computer (“Core Brain”).
- Impact: Security is no longer just about protecting individual endpoints; it is becoming a centralized middleware layer (as shown in BMW’s Neue Klasse stack).
Hardware-Software Decoupling: The “Software-Defined Vehicle” (SDV) requires software that is reusable across different hardware generations.
- Infineon’s View: Hardware must support this by being flexible. They are offering a “System Solution” (MCU + Gate Driver + Sensors + Security) rather than just components.
Connectivity as a Premium Feature: BMW noted that 98% of customers connect their smartphones. The vehicle is becoming another device in the digital ecosystem, expanding the attack surface for cybersecurity threats.

3. Sourcing & Business Model Transformation: “Directed Buy”

Perhaps the most critical insight for FESCARO is the change in how OEMs buy technology, presented by BMW.

The Old Model (Tier 1 Centric): The OEM buys a “Blackbox” ECU from a Tier 1. The Tier 1 selects the chip and writes the software.
- Problems: Lack of transparency, poor software reusability, inability to control supply during shortages.
The New Model (Directed Buy):
1. Direct Collaboration: BMW negotiates directly with semiconductor and software vendors (Tier 2).
2. Software Ownership: BMW demands ownership of the software stack to ensure reusability.
3. Tier 1 as Integrator: The Tier 1 still builds the physical ECU and handles logistics, but they act more as an integrator of choices made by the OEM.
  - Implication: FESCARO does not necessarily need to sell to Continental or Bosch to get into BMW; they can pitch directly to the OEM to become a “nominated” solution that Tier 1s must use.

4. Semiconductor Trends: Efficiency & Cost

Infineon (Hans Adlkofer) provided deep insights into the physical layer that FESCARO’s software must protect.

The “Multi-Path” Reality: The market will not be 100% BEV immediately. OEMs will maintain a portfolio of ICE, Hybrid, and BEV. Security solutions must work across this diverse fleet.
System Cost is King: OEMs are obsessed with reducing the system cost (not just component cost) to make EVs profitable.
- Technology Mix: High-end EVs (800V) will use Silicon Carbide (SiC). Entry-level or hybrid vehicles will use hybrid switches (SiC + Silicon IGBT) or Gallium Nitride (GaN) for onboard chargers to save space and cost.

5. Cultural Characteristics of European OEMs & Tier 1s

To succeed in Europe, understanding the “Bavarian Ecosystem” approach described by Bayern Innovativ is crucial.

Ecosystem over Individualism: Success in Germany is determined by “powerful ecosystems and strategic alliances,” not just a standalone product.
- Action: Joining clusters like the Bavarian Chips Alliance or Thinknet 6G is viewed as a badge of trust and legitimacy.
Consultative Selling: European buyers (like Infineon’s customers) do not want a product sheet; they want a partner who understands the system and advises on the best optimization.
Geo-Vigilance: There is high anxiety regarding geopolitical stability. Being a “Like-Minded Partner” (a term explicitly used for Korea by ZVEI) is a significant competitive advantage over Chinese competitors.
Transparency: The “Blackbox” era is over. OEMs demand full visibility into the software stack, the supply chain of the chips, and the origin of the code.

Summary: The Opportunity Landscape

Feature	Current European Trend	Opportunity for a Korean Firm
Geopolitics	“Derisking” from China; US Sanctions on wireless tech.	Replace Chinese connectivity/security vendors in Western supply chains.
Procurement	Shift to “Directed Buy” (OEM selects chips/SW directly).	Bypass Tier 1 gatekeepers; pitch directly to OEM architecture teams.
Architecture	Zonal Architecture & Central Computing.	Position security as a centralized middleware platform rather than per-ECU patches.
Partnership	Value on Ecosystems and Alliances.	Leverage Korea’s status as a “Horizon Europe” partner; join local clusters (e.g., Bavaria).
Market Share	Korea currently has only 4% of BMW’s purchasing volume.	Massive headroom for growth, especially as a trusted high-tech alternative.

This environment suggests that the market is looking for a transparent, flexible, and geopolitically safe software partner who can work directly with OEMs to secure the next generation of Zonal Architectures.