2025-11-20 00:19

Tags: [[business]], [[automotive-trends]]

European Automotive Market Overview - KES 2025

Comprehensive Analysis for Asian Automotive Software Companies

Based on presentations from:

BMW Group (Hyun Jung-jo)
Infineon Technologies (Hans Adlkofer)
ZVEI (Clemens Otte)
Bayern Innovativ (Dr. Malte Kohring)
STMicroelectronics and others

Event: Korea-Europe Semiconductor Summit 2025, Munich, Germany Date: November 18, 2025

Executive Summary

The European automotive market is undergoing a fundamental transformation driven by electrification, software-defined vehicles, and geopolitical pressures. European OEMs and Tier 1 suppliers are restructuring their supply chains through “directed buy” models, seeking greater control over semiconductor sourcing and software development. This creates significant opportunities for Asian automotive software companies, particularly Korean suppliers, who currently represent only 4% of BMW’s €91.8 billion purchasing volume.

Key Market Indicators:

European EV adoption: 17.4% in 2024, targeting 25-30% by 2027-2028
Electrified vehicles (including PHEVs): Already 25% of sales
800V architecture becoming standard for fast charging
Zonal architecture replacing distributed ECU systems
Software-defined vehicles enabling hardware-software decoupling

1. AUTOMOTIVE SOFTWARE TRENDS

1.1 Software-Defined Vehicle Architecture

BMW’s New Architecture Strategy:

BMW is transitioning to a “Neue Klasse” platform with four “super brain” layers:

Core Brain - Central computing power
Panoramic iDrive - User interface and digital cockpit experience
Autonomous Driving - Self-driving capabilities
Heart of Joy - Driving dynamics and emotional connection

Key Technical Evolution:

From: Distributed ECU architecture (100+ ECUs per vehicle)
To: Zonal architecture with centralized computing
Middleware layer supporting: OTA updates, cybersecurity, AI platform, data management

Critical Insight for Asian SW Companies:

“Zonal architecture with centralized computing power is the key for self-driving vehicles and an innovation driver for the semiconductor industry.” - BMW

1.2 IVI System Evolution

Current Generation (2023-2025):

Linux-based NGU22 systems: Wi-Fi 6, 250 Mbit/s
Android-based IDC23/IDC Evo: Wi-Fi 6E (6 GHz band), 800 Mbit/s

Next Generation (SOP 2030):

Must predict technology requirements until 2040
Focus on resilience and long-term premium positioning
98% of BMW customers connect smartphones - seamless integration critical

Digital Ecosystem Components:

Entertainment systems for passengers and drivers
Multiple touchscreens with personalization
Head-up displays
Health check functions
Consumer electronics device compatibility

1.3 Connectivity Architecture

Two-ECU Approach:

Head Unit: In-cabin connectivity (entertainment, smartphone integration)
Telematics: External connectivity (cloud services, V2X infrastructure)

Technology Roadmap:

Wi-Fi 6E already in production (IDC Evo)
Planning for Wi-Fi 7 and beyond for 2030 SOP
Bluetooth, 5G modems, GPS integration
Premium device concepts (wearables, health monitors, game controllers)

2. SEMICONDUCTOR DIRECTED BUY MODEL

2.1 Paradigm Shift in Supply Chain

Traditional Model Problems:

High software development costs (not reusable)
Quality issues not under OEM control
Long reaction time for defect management through Tier 1
Lack of transparency with semiconductor suppliers
Semiconductor shortage vulnerabilities (COVID-19 crisis)

New Directed Buy Model:

┌─────────┐    Direct Collaboration    ┌──────────────┐
│   BMW   │ ←────────────────────────→ │ Semiconductor│
│   OEM   │    Direct Contracts        │  Suppliers   │
└────┬────┘                             └──────────────┘
     │                                          │
     │        System Integration               │
     │              & ECU                       │
     └──────────→ Tier 1 ←─────────────────────┘

Key Benefits:

Direct technical collaboration with semiconductor suppliers
Software ownership transferred from Tier 1 to BMW
Direct influence on chipset design and future roadmaps
Faster reaction time for defect management
Cost savings through software reusability
Supply chain resilience through direct relationships

Critical Success Factor:

“Three-party collaboration (OEM-Semiconductor-Tier1) is the key for successful implementation” - BMW

2.2 Software Stack Responsibility Changes

Wireless Service Platform Example:

Layer	Previous (Tier 1)	Future (Directed Buy)
Application	BMW	BMW
Middleware	Tier 1	BMW In-house
Drivers	Tier 1	BMW In-house
Hardware Abstraction	Tier 1	BMW In-house
Physical Layer	Tier 1/Tier 2	Direct Semiconductor

Note: Tier 1 still provides complete ECU and overall Android system integration

2.3 Opportunities for Korean Suppliers

Current State:

Korean suppliers: 4% of BMW’s €91.8B purchasing volume
Korea is BMW’s 5th largest market globally (3.5%)
Korea is 3rd largest market for 5/7 Series segments (after China, USA)
BMW actively seeking to increase Korean supplier partnerships

Target Areas:

Wireless connectivity modules (Wi-Fi, Bluetooth, 5G)
Software development (middleware, drivers, HAL)
Semiconductor design collaboration
System integration services

3. SEMICONDUCTOR TECHNOLOGY TRENDS

3.1 Power Semiconductor Evolution

Infineon’s Three-Technology Strategy:

The automotive industry requires three distinct power semiconductor technologies optimized for different use cases:

Silicon-based IGBT

Applications: Entry-level EVs, low-cost powertrains
Characteristics: Mature technology, proven reliability
Voltage: 400V systems
Frequency: 1kHz-10kHz
Cost: Lowest per kW
Market Position: Declining but still significant workhorse

Silicon Carbide (SiC)

Applications: Long-range EVs, highway driving, premium vehicles
Characteristics: Superior efficiency, especially in partial load
Voltage: 400V and 800V systems (enabling fast charging)
Frequency: 10kHz-300kHz
Efficiency: Optimal for WLTP test cycles and highway “steady sailing”
Market Position: Becoming dominant technology - main choice for next 5-10 years
Key Advantage: 10-15% better range through improved partial load efficiency

Gallium Nitride (GaN)

Applications: Onboard chargers, DC-DC converters, multi-level inverters
Characteristics: Ultra-compact, high switching frequency
Frequency: 100kHz-10MHz
Power Density: 22kW in “shoebox” form factor
Voltage: 100V-11kV (in multi-level topologies)
Market Position: Emerging, fastest implementation in China
Unique Advantage: Extremely compact design, ideal for space-constrained applications

3.2 Five Key Technology Selection Factors

Infineon evaluates power semiconductors based on:

Temperature: Maximum operating temperature capability
Voltage level: 400V vs 800V system compatibility
Switching losses: Efficiency at different operating points
Integration: Physical size and packaging efficiency
Cost: System-level cost optimization

“None of the technologies is best in all classes. We make it dependent on what is your use case.” - Infineon

3.3 Hybrid Technology Approaches

Fusion Switch Technology:

Combines SiC + IGBT in one module
Cost-effective solution approaching pure SiC performance
Balances cost and efficiency

Multi-level Inverters:

3-level topologies enable GaN advantages at high voltage
Working with Korean companies on implementation
China leading in deployment speed

3.4 High Voltage System Architecture

Critical Applications Moving to High Voltage:

Traction inverters (50kW-300kW)
DC-DC converters
Onboard chargers (11kW-22kW)
Climate compressors
HVAC systems
Chassis applications

800V Architecture Benefits:

Fast charging: 10-15 minutes vs 30-60 minutes
Reduced cable weight and complexity
Improved system efficiency
Standard for premium EVs

3.5 Market Growth Projections

Power Semiconductor Market (2023-2030):

Silicon IGBT: Declining from majority to ~40% market share
Silicon Carbide: Growing to dominant ~50%+ market share
GaN: Steady growth in niche applications (OBC, DC-DC)

Electrification Forecast:

By 2030: ~50% of vehicles electrified globally
Strong growth continues despite recent slowdown
Diverse powertrain mix (BEV, PHEV, MHEV, REEV, FCEV)

3.6 Beyond Automotive: AI Server Market

Infineon’s AI Data Center Focus:

Current: 48V systems insufficient for AI power demands
Transition: Moving to 400V/800V with SiC
Power density: 125kW per rack today → 250kW soon → 1 megawatt by 2028
Technology: SiC + GaN combination for voltage conversion
Challenge: Converting 400-800V down to 0.8V at the chip
Infineon is choice supplier for major AI infrastructure providers

4. EUROPEAN POLICY LANDSCAPE

4.1 European Chips Act Evolution

Chips Act 1.0 (2023) - Crisis Response:

Three Pillars:

Pillar 1: Strengthen technological capabilities (pilot lines, design infrastructure, competence centers)
Pillar 2: Build production capacity (first-of-a-kind projects like TSMC, ESMC)
Pillar 3: Crisis mechanism and monitoring for supply chain resilience

Achievements:

TSMC Dresden fab construction (despite Intel/Wolfspeed setbacks)
€43B+ investment commitments
New partnerships with leading semiconductor companies

Limitations:

20% global production target not achievable under current conditions
Study shows: Even with Intel/Wolfspeed, Europe would maintain only 8% by 2045
Without additional investment: Would decline to 6%
Focus too narrow on front-end fabs
Fragmented governance across member states

4.2 Chips Act 2.0 - Strategic Framework (Early 2026)

ZVEI’s Key Priority Recommendations:

1. Clearer Governance

Problem: Fragmented decisions across member states → long approval cycles
Solution: Centralized coordination, new dedicated budget for strategic projects
Goal: Faster decision-making, aligned European strategy

2. Stronger Integration of User Industries

Automotive, industrial equipment, energy, healthcare dependencies
User industries must define technology priorities
Ensure long-term supply security for critical applications
Focus on “demand-driven” rather than “supply-driven” strategy

3. Broader “First-of-a-Kind” Definition

Current: Mainly front-end fabs Needed:

Advanced packaging and substrates
Consumable materials and specialty chemicals
System integration capabilities
Equipment manufacturing

4. Much Stronger International Partnerships

Recognition: “No country can cover the full supply chain”
Target: Deeper cooperation with trusted partners like Korea
Areas: Research, talent development, economic security
Korea explicitly named as strategic partner in German strategy

4.3 Germany’s National Microelectronics Strategy (September 2025)

Three Guiding Principles:

Developing strengths
Exploring new opportunities
Increasing resilience

Six Strategic Focus Areas:

New chip types and architectures (industrial, automotive, energy, security)
Leading-edge capabilities (manufacturing, design, pilot lines, system integration)
Stable supply for European user industries
Upstream value chain (equipment, materials, specialty chemicals)
Strong talent base development
Coordinated action across all actors

International Cooperation:

“Korea explicitly included as trusted partner in semiconductor research, talent development, and economic security” - German Ministry

4.4 Critical Vulnerabilities

Printed Circuit Boards (PCBs):

Europe’s market share: Only 2.2%
China’s market share: 60%
Security risk: Can embed chips in PCBs
Strategic assessment: “If we do not act here, we lose strategic control”

Other Critical Gaps:

Advanced packaging capabilities
Algorithm development
Electronic manufacturing systems

5. BAVARIAN ECOSYSTEM OVERVIEW

5.1 Bavaria as European Semiconductor Hub

Economic Powerhouse:

13.3 million inhabitants
€770 billion GDP
Largest federal state in Germany
Leader in German patent registrations

Key Export Sectors (All semiconductor-dependent):

Automotive
Electronics
Machinery
Chemicals

5.2 Bavarian Chips Alliance

Five Pillars of Bavarian Semiconductor Initiative:

Talents: Strengthen skilled workforce
Funding Programs: Bavarian Chip Design Center
Invest in Bavaria: Settlement support
Bavarian Chips Alliance: Expert network
Settlement Support: Infrastructure and ecosystem

Full Supply Chain Coverage:

Suppliers (materials, equipment)
Designers (Apple, etc.)
Manufacturing (front-end and back-end)
Science (universities, research institutions)
Electronics, PCB, hardware
Software and product integration
Application industries (automotive, etc.)

Major Players in Bavaria:

Infineon: Headquarters in Munich
Apple: Multi-billion chip design center in Munich
OpenAI: Opened offices in Munich (2025)
Global companies: BMW, Audi, Siemens, Airbus, Microsoft, Amazon, Google

5.3 Three Powerful Ecosystems

1. Bavarian Chips Alliance

Focus: Semiconductor supply chain
Activities: Chip design, supply chain workshops, AI applications, manufacturing sustainability

2. Thinknet 6G

Focus: Communication technologies
Structure: Think tank + networking
Hubs: Munich and Erlangen-Nuremberg
International partnerships beyond Bavaria

3. Thinknet Quantum Technology

Focus: Future computing technologies
Complements semiconductor ecosystem

5.4 Korea-Bavaria Partnership

Current Relations:

4,700+ Korean citizens in Bavaria
800+ Korean students
Strong existing partnerships with KOTRA

Meeting Points:

SEMICON Europe 2025 (Munich, this week)
SEMICON Korea 2026

Partnership Invitation:

“Let’s grow together. Bavaria is what we love. Semiconductors are what we know.” - Dr. Malte Kohring, Bayern Innovativ

6. GEOPOLITICAL CHALLENGES

6.1 US-China Technology Tensions

US Sanctions Impact (March 2025):

Scope:

Affects: Wi-Fi, Bluetooth, 5G modems, GPS, RF signals
Does NOT affect: Processors, power management, sensors, other semiconductors

Restricted Sources:

Products manufactured in China
Software implemented in China
Software developed by Chinese nationals (regardless of location)
Also applies to: Russia, North Korea, Iran, Cuba

BMW’s Response Strategy:

Current: Using wireless chipsets from Western suppliers
Future (SOP 2030): Preparing “China variant” for vehicles sold in China
Approach: Building relationships with Chinese local wireless suppliers as backup
Flexibility: Market-specific configurations based on destination

Cost Impact:

“Overhead and extra development cost without delivering tangible customer benefits. But we must prepare in advance.” - BMW

6.2 Supply Chain Resilience Requirements

De-sourcing and Dual-sourcing:

No longer optional - now mandatory
Multiple suppliers for critical components
Geographic diversification
Technology sovereignty considerations

Key Lessons from COVID-19:

€102 billion GDP impact in Germany alone (automotive + industrial)
Hidden costs: Bullwhip effects, emergency task forces
Wake-up call: “Without semiconductors, Europe comes to a standstill”

Korea-Germany Shared Reality:

Both economies rely on complex global supply chains
Both learned from concentration risks (Korea: materials, Germany: chips)
Diversification is shared priority
Goal: Multiple reliable sourcing options, not de-globalization

7. OPPORTUNITIES FOR ASIAN AUTOMOTIVE SW COMPANIES

7.1 Immediate Market Entry Points

1. Wireless Connectivity Software

Middleware development for Wi-Fi 6E/7
Bluetooth stack implementation
5G modem integration software
GPS/positioning software
Android automotive platform expertise

2. Directed Buy Support Services

Semiconductor selection consulting
Software-hardware co-design
Integration testing services
Quality assurance for direct supply model
Supply chain management software

3. IVI System Development

Digital cockpit applications
Smartphone integration solutions
Health monitoring software
Entertainment system development
Personalization algorithms

4. Cybersecurity Solutions

OTA update security
Secure boot implementation
Intrusion detection systems
Data encryption services
Compliance with European regulations

7.2 Strategic Partnership Models

Three-Party Collaboration Opportunities:

Korean SW Company Roles:
┌────────────────────────────────────────────────┐
│                                                │
│  1. OEM Direct Partnership                     │
│     - Software development contracts           │
│     - System integration services              │
│     - Long-term platform collaboration         │
│                                                │
│  2. Semiconductor Vendor Partnership           │
│     - Software enablement for chips            │
│     - Reference design development             │
│     - Joint customer support                   │
│                                                │
│  3. Tier 1 Collaboration                       │
│     - ECU software development                 │
│     - Integration services                     │
│     - Testing and validation                   │
│                                                │
└────────────────────────────────────────────────┘

7.3 Technology Areas with High Demand

Power Electronics Software:

Battery management systems (BMS)
Inverter control algorithms
Thermal management software
Energy optimization algorithms
800V system controllers

Zonal Architecture Software:

Zone controller software
Gateway implementations
Service-oriented architecture (SOA)
Middleware for distributed computing
Real-time operating systems (RTOS)

AUTOSAR and Middleware:

AUTOSAR Classic/Adaptive implementation
Middleware platform development
Communication stacks (CAN, Ethernet, etc.)
Diagnostic services
Configuration tools

7.4 Competitive Advantages for Korean Companies

1. Technology Leadership:

Strong semiconductor ecosystem in Korea
Advanced memory technologies
5G leadership
Display and HMI expertise

2. Automotive Heritage:

Hyundai/Kia global success
Tier 1 suppliers (Hyundai Mobis, LG, Samsung)
Understanding of automotive quality requirements
Cost-competitive development

3. Cultural and Business Alignment:

German companies value Korean work ethic and precision
Existing strong bilateral trade relationships
Geographic proximity to China while maintaining Western partnerships
Quick decision-making culture

4. Government Support:

Korea-Europe research partnerships (Horizon Europe)
KOTRA support network
Government R&D funding programs
Strategic technology initiatives

7.5 Market Entry Barriers and Mitigation

Barriers:

Automotive qualification requirements
- Mitigation: Partner with established Tier 1, pursue IATF 16949
Language and cultural differences
- Mitigation: Hire local team in Germany, use Bavaria offices
Long development cycles (5-10 years)
- Mitigation: Focus on software services first, build track record
Established relationships (96% European suppliers)
- Mitigation: Leverage directed buy model, offer differentiation
Regulatory compliance (UNECE, EU regulations)
- Mitigation: Partner with certification experts, invest in compliance team

7.6 Recommended Market Entry Strategy

Phase 1: Establish Presence (Year 1-2)

Open office in Munich/Bavaria area
Join Bavarian Chips Alliance as partner
Attend SEMICON Europe, automotive conferences
Hire local business development team
Build relationships with KOTRA Munich

Phase 2: Pilot Projects (Year 2-3)

Secure small software development contracts
Prove capability in non-critical systems
Build reference customers
Demonstrate cost and quality competitiveness
Obtain relevant certifications

Phase 3: Scale Partnership (Year 3-5)

Expand to critical system development
Multi-year framework agreements
Joint development programs
Participate in directed buy programs
Establish as tier-preferred supplier

8. KEY TAKEAWAYS AND RECOMMENDATIONS

8.1 Critical Market Insights

1. Software-Defined Vehicles Are Not Optional

Every major OEM is transitioning to SDV architecture
Software reusability is becoming mandatory
Traditional Tier 1 model is being disrupted
Opportunity window for new entrants is NOW

2. Directed Buy Model Creates New Access Points

OEMs want direct relationships with capable software providers
Three-party collaboration is the new normal
Korean companies have explicit invitation to participate
Current 4% share of BMW spending shows huge growth potential

3. Power Semiconductor Software Is Critical

Three technologies (IGBT, SiC, GaN) require different software approaches
800V systems require new control algorithms
Efficiency optimization through software is key differentiator
Server/AI market using same technologies - potential crossover

4. Geopolitical Factors Create Urgency

US-China tensions drive dual-sourcing requirements
European desire to reduce Asian dependency
Korea positioned as “trusted partner” by Germany
Supply chain resilience now strategic priority

5. European Policy Strongly Supports International Partnership

Chips Act 2.0 explicitly prioritizes Korea collaboration
Government funding available for joint projects
Horizon Europe now includes Korea
Strong political will to diversify supply chains

8.2 Strategic Recommendations

For Asian Automotive Software Companies:

IMMEDIATE ACTIONS (Next 6 months):

Establish contact with BMW, Infineon, other OEMs through KOTRA
Join Bavarian Chips Alliance or similar networks
Attend SEMICON Europe 2025 (this week)
Assess internal capabilities against European requirements
Identify 2-3 target technology areas for focus

SHORT-TERM (6-18 months):

Open liaison office in Munich/Bavaria region
Hire local business development and technical staff
Begin certification process (IATF 16949, ISO 26262)
Secure pilot project with Tier 1 or OEM
Build partnership with European semiconductor vendor

MEDIUM-TERM (18-36 months):

Expand development capacity in Europe
Target directed buy opportunities with major OEMs
Develop reference designs for key applications
Apply for Horizon Europe funding for joint projects
Establish as qualified supplier for 2028-2030 platforms

LONG-TERM (3-5 years):

Become preferred partner for software-defined vehicle platforms
Multi-OEM customer base
Participate in next-generation technology development
Joint ventures or deeper partnerships with European players
Thought leadership in automotive software innovation

8.3 Critical Success Factors

1. Quality and Reliability

Automotive quality standards are non-negotiable
Functional safety (ISO 26262) is mandatory
Cybersecurity (ISO 21434) increasingly critical
Testing and validation must be rigorous

2. Long-term Commitment

Automotive relationships take years to build
Must commit to 10+ year support lifecycle
Investment required before revenue
Patient capital essential

3. Cultural Adaptation

German business culture values precision and process
Documentation and traceability critical
Direct communication preferred
Reliability and punctuality essential

4. Technical Excellence

Must demonstrate deep expertise in target areas
Innovation valued but maturity required
System understanding as important as coding
Continuous learning and adaptation necessary

5. Strategic Positioning

Position as “trusted partner” not just supplier
Emphasize complementary strengths (Korea + Germany)
Leverage geopolitical positioning carefully
Build reputation through consistent delivery

9. CONTACT INFORMATION AND RESOURCES

Key Organizations for Partnership

Bavarian Chips Alliance Bayern Innovativ GmbH Dr. Malte Kohring, Head of Digitalization Division Munich, Germany (Contact via KOTRA Munich)

KOTRA Munich Office Primary liaison for Korean-German semiconductor partnerships Supports business development and partnership facilitation

ZVEI (German Electrical and Electronic Manufacturers’ Association) Clemens Otte, Director of Microelectronics Policy and industry coordination

BMW Group Hyun Jung-jo (John), Tech Lead, Wireless Connectivity & Semiconductor Portfolio Direct contact for connectivity software opportunities

Infineon Technologies AG Hans Adlkofer, SVP Automotive Systems Power semiconductor and system integration partnerships

Upcoming Events

SEMICON Europe 2025 Location: Munich, Germany Date: November 2025 (this week) Focus: Meet European semiconductor ecosystem

SEMICON Korea 2026 Focus: Strengthen Korea-Europe partnerships

Further Research Resources

European Chips Act documentation (ec.europa.eu)
German Microelectronics Strategy (BMWK)
BMW supplier portal and qualification requirements
Infineon automotive partner program
Horizon Europe Korea partnership program
ZVEI position papers on semiconductor policy

CONCLUSION

The European automotive market presents unprecedented opportunities for Asian automotive software companies, particularly those from Korea. The convergence of technological transformation (SDV, electrification), supply chain restructuring (directed buy), and geopolitical factors (trusted partner status) creates a unique window of opportunity.

The key message from all presentations is clear: European OEMs and semiconductor companies are actively seeking international partnerships, explicitly naming Korea as a strategic priority. The current 4% Korean supplier share of BMW’s €91.8B purchasing volume demonstrates enormous growth potential.

Success requires:

Immediate action to establish presence and relationships
Long-term commitment to quality and partnership
Technical excellence in high-demand areas (connectivity, power electronics, SDV)
Cultural sensitivity and adaptation
Strategic positioning as complementary partner, not competitor

The opportunity is real, substantial, and time-sensitive. European OEMs are making platform decisions NOW for 2028-2030 production. Companies that establish themselves as capable, reliable partners in the next 18-24 months will benefit from multi-year, high-value relationships throughout the next decade.

The door is open. The invitation is explicit. The time to act is now.

Document compiled from presentations at Korea-Europe Semiconductor Summit 2025
For Asian automotive software companies seeking European market opportunities
November 2025

References

https://claude.ai/chat/a71f86b4-761e-4c6d-b3f3-3968ed4cb41b