Practical Chip Design

Tata Motors is expected to announce its long-awaited $2500 People’s Car this Thursday. Many analysts are predicting that the car, designed from a clean sheet of paper for extreme low cost and for user needs in the developing world, will be to developing countries in this decade what the Model T was to a developing USA a century ago. But some are also saying that the cost-cutting measures Tata is putting into the design will spread like a virus through the rest of an auto industry pressed on every side by saturating mid-range markets, expensive credit, and recession. That is news SoC design teams need to read twice.

The reason is that a lot of business plans for chip companies have at their foundation strong growth in complex SoCs for the automotive market: whether for infotainment, active safety, or vehicle management. All of that electronics is supposed to add substantial cost to a car every year, and it’s supposed to provide SoC developers with a growing, high-margin market for sophisticated designs on which they can differentiate themselves.

But Tata is going in exactly the opposite direction. As a New York Times article points out, Tata will sell it’s entire People’s Car for about the price of the optional DVD player on a Lexus. In fact, one of the things Tata’s designers have systematically stripped from their design is electronics content. High-end electronics content was a non-starter.

That’s not to say that you can build a better car without electronics, although some enthusiasts would embrace that argument after less than one beer. It’s to say you can build a good-enough car for the developing-world driver—a car that will far exceed his or her experience with a light motorcycle, for instance—without electronics. But why is this relevant to our mid-range automotive market in the industrialized world?

Two reasons, neither of which involves masses of Prius owners switching to People’s Cars. First, that developing-world market is likely to be far faster-growing than the Prius market. Other vendors are already watching, or in some cases actively developing competition for, the People’s Car. If it takes off, this segment could dominate design starts in the auto industry, considerably cooling the manufacturers’ appetite for new high-end or mid-range designs laden with cost and aimed at weak Western markets.