The main factor to drive the demand is the proliferation of electronic content in vehicles aiming at reducing human errors as well as the increasing number of safety features such as radars, ultra sonic sensors and multiplexing with all of them requiring increasing amounts of processing power and intelligence, the market research company says.

"After a complete industry makeover, the market for automotive microcontrollers expects to witness tremendous growth over the next years primarily due to the growth of end-user markets and expanding applications of integrated circuits in automobiles," predicts Frost & Sullivan Senior Research Analyst Bonnie Varghese. The study forecasts the market to grow from $5.83 billion in 2006 to $9.52 billion in 2010.

A source for additional microcontroller demand will be the rise of hybrid and electric vehicles, the study finds. Increasing car sales especially in Asia also will make a contribution to drive the microcontroller market.

Another reason for growing electronic automotive content is the necessity to increase fuel efficiency while at the same time reducing emissions. In order to achieve these goals, the industry increasingly relies on electronic solutions. In this segment, Europe in particular will generate substantial revenues due to early technological acceptance and government regulations.

However, strong quality requirements and certifications will continue to pose challenges for vendors in the microcontroller market. In order to master these challenges, Frost & Sullivan recommends the microcontroller manufacturers to focus on core competencies. "Rather than diverting attention to various technologies and protocols, manufacturers can concentrate on fewer technologies which will likely prove more advantageous for marketing and business", said Varghese. They also should match performance requirements with the costs of their products, she said.

The market researcher also has a recommendation for automotive OEMs. According to the study, they can increase their revenues by working with semiconductor vendors to clearly identify their difficulties. This collaboration will help to reduce the gap between expectations and actual solution provided, Frost & Sullivan says.