The semiconductor market supplying hybrid powertrains will increase from $384 million in 2008 to $1.3 billion in 2015, mainly in power devices but also in analog microcontrollers and sensors, according to Chris Webber, vice president of Strategy Analytics’ Global Automotive Practice. “Electrification in powertrains will deliver significant opportunities for semiconductor vendors,” he said.

The Strategy Analytics Automotive Electronics Service report, “Hybrid Vehicle Market Forecast: Environmental and Fuel Cost Concerns Stimulate Demand,” predicts 38% annual growth for full and mild hybrid powertrains from 2007 to 2012. The report concludes that the more cost-effective mild hybrid solution will see faster growth (79%) mainly from Honda and European OEMs, although market leader Toyota will have a head start.

The higher cost to consumers and the limitations imposed by current battery technology are holding back hybrid deployment, according to Strategy Analytics automotive electronics analyst Kevin Mak. “Despite their enthusiasm for environmentally friendly vehicles, consumers are anxious not to pay higher prices during this global recession,” Mak said. In response to this, OEMs are developing ways of reducing the break-even period to repay the hybrid premium and thus make hybrid purchases worthwhile. “Tougher emission standards will also drive hybrid development -- even European carmakers will be involved despite good progress in reducing CO2 using diesel technology.”