New Bosch unit targeting software, chips

Heyn ruled out a spinoff of all or part of Bosch’s automotive activities, unlike Continental’s Vitesco powertrain unit. “There is no intent to do a spinoff,” he said, acknowledging that “rumors” had been spread suggesting that.

The growth prospects for Bosch Mobility largely revolve around software, which the supplier says will be a $215 billion market by 2030. He declined to cite specific Bosch figures because it’s not yet clear how to break out revenue directly from software.

Compensation models for software are still evolving, he said.

“Today, there are a multitude of monetization vehicles that are being pursued, because our industry is not yet used to software-only business models,” Heyn said. For example, how should a supplier be paid separately for updates to software that is part of a component system?

“The software portion of our business is certainly on the rise, but what the business model will look like, and which ones will be dominant, remains to be seen and will depend on market requirements,” he said.

Another area where Bosch will look to grow is in semiconductors, where a shortage of automotive-grade chips that started in late 2020 is only now starting to ease. The mobility electronics unit will oversee both ECUs and in-house semiconductor activities, which are set to grow with Bosch’s recent acquisition of TSI, a California company that makes silicon carbide chips, seen as crucial for EV development.

Bosch plans to spend $1.5 billion to upgrade TSI’s production lines in California.

Bosch also has been the object of speculation that it will partner with Taiwan’s TSMC in a European semiconductor factory. A Bosch spokesman said the company would not comment on “market rumors.”

“It’s relatively clear that with the market requirements we see today that the automotive industry will need more electronics, which in turn will require a lot more semiconductors,” he said. “It’s only natural that we are seeking to engage more in this area, as we’re doing with our [TSI] investment in Roseville, Calif.”