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A design win is when a car manufacturer, also known as an Original Equipment Manufacturer (OEM), selects a supplier’s product for integration into a specific vehicle model.
This decision is an important milestone that confirms the supplier’s technology will be part of the new vehicle’s design. However, it doesn’t mean the supplier will start shipping products immediately, as production orders only come later when manufacturing begins.
Since vehicle development cycles can span several years, revenue from a design win may not be realized immediately but is typically secured once mass production starts.
A design win secures a place for a supplier’s product in an upcoming vehicle model, but it is just one step in the process. Actual orders, where the OEM purchases components in volume, come only once the vehicle moves into production. While a design win establishes a long-term supply agreement, license revenue is generated when manufacturing begins and orders are placed.
Securing a design win is a critical first step, but bringing a product to full-scale production involves multiple stages.
OEMs evaluate suppliers, develop concepts, and negotiate terms before awarding a design win.
The OEM formally selects a supplier’s product for the vehicle model.
After securing a design win, the supplier works with the OEM to finalize project-specific modifications and set up manufacturing processes. Adjustments may still be made if the OEM updates its requirements. In rare cases, a design win may be revised or, if a vehicle program is canceled, withdrawn entirely.
Once everything is approved, large-scale manufacturing of the car model starts, and the supplier delivers components throughout the vehicle’s lifecycle.
For suppliers, securing a design win is a major business milestone. It confirms that their technology will be part of an OEM’s vehicle lineup, establishing a long-term supply agreement. Since vehicle models typically remain in production for several years, a design win also provides visibility into future demand and revenue.
Because vehicle production operates on long timelines, design wins are the primary metric used to measure a supplier’s success. Unlike individual orders, which can fluctuate based on short-term demand, design wins indicate a supplier’s role in upcoming vehicle programs and serve as a strong predictor of future revenue.
A design win’s value is based on two key factors: the estimated production volume of a vehicle model over its typical seven-year lifecycle and the agreed-upon license fee per vehicle.
To calculate this, Smart Eye estimates how many vehicles of the model will be produced, considering factors such as the OEM’s communicated production expectations or the sales history of a previous model it replaces.
The per-vehicle license fee is fixed at the time of the design win, but the total volume is not guaranteed – it depends on actual production numbers over the years.
In addition to license fees, a design win may include a one-time Non-Recurring Engineering (NRE) fee to cover development and integration costs before production begins.
While NRE fees are factored into the total design win value, they are typically a small portion of the overall revenue. Their primary purpose is to cover upfront engineering work, ensuring that Smart Eye’s software is properly integrated into the OEM’s system before mass production starts.
License fees can increase over time through feature growth—when an OEM or Tier 1 adds new functionality to an existing system, enabling the supplier to charge a higher license fee.
For example, a base Driver Monitoring System (DMS) may start with standard features, but later, the OEM could decide to add drowsiness detection. Since these enhancements require additional software capabilities, the per-vehicle license fee increases accordingly.
Smart Eye factors in feature growth potential for certain design wins, when it is likely that the OEM will expand system functionality over time.
In some cases, Smart Eye is initially awarded only a portion of a car platform, meaning our technology is used in just a few vehicle models within a larger lineup. However, it is often highly likely that Smart Eye will be selected for additional vehicles built on the same platform in the future.
When this is the case, Smart Eye estimates the potential value of securing future design wins within the same platform. In press releases announcing a new design win, this is communicated as the estimated value over the product lifecycle from possible additional design wins.
However, for software-defined vehicles (SDVs), OEMs may award multiple car platforms at once, meaning there are no additional platforms left to win later.
