Automotive Semiconductor Market Size, Share, Industry Report

Updated on : Oct 23, 2024

Automotive Semiconductor Market Size

Automotive semiconductor market is projected to grow from USD 42.9 billion in 2022 to USD 70.0 billion by 2027, growing at a CAGR of 10.1% during the forecast period from 2022 to 2027.

Automotive Semiconductor Market Share

The semiconductor technology has evolved over the years and has enabled manufacturers of automobiles to bring multiple applications together on a single chip by cutting down the board area, thus optimizing the performance. As a result, one of the major drivers of the automotive industry over the years has been the rise of integrated electronics, and the advancements in the same can be seen to keep the automotive semiconductor industry moving ahead in the coming years.

Rising trend of vehicle electrification and growing demand for advanced safety, convenience, and comfort systems are the main factors driving the growth of semiconductor content in the automobiles. On the other hand, factors such as rising cost of overall vehicle, maintaining balance between cost and quality of the products, and continuous optimization of component size are continuously creating challenges for the automotive semiconductor market.The automotive chip market has been segmented based on component, vehicle type, fuel type, application, and geography. These market segments are further analyzed on the basis of market trends across the four regions considered in this study.

Automotive Semiconductor Market Forecast to 2027

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Automotive Chip Market Dynamics

Driver: Growing shift towards the use of electric and hybrid to reduce vehicle emissions

Motor vehicles not running on fossil fuels, such as electric vehicles, hybrid electric vehicles, solar-powered vehicles are the primary choice for alternate technologies of powering an engine that does not involve petroleum. Increasing the use of electric and hybrid vehicles will help reduce fuel costs of consumers, minimize air pollution due to reduction in greenhouse gases (GHGs), improve air quality in urban areas, and lower dependence on fossil fuels. The adoption of electrified vehicles will lead to a significant rise in demand for new automotive ICs, microprocessors, and sensors.

According to a European Environmental Agency (EEA) report published in October 2022 titled “New registrations of electric vehicles in Europe”, 2021 saw a significant increase in the uptake of electric cars and vans in the EU. Electric car registrations for the year were close to 1,729,000, up from 1,061,000 in 2020. This represents an increase from 10.7% to 17.8% in the share of total new car registrations in just 1 year. The uptake of electric vans also increased, from 2.1% of total new registrations in 2020 to 3.1% in 2021. The number of battery electric and plug-in hybrid cars are comparable in 2021, while battery electric vehicles accounted for the majority of electric van registrations in 2021.

Hence, with the inclusion of advanced technologies and new features in vehicles has increased the scope of electrification. As a result, original equipment manufacturers (OEMs) are installing a greater number of ICs, microprocessors, and sensors in high-end electric vehicles.

Restraint: Increase in the overall cost of motor vehicle

With growing demand & expectations from the consumers and increasing competition between OEMs, innovation has always been an important factor in the automotive industry. Alternatively, regulatory compliance is also a major factor behind the current wave of automotive innovation. Manufacturers are racing to meet higher fuel-efficiency standards, which are rooted in concerns over oil dependency and the environment, especially global warming. Another key factor driving innovation is the increasing number of software-driven electronic components in vehicles today.

These components enable quicker innovations not only in telematics and on-board infotainment but also in features related to vehicle handling, safety, service, reliability, and performance. However, installation of all new safety features, emission control devices, and luxury components, as a result of either consumer demand or regulatory compliance, eventually increases the overall cost of the vehicle. Cost is not the area of concern for premium segment cars but the demand for small and medium segment cars is largely affected by the cost of the vehicle. Every automaker is trying to provide the efficient safety and comfort features that too at a reasonable price. This puts the limitation on the use of semiconductor devices in the vehicle as semiconductor is the key component for these features. This rising cost of the vehicle owing to the increased use of electronics may restrain the growth of the semiconductor market.

Opportunity: Rising environmental concerns driving development of electric vehicles

Environmental problems and need to conserve energy are powerful factors that have advanced the development of HEVs and EVs. Hybrid vehicles are equipped with, in addition to an engine, a motor, a high-voltage high-power battery to drive that motor. Hybrid vehicles fulfil the need for high power requirement whenever necessary, along with the environmental benefits.

Stringency of the emission norms across the globe has resulted in technological advancements in the automotive sector in order to reduce the harmful exhaust emissions from the vehicles. The advent of EVs is one of the most important steps in automotive industry for the environment protection. These vehicles do not use any conventional fuel, thereby do not produce any harmful gases. These all factors have accelerated the growth of the electric car sales, especially in developed regions such as North America and Europe. As these vehicles completely rely on electrical power supply, the use of electronic devices is much more in these vehicles.

Power electronics is a key technology for hybrids and represent 20% of the total cost of a vehicle, giving a lot of scope for semiconductor technology. These new technologies are in the introduction phase and are poised to have a greater impact on the automotive chip market. The rise of HEVs and EVs is likely to be a huge opportunity for automotive semiconductor manufacturers. Governments of many countries such as Germany, US, Denmark, China, France, Sweden, UK, and India among others offer several incentives to promote the electric and hybrid car sales with the country.

Challenge: Safety and security threats in autonomous vehicles

In recent years, autonomous cars have gained traction. There have been multiple fatal incidents in Level 3 to Level 5 autonomous vehicles, wherein the vehicle had limited human interaction. Moreover, the EU Agency for Cybersecurity (ENISA) and Joint Research Centre (JRC) released a report that autonomous vehicles carry serious cybersecurity risks. The report noted that autonomous vehicles are susceptible to adversarial machine learning techniques such as evasion or poisoning attacks. This threat model involves spoofing the pattern and facial recognition systems.

Evasion attacks manipulate the data fed into the systems to alter the output for the attacker’s benefit. Similarly, poisoning attacks corrupt the training process to cause a malfunction benefiting the attacker. For instance, autonomous cars from Tesla that feature autonomous driving operation were tricked into accelerating from 35 to 85 mph with a modified speed limit sign. With the development of advanced sensors such as microprocessors, ICs, radar, LiDAR, and image sensors, OEMs are expected to increase their utilization in autonomous cars. However, OEMs and integrators must focus on ensuring the accuracy, security, and reliability of these sensors. Moreover, manufacturers should adopt the security-by-design approaches to guarantee security on the roads.

Automotive Semiconductor Market Growth Analysis

Market Interconnections

Analog IC market to account for largest share of the automotive chip market in 2022

In today’s automobiles, electronics are the chief differentiators between the competing automakers. In terms of numbers, automotive electronics per car typically include hundreds of sensors, tens of electronic control units (ECUs) processing systems, miles of cable harnesses, and extensive network systems. Analog ICs are required to assist all these processors, power devices, sensors, and other electronic components of the automobile to perform the task and to transfer the controls instructions and signals from one system to other. Growing electrification of the powertrain segment not only generating a huge demand for power devices but also showcasing the opportunity to supporting analog ICs to grow significantly in the coming years. In the report, under the analog ICs segment, we have also covered the market for logic ICs and the connectivity devices. The analog ICs primarily used in a vehicle are amplifiers, interfaces, converters, comparators, ASIC, ASSP, regulators, drivers, logic ICs, and infotainments, telematics, and connectivity devices.

Automotive semiconductor market for passenger cars is projected to have the highest share during the forecast period

The passenger car is the largest segment with the highest production and demand globally. Passenger cars comprise sedans, hatchbacks, station wagons, sport utility vehicle (SUVs), multi-utility vehicles (MUVs), and vans. This is the most promising market for automotive semiconductor, owing to the fact that this is the largest segment in the automotive industry. Passenger cars continue to be mostly equipped with gasoline-powered engines globally. In China, there is a higher demand for electric powered passenger vehicles compared to the rest of the world. The semiconductor content in electric or hybrid vehicles is more than the normal passenger cars. The major area of semiconductor application in these vehicles is the powertrain. The increasing demand for the electric and hybrid vehicles owing to the growing environmental concerns is the key opportunity for the automotive semiconductor manufacturers.

Telematics and infotainment application to have the highest market share during the forecast period

Telematics & infotainment accounted for the largest share of the automotive chip market based on applications. This growth in telematics & infotainment application can be attributed to the technological advancements in the field of cell phones, internet, and GPS receivers. High accuracy requirements have led to increased demand for systems such as location tracking, job dispatch, and vehicle diagnostics among others. The infotainment and telematics systems in today’s vehicles have multiple capabilities. They are interconnected with one another and with other systems such as GPS and entertainment systems. User peripherals such as short-range wireless devices, mobile phones, and USB devices are also attached to the same internal networks. The telecommunications interfaces can also be used for remote vehicle surveillance, reprogramming of software, system diagnostics, and control of certain vehicle systems through connections with external devices.

APAC is expected to account for a dominant share of the market

The APAC region has emerged as a major automotive hub with majority of the market share in terms of vehicle production as well as sales. The primary reason behind this trend is the growing Chinese automotive market. This market has evolved into the largest producer of vehicles and consequently the largest consumer of automotive semiconductor across the globe. The region is known for small and cost-effective cars. As a result of various reasons such as low production cost, easy availability of economic labor, lenient emission & safety norms, government initiatives for foreign direct investments (FDIs), the region has witnessed higher growth in the past 10 years than the matured markets of Europe and North America. Growing population, accelerating economies (developed as well as developing), and government initiatives to promote industrial growth have made APAC an ideal destination for automobile production units.

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Automotive Chip Companies - Key Market Players

Major vendors in the automotive semiconductor companies include Robert Bosch (Germany), Continental (Germany), Infineon Technologies (Germany), NXP Semiconductors (Netherlands), Sensata Technologies (US), Borgwarner, (US), Allegro Microsystems (US), DENSO (Japan), Analog Devices (US), ELMOS Semiconductor (Germany), STMicroelectronics (Switzerland), TE Connectivity (Switzerland), Onsemi (US), Renesas Electronics (Japan), ROHM Semiconductor (Japan), Aptiv (Ireland), CTS (US), Autoliv (Sweden), ZF Group (Germany), Quanergy (US), Toshiba (Japan), Magna International (Canada), Melexis (Belgium), Amphenol (US), and Valeo (France).

Automotive Semiconductor Market Report Scope

Automotive Semiconductor Market Highlights

This report categorizes the automotive chip market based on component, vehicle type, fuel type, application, and geography.

Recent Developments in Automotive Chip Industry

• In May 2022, Continental (Germany) widened its broad sensor portfolio by launching two new sensors for electrified vehicles: the Current Sensor Module (CSM) and the Battery Impact Detection (BID) system. Both new solutions focus on protecting the battery and/or on battery parameter retention.
• In October 2021, Infineon Technologies (Germany) introduced the SLI37 automotive security controller: an easy-to-design and reliable trust anchor to secure safety-critical automotive applications such as 5G-ready eUICC (eCall), vehicle-to-everything (V2X) communication, car access, or software updates over the air (SOTA) updates.
• In July 2021, NXP Semiconductors (Netherlands) announced a collaboration with Ford to deliver enhanced driver experiences across its global fleet of vehicles, including the 2021 Ford F-150 pickup, Mustang Mach-E and Bronco SUVs. Ford’s new fully networked vehicle architecture will implement NXP’s vehicle networking processors and the i.MX 8 Series processors.

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