Automotive Semiconductor Market Size, Share & Industry Analysis, By Component (Processor, Analog IC, Discrete Power Device, Sensor, Memory Device and Others), By Vehicle Type (Passenger Cars and Commercial Vehicles), By Propulsion (ICE & Electric), By Application (Powertrain, Safety, Body Electronics, Chassis and Telematics & Infotainment) and Regional Forecasts, 2024-2032

The global automotive semiconductor market size was valued at USD 65.55 billion in 2023 and is projected to grow from USD 71.97 billion in 2024 to USD 123.04 billion by 2032, exhibiting a CAGR of 6.9% during the forecast period.

The factors such as the rise in adoption of electric and hybrid electric vehicles and the development of highly autonomous vehicles to increase safety are one of the primary factors driving the market growth. Besides, increasing electronic content in automotive and growing digital connectivity in vehicles will also boost semiconductor adoption in automotive.

Furthermore, increasing technological advancements in automotive semiconductors are also anticipated to propel market expansion. For instance, in January 2022, Infineon Technologies launched a new AURIX TC4x family of 28 nm microcontrollers (MCUs) for eMobility, ADAS, automotive E/E architectures, and affordable artificial intelligence (AI) applications. Also, in October 2021, Infineon Technologies AG introduced the SLI37 automotive security controller: an easy to design and reliable trust anchor to secure safety-critical automotive applications like 5G-ready eUICC (eCall), V2X communication, car access, or SOTA updates.

Moreover, the increased manufacturing of automobiles in several countries has consequently aided market growth. While around 80 million automobiles were manufactured globally in the previous year 2021, the graph is expected to trend upward over the projected period, favorably benefiting the global semiconductor industry.

The pandemic led to industry uncertainty and panic, prompting global governments to enact stringent measures. Social distancing and lockdowns reduced automobile demand, disrupting production and supply chains. 2020 saw a 16% decline in global vehicle production. Despite a swift 2021 recovery, semiconductor shortages and pandemic fears affected showroom traffic. Semiconductor companies suffered revenue losses. The pandemic spurred interest in electric vehicles. Electric and hybrid vehicle sales are forecasted to reach 145 million worldwide by 2030. Despite pandemic challenges, the electric vehicle market is expected to expand rapidly post-pandemic.

Automotive Semiconductor Industry Trends

Increasing Integration Of Artificial Intelligence In Vehicle

The automotive industry is increasingly using semiconductors to support vehicle AI to mimic, augment, and support the actions of humans, while simultaneously leveraging the advanced reaction times and pinpointing precision in machine-based systems. In self-driving vehicles, AI is used to make the car more convenient and safer for both driver and passengers. In-car assistants, driven by natural language processing (NLP) and machine learning techniques, allow a vehicle’s systems to respond to voice commands and infer which actions to take, without human intervention.

Despite the technological potential of both autonomous vehicles and in-car assistants, an abundance of caution relating to safety concerns, and a desire to ensure that users enjoy a smooth and glitch-free experience, these AI systems will likely be deployed gradually through smart semiconductors. Thus, the increasing integration of artificial intelligence in vehicles is one of the leading trends supporting the growth of the market.

In October 2023, BOS Semiconductors, a South Korean tech startup, collaborated with U.S. artificial intelligence hardware company Tenstorrent to create semiconductors for vehicle use and manufacturing. This collaboration grants BOS access to Tenstorrent’s AI Tensix core technology. The objective of this partnership is to integrate Tensix cores into BOS's chips to enhance the processing speed of automotive semiconductors using artificial intelligence.

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Automotive Semiconductor Industry Growth Drivers

Rise in Adoption of Electric and Hybrid Electric Vehicles to Drive Market Growth

Electric and hybrid vehicles require significantly more electronic components compared to traditional internal combustion engine vehicles. Semiconductors are essential components in these electronic systems as they power battery management systems, power electronics, control units, and sensors. Electric and hybrid vehicles are often equipped with advanced safety features such as (CAS) collision avoidance systems, (ACC) adaptive cruise control, and (LWDS) lane departure warning systems. These features rely on sophisticated sensor arrays and semiconductor components to function effectively, contributing to the increased demand for automotive semiconductors.

Moreover, electric and hybrid vehicles rely on complex powertrain systems that require precise control and monitoring. Semiconductor devices play a crucial role in optimizing the efficiency and performance of these systems, including motor control, battery management, and energy conversion. Thus, the shift toward electric and hybrid vehicles is reshaping the automotive industry and creating significant opportunities for semiconductor manufacturers to meet the growing demand for advanced electronic systems and components in the automotive market. In 2022, according to IEA (International Energy Agency), EV passenger cars recorded sales of 10.2 million units, whereas in 2021, the sales of EV passenger cars were around 6.5 million units. Thus, the rise in demand for electric and hybrid vehicles drives the market growth of the automotive semiconductor market over the forecast period.

Development of Highly Autonomous Vehicles to Increase Safety is Driving the Growth of the Market

The rise of autonomous vehicles is shifting demand for automotive chips and prompting OEMs to consider the in-house design. The strong focus on autonomous vehicles (AVs) has already altered demand patterns for semiconductors in the automotive industry, as the sales of specialty silicon chips tailored to specific applications are growing strongly. These customized chips are only available from a few semiconductor companies, and some OEMs are now designing them in-house to reduce development timelines and gain more control. With demand for specialty silicon continuing to grow, other OEMs could take the same route. In addition, semiconductor companies are investing in the development of advanced components such as fusion and SoC (System on a Chip) devices and a broad portfolio of microchips that incorporate machine learning and AI technologies owing to the increased incorporation of autonomous features in vehicles.

Safety is a key selling point for the adoption of high-level autonomous features. Systems such as ADAS can help to avert vehicular accidents via features such as traction control, lane departure warning, adaptive cruise control and anti-lock brakes. However, these systems require considerable advancement to achieve full autonomy (Level 5). They require complex components such as memory controllers, data links, sensors and high-speed processors among others to ensure vehicle safety. Sensors, in particular, are crucial to enable a shift to high-level autonomy. As autonomy levels rise, the number of sensors required will increase exponentially. For instance, up to 29 sensors can be required for Level 4 as compared to 6 for Level 2. These features will also penetrate budget and mid-range models where volume movement will be much higher and hence not be limited to high-end cars. Hence, increased development & adoption of autonomous driving to enhance safety is driving the growth of the market.

Increasing Electronic Content in Automotive to Support the Market Growth

The automobile industry has been moving at a steady pace to integrate electronics into cars in innovative ways to augment safety (radar and collision avoidance, automatic braking), infotainment (satellite radio and Bluetooth), navigation (GPS mapping), system monitoring, onboard computers and many others, including emerging self-driving cars. This has resulted in a significant increase in demand for electronic components. The growing automotive market presents a huge opportunity for automotive semiconductors to support battery performance in EVs, increased connectivity, enhanced sensors, and other technologies.

The use of semiconductor content in electric and hybrid cars is higher compared to that in conventional cars. Hybrid and electric vehicles need high-performance microcontrollers, microprocessors, application-specific integrated circuits, and power MOSFETs. Thus, the increasing electronic content in automotive provides lucrative growth opportunities for the market.

RESTRAINING FACTORS

Security Risk and High Costs is a Key Restraint for the Growth of this Market

 A failing component can negatively affect the vehicle performance. Components such as microprocessors and SoCs are complex and most of the interlinked controls affect each another. Hence, even if one component fails completely or is tampered with it can lead to in-operation of vehicle. Cars with MCU controlled features largely do not have secondary backups as a way to compensate for human error owing to the excess cost burden. Hence, a faulty MCU can pose a significant safety risk in crucial applications. Running diagnostics is required to ensure that a complex semiconductor part such as the SoC or MCU needs to be replaced or repaired. A replacement MCU then needs to be reprogrammed once it is installed, and further testing is required to ensure seamless operation with the vehicle.

These services incur additional labor costs. Furthermore, repairing an MCU is a highly precise and technical work. It involves disassembling the module itself, running diagnostics and performing critical electronics and circuitry work which requires specially trained technicians. Furthermore, these components are also highly susceptible to hacking and in case of a malicious attack can lead to failure to deliver critical information for systems such as crash avoidance, control braking among others. Hence, these factors are restraining the growth of the market.

Varying Regulatory or Legal Challenges in Countries Across the World Expected to Hamper the Market Growth

Leading players operating in the market are subject to different environmental, data privacy, labor, and health and safety laws & regulations in each country they are operating. Companies are also required to obtain environmental permits and other authorizations or licenses from governmental authorities for certain operations. Thus, need to comply with differing standards and varying practices of regulatory, tax, judicial and administrative bodies. If companies violate or fail to comply with laws, regulations, permits, and other authorizations or licenses, players could be fined or otherwise sanctioned by regulators. Furthermore, if one or more customers or distributors are sanctioned by regulators for non-compliance with laws and regulations, players could experience a decrease in demand for products.

For instance, import and export regulations, such as the U.S. Export Administration Regulations administered by the U.S. Department of Commerce, are complex, change frequently, have generally become more stringent over time, and have intensified in recent years. Thus, such factors may negatively impact the market if are required to suspend activities with certain customers or suppliers due to future changes in regulations. Furthermore, global privacy legislation, enforcement, and policy activity, such as the EU General Data Privacy Regulation, are rapidly expanding and creating a complex regulatory compliance environment. Therefore, the varying regulations or legal challenges across the world may hamper the growth of the market.

Automotive Semiconductor Market Segmentation Analysis

By Component Analysis

Increasing electronic components in vehicle to Drive Segment Growth

Based on the component, the market is segmented into processors, analog IC, discrete power device, sensor, memory device and others.

The processor segment held the largest market share in 2023 and is expected to continue its dominance during the forecast period. Increased use of electronics components in a vehicle is one of the primary factors driving the growth of the segment. However, discrete power devices expected to register the highest CAGR of 8.8% during the forecast period.

Memory devices are expected to be the second-fastest emerging segment. This expansion may be due mostly to the continuing electrification of important automotive applications like powertrain, which is increasing demand for power devices such as MOSFET and IGBT. The demand for improved vehicular safety and innovative features necessitates the addition of additional memory devices per car in order to program multiple control systems into an autonomous vehicle.

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By Vehicle Type Analysis

Rising Demand for Passenger Automobiles to Drive Segment Growth

Based on the vehicle type, the global market is segmented into passenger cars and commercial vehicles.

The passenger cars segment led the market in 2023 and is likely to dominate by 2032 in terms of revenue. The growth is attributable to the rising demand for passenger automobiles across the world. Furthermore, rising the adoption of automotive entertainment systems in passenger vehicles for hands-free phone connectivity and climate control, navigational services, voice control, two-way communication tools, parking assistance, and internet service is supporting sector expansion.

The commercial vehicle segment is anticipated to witness the fastest growth rate over the forecast period. The factors such as road infrastructure improvements, rapid urbanization, the expansion of e-commerce and mining operations are likely to support the commercial vehicles sales. Moreover, leading commercial vehicle manufacturers are focusing on the development and introduction of various autonomous features in commercial vehicles to improve safety. Therefore, the commercial vehicles segment is expected to grow at a significant CAGR during the forecast period.

By Application Analysis

Stringent Regulations on Vehicular Safety to Drive Segment Growth

Based on the application, the global market is segmented into powertrain, safety, body electronics, chassis, and telematics & infotainment.

The safety segment holds the largest market share in 2023 and is expected to continue its dominance over the forecasted period. This is primarily due to the implementation of stringent regulations on vehicular safety, owing to increasing road accidents in various countries. To fulfill the vehicle safety regulations, the auto manufacturers are various safety-related features such as emergency braking systems, advanced driver assistance systems in vehicles. Such factors are driving the market growth

The telematics & infotainment segment is anticipated to witness the fastest growth rate over the forecast period. Rising in-car connectivity and infotainment demand such as navigation systems, audio & video players, Over-the-Air updates, and smartphone connectivity are the key factor propelling the segment expansion. In addition, leading countries such as the U.S. and European countries mandate e-call services in vehicles, which is also fueling the segment growth.

By Propulsion Analysis

Integration of ADAS and Enhanced Infotainment System Boosts the

Based on the propulsion, the global market is segmented into two sub-segments, namely ICE and electric.

The ICE segment is estimated to hold the largest market in 2023. Modern ICE vehicles increasingly incorporate advanced infotainment systems, necessitating high-performance semiconductors. In addition to this, the integration of ADAS and other developed technologies for automotive drives the semiconductor demand in the ICE segment vehicles.

The electric segment is attributed to propel with the fastest growing CAGR during the forecasted period 2024-2032. Several government and regulatory bodies offer incentives and subsidies to promote the adoption of electric vehicles. This leads the consumer to shift towards using electric vehicles, which indirectly generates the demand for semiconductors for electric vehicles. This drives the segmental growth over the forecasted period.

For instance, As per the data provided by the International Energy Agency for the sales of passenger cars sold globally, around 13.8 million passenger cars were sold in 2023, which reflected a rise in sales of 35.3% as compared to the previous year, 2022.

REGIONAL INSIGHTS

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The Asia Pacific dominated the global market and is expected to retain its position throughout the forecast period. The region is also expected to have the highest CAGR during 2024-2032. Significantly growing automotive industry in countries such as China, India, and Japan among others along with the related government support for the expansion of the semiconductor industry across the region is driving the market growth. Moreover, the high adoption of electric cars in China has fueled market growth. Moreover, increasing penetration of commercial electric vehicles in emerging countries of APAC, including India, South Korea, Japan, and others, is also likely to boost the market growth in the near future. For instance, according to the China Passenger Car Association, the total passenger electric vehicles sales in China increased by 169.1% from 2020 to nearly 2.99 million in 2021.

North America is expected to witness the highest growth rate after Asia-Pacific. Significant growth in sales of electric commercial and passenger vehicles in the U.S. is driving the market growth. Moreover, the rising focus towards the development and commercialization of electric autonomous vehicles and Robo-taxies is further expected to provide a lucrative growth rate over the forecast period.

Europe is the second-fastest-growing market. The presence of a large number of leading market players as well as the major automobile manufacturers are fueling the market growth in Europe. In addition, the increasing stringency on vehicular emission, rising support for electrification along with the growing investment in autonomous vehicle innovations are also boosting the market expansion in Europe.

The rest of the world is expected to register a considerable CAGR from 2024 to 2032. Increasing adoption of battery-electric cars in the countries such as Brazil, UAE, South Africa, Saudi Arabia, among others, coupled with increasing investment in public charging infrastructures in regions such as Latin America and the Middle East, is also anticipated to drive the adoption of an electric vehicle, which in turns, fueling the market growth.

Automotive Semiconductor Industry Competitive Landscape

Focus on Early Development of Electric and Autonomous Vehicles to Drive the Competition

The market is fragmented, with various players worldwide. The companies operating in the market are increasing strategic moves such as partnership, collaboration, acquisition to expand their business and grab untapped opportunities in emerging markets. For instance, in December 2021, NXP Semiconductors partnered with Hailo, the leading edge Artificial Intelligence chipmaker to launch a number of joint AI solutions for automotive Electronic Control Units (ECUs). The joint solutions will combine NXP's safe and efficient automotive processors (S32G and Layerscape) along with the high-performance Hailo-8 AI processor. In November 2020, Infineon entered into an agreement with GT Advanced Technologies to expand its supply base for silicon carbide (SiC) boules. SiC is the basis for power semiconductors that are particularly efficient, robust, and cost-effective at the system level. With this supply contract, the German semiconductor manufacturer adds a further element to secure its growing base material demand in this area.

Infineon Technologies AG is one of the Leading Players in the market 

Infineon Technologies AG is one of the world's leading manufacturers of semiconductors. The group's products include power semiconductors, sensors, microcontrollers, digital, mixed-signal, and analog ICs, discrete semiconductor modules, switches, interface ICs, motor-controlling ICs, and RF power transistors, voltage regulators, and electronic safety components. Its headquarters are located in Neubiberg, Germany. Infineon's customers include all major automobile, truck, and bus producers, such as Volkswagen, General Motors BMW Ford, Toyota Renault, Porsche, PSA, Honda, BharatBenz, Schmitz, Volvo, Freightliner Trucks, Koegel, and Daimler AG. In addition, in April 2020, Infineon Technologies AG completed the acquisition of Cypress Semiconductor Corporation. Cypress adds a differentiated portfolio of microcontrollers, connectivity components, software ecosystems, and high-performance memories. The addition of Cypress’ strong R&D capabilities and its foothold in the U.S. and Japan strengthen Infineon’s connections with customers around the world.

LIST OF KEY COMPANIES PROFILED:

• Robert Bosch GmbH (Stuttgart, Germany)


• Infineon Technologies AG (Neubiberg, Germany)


• STMicroelectronics (Geneva, Switzerland)


• NXP Semiconductors (Eindhoven, Netherlands)


• Toshiba Corporation (Tokyo, Japan)


• On Semiconductor Corporation (Arizona, US)


• ROHM Co., Ltd. (Kyoto, Japan)


• Texas Instruments Incorporated (Texas, US)


• Renesas Electronics Corporation (Tokyo, Japan)


• Denso Corporation (Aichi, Japan)

KEY AUTOMOTIVE SEMICONDUCTOR INDUSTRY DEVELOPMENTS:

• June 2023: Nidec Corporation and Renesas Electronics Corporation collaborated to develop semiconductor solutions for an advanced E-Axle (X-in-1 system) combining an EV drive motor and power electronics for electric vehicles (EVs).


• May 2023: Infineon Technologies AG and Hon Hai Technology Group forged a long-term partnership in electric vehicles (EV), aiming to pioneer advanced electromobility with enhanced efficiency and intelligence. The Memorandum of Understanding (MoU) prioritizes silicon carbide (SiC) development, combining Infineon's automotive SiC advancements with Foxconn's automotive systems expertise.


• February 2023: Wolfspeed Inc., a Silicon Carbide technology leader, and ZF, a global mobility technology company, unveiled a strategic partnership. This collaboration featured a joint innovation lab aimed at advancing Silicon Carbide systems for mobility, industrial, and energy applications. ZF also tends to make a substantial investment to aid in constructing one of the world's most advanced and largest 200mm Silicon Carbide device factories in Ensdorf, Germany.


• February 2022: STMicroelectronics has unveiled new automotive microcontrollers (MCUs) optimized for electric vehicles February 2022, STMicroelectronics has unveiled new automotive microcontrollers (MCUs) optimized for electric vehicles and centralized (domain and zonal) electronic architectures. STMicroelectronics’ new Stellar E MCUs, designed for the next generation of software-defined EVs, integrate high-speed control-loop processing on-chip. With the new Stellar E devices, this platform now enables a new value chain for EVs.


• January 2022: Infineon Technologies launched a new AURIX TC4x family of 28 nm microcontrollers (MCUs) January 2022, Infineon Technologies launched a new AURIX TC4x family of 28 nm microcontrollers (MCUs) for eMobility, ADAS, automotive E/E architectures and affordable artificial intelligence (AI) applications

REPORT COVERAGE

The market report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and leading applications of the product. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that have contributed to the growth of the market over recent years.

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