Automotive Semiconductor Market

Up from the revenue of US$40.2 Bn registered in 2018, the global automotive semiconductor market valuation is expected to be worth US$141.5 Bn by 2030, registering a CAGR of 12.5% during the forecast period 2023-2030.

Market Analysis in Brief

Automotive semiconductors are the semiconductor devices used in vehicles such as memory, power, logic, MCU used to perform various functions like safety, infotainment & telematics, advanced driver assistance systems, and body electronics & lighting. Smart car access, automotive Ultra-Wideband (UWB), and Near-Field Communication (NFC) are rapidly gaining ground in automotive, enabling the connection of vehicles and car keys to portable devices and the infrastructure. This increases the average semiconductor content per vehicle has been leading to the strengthening of the overall automotive semiconductor market. COVID-19 had an adverse impact on the global automotive semiconductor market. During the pandemic, the revenue of semiconductor automotive manufacturers has dropped significantly. For instance, the revenue of both Texas Instruments, and NXP Semiconductors dropped by -4.2% and -9.2% respectively, from 2020 to 2021. However, with strong government and favourable regulatory support, the market is all set for a leapfrog between 2023 and 2030.

Key Report Findings

• At a staggering pace of growth, the worldwide market for automotive semiconductors has been projected to reach the revenue of more than US$141 Bn toward the end of 2030.
• Discrete, memory, and sensor components remain sought-after throughout the period of forecast.
• By application, the ADAS segment is likely to maintain a dominant position in market.
• By the type of vehicle, passenger vehicles continue to represent the largest demand generating category.
• Led by China, Asia Pacific remains the leading regional market for automotive semiconductors. Europe is slated to exhibit noteworthy expansion in the years to come.

Growth Drivers

Increasing Semiconductor Content Per Vehicle

Semiconductor content per vehicle continues to increase in line with the favourable government regulation around safety and emissions, standardisation of higher-end options across a greater number of vehicle classes, as well as consumer demand for greater fuel efficiency, advanced safety, multimedia applications, and connectivity. Automotive safety features are evolving from passive safety systems to active safety systems with advanced driving assisted systems (ADAS) such as radar and vision systems. Semiconductor content is also increasing in engine management and fuel economy applications, like battery management systems.

Comfort and convenience systems, and UI applications, as well as infotainment features such as digital audio broadcasting, are among the rapidly growing areas with high semiconductor content. In addition, the use of networking in automotive applications continues to increase as various subsystems communicate within the automobile, and with external devices and networks. Furthermore, networking will play a key role in the electrical/electronic (E/E) architecture transformation toward domain and zonal architectures.

Government Support, and Mounting Investments

Governments across several countries are investing heavily in the semiconductor industry.

1. The Chinese government has long had an industrial policy to support its nascent chip industry, these efforts accelerated in 2014, as China released its National IC Promotion Guidelines, which laid out ambitious targets for industry revenue, production capacity, and technological advances. In addition, China published the “Made in China 2025 Plan”, which sets aspirational goals for China to achieve 70% self-sufficiency in semiconductors by 2025.

2. The Government of India is focusing to increase semiconductor manufacturing capacity across the country. In 2021, the Union government in India announced a production-linked incentive scheme for semiconductors worth INR 76,0000 Mn to increase investor interest in the industry. Furthermore, in May 2022, the government also announced to invest around US$ 20 Bn in electronics manufacturing and design and US$10 Bn in semiconductor manufacturing research and design. The government also announced to invest of about INR 10,0000 Mn to renovate Mohali SCL (semi-conductor laboratory) facility and to build the “India Semiconductor Research Centre”.

3. In 2021, the Japanese government approved US$7.7 Bn in funding as part of a strategy to support domestic semiconductor manufacturing. The United States is seeking to reduce its reliance on Chinese-made semiconductor chips. In 2021, The US government signed a US$ 52.7 Bn executive order to boost research and provide subsidies to the chip-making industry, with the aim.

4. In July 2022, In the United States, the Congress government passed the CHIPS Act of 2022 to strengthen domestic semiconductor manufacturing, design, and research fortify the economy and national security, and reinforce America’s chip supply chains. Government initiation and investment to boost the semiconductor sector helps to strengthen the automotive semiconductor market.

What was the COVID-19 Impact on Global Automotive Semiconductor Market?

The COVID-19 pandemic resulted in significant economic uncertainty, and significant declines in business and consumer spending. Economic slowdown, which negatively affected semiconductor business operations. Specifically, throughout most of calendar 2020 and into early calendar 2021, the decline in demand for vehicle sales resulted in decreased demand for integrated circuit products. Similarly, during calendar 2022, spikes in COVID-19 cases in certain parts of China have led the Chinese government to impose lockdowns, which have adversely affected consumer demand in the region.

The COVID-19 pandemic has served to impact on semiconductor business, results of operations, and financial condition through delayed, reduced, or canceled customer orders; disruptions or delays in the supply chain; the inability of customers or licensees to purchase or pay for products or technologies; the insolvency of key suppliers, customers or licensees; delays in reporting or payments from customers or licensees.

The pandemic also had an impact on semiconductor future business, results of operations and financial condition will depend on uncertain future developments. During the COVID-19 pandemic, automotive semiconductor companies across certain countries have experienced trade tension that affects global trade and macroeconomic conditions through the enactment of tariffs, import or export restrictions, trade embargoes, and sanctions, restrictions on cross-border investment, and other trade barriers.

Overview of Key Segments

Discrete, Memory, and Sensor Segments Will be Instrumental to Market Growth

Based on component, the market is categorised into logic, memory, analog, opto, discrete, MCU and sensor. The discrete, memory, and sensor segments are anticipated to play key roles in driving market growth. The discrete segment is expected to witness the fastest growth over the forecast period.

The memory devices segment is expected to grow by 10.7%. This growth can be mainly attributed to the ongoing electrification of the major applications of automobiles such as powertrain, which is creating more demand for power components such as IGBT, and MOSFET. The need for better safety and advanced features in vehicles is creating the need for more memory devices per vehicle to program various control systems into an autonomous system.

Passenger Vehicle Dominant Type

The passenger vehicles segment accounted for the largest market share of over 55.3% in 2022 and is expected to continue leading the market throughout the forecast period. This growth can be attributed to the high demand for passenger cars across the globe. Moreover, increasing the installation of automotive infotainment systems in passenger cars for hands-free phone connectivity and providing navigational services, climate control, voice control, parking assistance, two-way communication tools, and access to the internet is further stimulating the segment growth.

ADAS Remains the Largest Revenue Generating Application

Advanced driver assistance system application is the highest revenue-generating application in the global automotive semiconductor market. The growing demand for ADAS application is due to increasing government regulations for mandatory implementation of ADAS in vehicles in developed nations such as the US, Japan, China, and Germany.

The rising awareness towards the safety and comfort of passenger cars with the integration of the ADAS creates new opportunities. The infotainment & telematics segment is projected to grow at the CAGR of 12.6% over the forecast period and is anticipated to hold the highest share by the end of the forecast period.

The increasing competition to provide better comfort and convenience to their customers is encouraging automobile manufacturers to use more semiconductor components for telematics and infotainment and safety applications. Moreover, stringent regulations and standards are generating more demand for semiconductor components in safety and powertrain applications. In addition, vehicle electrification is creating lucrative growth opportunities in the field of vehicle automation.

Growth Opportunities Across Regions

Asia Pacific Set for the Fastest Growth Pace Through 2030

Asia Pacific is the fastest growing region in the global automotive semiconductor market due to the growth of the automotive industry, especially in emerging economies such as India, China, and Japan. The region has accounted for a market share of over 40% in 2022. China is expected to hold the major market share in the Asia Pacific majorly attributing to government initiation and investment in the semiconductor industry, rising vehicle electrification, and semiconductor content per vehicle. India is expected to grow at the highest rate due to the adoption of automotive electronics in automotive and massive growth in vehicle production.

On the other side, Europe is projected to grow significantly over the forecast period. The growing demand for electric vehicles is likely to fuel the market growth in Europe. Automobile manufacturers are continuously focusing on designing, innovating, and developing autonomous vehicles, which have drawn a considerable percentage of customers in major automotive manufacturing countries. 

Automotive Semiconductor Market: Competitive Landscape Analysis

The global automotive semiconductor market is segmented due to the presence of major players like NXP Semiconductors N.V. (NXP), Infineon Technologies, Renesas Electronics Corporation, STMicroelectronics, and TSMC. Several players in the market continue to rely on organic growth strategies such as partnerships, mergers, collaborations, innovations, and acquisitions to enhance their product offerings and gain sustainable competitive advantage.

Notable Developments

• The top 10 vendors accounted for more than 60% market value share in 2022.
• NXP is the second highest revenue-generating vendor, shows the report. From 2020 to 2021, the automotive revenue of NXP has increased by 43.6%. Growth in automotive semiconductor sales relies on global vehicle sales and production trends and the increase in semiconductor content per vehicle, which is being driven by the proliferation of electronic features throughout the vehicle. Despite the decline in vehicle sales and production in 2020 due to the outbreak of COVID-19 and the very low growth in 2021 due to the global supply crisis, the increase in semiconductor content per vehicle continued.
• Infineon Technologies recorded the largest market share in the global automotive semiconductor market in 2022.
• In 2020, Infineon Technologies completed the acquisition of Cypress Semiconductor Corporation, with an objective to solidify the leadership position of Infineon in the automotive semiconductor industry. 

The Global Automotive Semiconductor Market is Segmented as Below:

By Component Coverage

• Logic
• Memory
• Analog
• Opto
• Discrete
• MCU
• Sensor

By Vehicle Type Coverage

• Passenger Vehicle
• Light Commercial
• Medium & Heavy Commercial
• Electric Vehicles

By Application Coverage

• Infotainment & Telematics
• Advanced Driver Assistance Systems (ADAS)
• Passive safety
• Hybrid, Electric & Powertrain Systems
• Body Electronics & Lighting
• Misc.

By Geographical Coverage

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • U.K.
  • Italy
  • France
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Rest of Latin America
• Middle East & Africa
  • GCC
  • Rest of Middle East & Africa

Leading Companies

• Infineon Technologies
• NXP Semiconductors N.V.
• Texas Instruments
• Renesas Electronics Corporation
• Taiwan Semiconductor Manufacturing
• Semiconductor Components Industries, LLC (Onsemi)
• STMicroelectronics
• Samsung
• Analog Devices, Inc.
• Intel Corporation
• Qualcomm Technologies, Inc.
• LG Electronics Inc.
• AMD