Automotive Semiconductor Market: 3 Technology-Driven Trends Outline

By Akhil Nair

Semiconductors have facilitated several innovations in automotive technology, including DRAM & NAND flash, sensors, vision-based graphics processing units (GPUs), etc. With cars becoming increasingly complex, there will be a steady demand for automotive conductors. According to Inkwood Research, the global automotive semiconductor market is projected to register a CAGR of 9.47% during the forecast period, 2022-2030.

As per our analysis, Flash is the largest revenue-generating memory type in the automotive semiconductor market, set to record a revenue share of 60.12% by 2030.

Sustainability policies, surging use of technologies, developments in emerging markets, innovative business models, rising automation, and digitization have revolutionized industries and economies globally. The automotive semiconductor industry is no exception.

In the last few years, there have been many simultaneous disruptions in the automotive industry. These include the integration of different technologies into the mass production of cars, improved LIDAR sensors, matrix LED lights, and enhancements in EV batteries, 3D mapping applications, and augmented-reality technologies like heads-up displays.

In this regard, Inkwood Research lists the three technology-driven trends shaping the automotive semiconductor market:

• Connected Cars

Semiconductors are the major constituent of electronics in technologically-advanced automobiles. They are used for critical functions like power management, safety features, sensing, and control & display of the vehicle. They process the captured data using on-vehicle computing systems that provide timely, accurate, and reliable control systems for the car. These can be achieved through ultrasonic sensors, radar, light detection, and image cameras.

Online navigation and hands-free mobile service are the current standards in new vehicles. However, at present, automotive players are moving toward the next way of innovation in connected cars. The new offerings include telematics services reliant on human-machine interfaces, including eCall and voice assistance. Such developments help alert drivers about available parking spaces, collision avoidance, and road closures. Connected cars and telematics facilitate valuable insights into performance and vehicle operations, safety services, remote diagnostics, etc.

Accordingly, 5G networks are predicted to supplement vehicle-to-vehicle and vehicle-to-infrastructure connectivity. For instance, Deutsche Telekom’s SmartHome app allows users to adjust their home’s lighting and heating while on the road.

Overall, connectivity strongly influences vehicle-purchase decisions. As a result, connectivity solutions, with their increasing importance, are set to raise revenue for OEMs.

• Vehicle Electrification

The automobile industry is steadily integrating electronics into cars to enhance infotainment, system monitoring, safety, navigation, etc. Also, the thriving automotive market offers lucrative opportunities for automotive semiconductors to supplement improved sensors, increased connectivity, and battery performance in electric vehicles.

Further, the automotive semiconductor content in hybrid and electric cars is higher than in conventional cars. Besides, electric vehicles need hundreds of semiconductors than average combustion-engine cars. In addition, such vehicles need power metal–oxide–semiconductor field-effect transistors (MOSFETs), application-specific integrated circuits, microprocessors, and high-performance microcontrollers.

Furthermore, semiconductors allow electric vehicles to become safer and smarter. For instance, they support touch-screen interactivity with the driver and passenger and electric vehicle (EV) batteries and components in the power train. Semiconductor chips facilitate power systems that apply updates to firmware. Also, the need for semiconductors increases with the growing digital advancements in electric vehicles.

Moreover, semiconductor innovations can enable longer and more efficient battery life. This is because common electric batteries rely on outdated technologies, limiting their performance, further reducing the life span and raising the costs of electric vehicles. Accordingly, semiconductor chemistries like Silicon Carbide (SiC) and Gallium Nitride (GaN) enable operations for EV batteries at higher voltages compared to traditional silicon wafers. For instance, Tesla Model 3 uses Silicon Carbide MOSFETs for its main inverter.

• Advanced Driver Assistance Systems (ADAS)

Advanced Driver Assistance Systems (ADAS) are assistance systems based on electronic control technology. They use sensors like cameras and radar to perceive the surroundings and provide the required information to the driver to take action. Automotive processors integrated with neural processing units (NPUs) for AI processors are the brainpower of these systems, assessing signals from onboard sensors to recognize obstacles and lane markings. The continual demand for driver assistance systems is raising the demand for advanced semiconductors in automotive. Chips with built-in ‘intelligence,’ known as application-specific integrated circuits (ASICs), are customized to a specific application.

Most of the automotive sector’s increasing importance as a revenue source for semiconductor companies is attributed to the shift to ADAS. This is because these systems should instantly process data while responding to unexpected changes like sudden stops in traffic. Such capacities need multiple interconnections within the high-performance chips and vehicle. Consequently, they have a centralized electrical and electronic (E/E) architecture and more electronics content and sensors compared to traditional vehicles.

According to our estimations, Advanced Driver Assistance Systems (ADAS) are expected to garner the largest revenue share of 28.69% by 2030.

Automotive Semiconductor Market: What Lies Ahead?

The internal-combustion engine (ICE) has been the source of innovation and value in the automotive industry for a century. However, the world is now entering a new automotive age with cars differentiated by functionalities facilitated by electronics and semiconductors. This transition places semiconductors at the ‘heart’ of automotive innovation, bringing together the automotive, computing, and semiconductor industries.

At the same time, this transition has significant implications, with the aforementioned technology-driven trends, namely connected cars, vehicle electrification, and ADAS, set to raise the semiconductor content in cars by ten-fold. Such developmental trends, along with the continual shift from direct subsidies to policy approaches that depend on regulatory measures like fuel economy standards and zero-emission vehicle mandates, are evaluated to influence the global automotive semiconductor market growth.