Automotive Semiconductor Market - Global Outlook & Forecast 2023-2028

MARKET OVERVIEW

The global automotive semiconductor market was valued at USD 68.50 billion in 2022 and is expected to reach USD 135.00 billion by 2028, growing at a CAGR of 11.97% during the forecast period. Due to the increasing complexity of vehicle systems and the ongoing advancements in automotive technology, the demand for specialized semiconductors tailored to the automotive industry has grown significantly. The automotive semiconductor market contributes to developing features such as advanced driver assistance systems (ADAS), electrification, autonomous driving capabilities, efficient power management, communication interfaces, and various in-cabin comfort and entertainment offerings.

Automotive semiconductors are electronic components and devices specifically designed and manufactured in automobiles and other vehicles. These semiconductor components are pivotal in enabling various functionalities, control systems, safety features, connectivity options, and entertainment systems within modern vehicles. They are integral to the functioning of different automotive systems, ranging from engine control and safety systems to infotainment and communication technologies. Automotive semiconductors encompass a wide range of integrated circuits (ICs), microchips, sensors, and other electronic components designed to withstand the unique challenges and requirements of the automotive environment. These components are engineered to operate reliably across various temperatures, resist mechanical stress, and deliver consistent performance even in the presence of electromagnetic interference.

The automotive semiconductor market in APAC is expected to experience significant growth as it is characterized by a diverse range of countries, from established automotive powerhouses like Japan and South Korea to emerging economies such as China and India. Thus, as vehicles increasingly rely on electronic systems and connectivity, the demand for semiconductor components has surged, giving rise to a highly competitive and rapidly evolving market. The global automotive semiconductor market is characterized by intense competition among vendors striving to secure contracts with automakers.

MARKET TRENDS & OPPORTUNITIES

Rising Development of Autonomous Vehicles
Autonomous vehicle development encompasses the active participation of vehicle manufacturers, suppliers of vehicle components, hardware and software companies, and semiconductor enterprises. This collective includes startups and some of the most prominent global vehicle manufacturers, automotive suppliers, and technology corporations. The rising development of autonomous vehicles increases the demand for automotive semiconductors for several reasons, mainly due to the rising need for sensors, processors, and communication.

Growing Electric Vehicle Industry
The growing electric vehicle (EV) industry significantly drives the automotive semiconductor market's growth. As electric vehicles become more popular and widespread, they introduce new technological requirements and opportunities that rely heavily on semiconductor technology.

Electric vehicles rely on advanced power electronics to control the flow of electricity between the battery, motor, and other components. Semiconductors like insulated gate bipolar transistors (IGBTs) and silicon carbide (SiC) devices are critical for efficient power conversion and energy management. Battery management systems (BMS) in EVs monitor and manage EV batteries' performance, health, and safety. For this, semiconductors are used for voltage and current sensing, temperature monitoring, and cell balancing within the battery pack. For optimized efficiency and smooth acceleration, EVs require precise motor control, which requires semiconductors to control and ensure optimal performance and energy usage.

INDUSTRY RESTRAINTS

Shortage of Semiconductors
The shortage of semiconductors in the global automotive semiconductor market is a significant challenge affecting the global automotive industry. This shortage can lead to production delays, reduced vehicle availability, and disruptions across the supply chain. Addressing this challenge requires a multi-faceted approach involving collaboration among various stakeholders. The automotive industry is currently facing a critical challenge due to a shortage of semiconductors, impacting various aspects of vehicle production and operations. This shortage has emerged as a result of several interrelated factors.

SEGMENTATION INSIGHTS

INSIGHTS BY COMPONENT
Based on the component segmentation, the microcontrollers segment dominated with a share of around 37% in the global automotive semiconductor market. The automotive semiconductor market comprises various component segments that play integral roles in the design and functionality of modern vehicles. Each segment contributes to vehicle performance, safety, connectivity, and user experience. Some of the component segment's key market dynamics include innovation and technological advancements, consumer demand & user experience, electric & autonomous vehicles, connectivity & IoT integration, regulatory standards & safety requirements, semiconductor industry, efficiency and environmental concerns, and market competition. Rapid technological advancements drive innovation in automotive semiconductor components.

Increasing environmental consciousness drives demand for semiconductor components that enhance vehicle efficiency, particularly in electric powertrains and energy management. Intense competition among semiconductor manufacturers and technology companies can lead to innovation, price fluctuations, and market consolidation. Emerging automotive markets and urbanization trends drive demand for cost-effective semiconductor components for entry-level vehicles and transportation solutions.

INSIGHT BY APPLICATION
The powertrain application segment dominated the global automotive semiconductor market in 2022. Modern powertrain systems are becoming increasingly complex, with more and more electronic components. This leads to a demand for more powerful and sophisticated semiconductors to control these systems. Moreover, automotive manufacturers increasingly prioritize vehicle safety to enhance consumer confidence and comply with regulatory requirements. This includes integrating various safety systems like adaptive cruise control, lane departure warning, automatic emergency braking, pedestrian detection, and more, all of which rely on semiconductor components. Also, the demand for body electronics in the automotive semiconductor industry is expected to grow during the forecast period.

INSIGHT BY VEHICLE TYPE
The global automotive semiconductor market by vehicle type is segmented into passenger, light, and heavy commercial vehicles. The passenger vehicle segment dominated the market due to new and advanced features in modern vehicles and the growing electric vehicle industry across the automotive semiconductor market. Semiconductor components in passenger vehicles are utilized for various purposes, including infotainment systems, ADAS features, comfort and convenience systems, powertrain control, and more. As vehicles become more connected and automated, the demand for semiconductor technology in passenger vehicles continues to rise. Moreover, commercial vehicles, including trucks, buses, vans, and other vehicles for transporting heavy goods and passengers, depend on semiconductors due to powertrain control, telematics, fleet management systems, safety features, and in-cabin technologies. As the logistics and transportation industry evolves, there is an increasing need for advanced semiconductor solutions to improve efficiency and safety in commercial vehicles.

GEOGRAPHICAL ANALYSIS

The higher adoption of automotive semiconductors globally is driven by several transformative trends and factors within the automotive industry. These factors are shaping the way vehicles are designed, manufactured, and experienced, leading to a significant increase in the integration of semiconductor technology. The shift toward electrification in the automotive industry requires sophisticated semiconductor components for battery management, power electronics, motor control, and energy efficiency. EVs rely heavily on semiconductors to manage power flows, optimize charging, and enhance performance.

APAC dominated the global automotive semiconductor market with a CAGR of around 12% during the forecast period. Rising economic growth, the establishment of new businesses, company expansions, and increased automotive activities are mainly driving the demand for automotive semiconductors in the region. China, in particular, is the largest automotive market in the world and has made significant investments in electric and autonomous vehicle technologies, propelling the automotive semiconductor market growth. Asia Pacific semiconductor manufacturers, like Taiwan's TSMC and South Korea's Samsung, are key players in providing advanced manufacturing capabilities for automotive chips. The North American automotive semiconductor market is highly driven by increasing consumer demand for customized products. Companies like Tesla have driven innovation in the North American region. The presence of leading semiconductor companies, such as Intel and NVIDIA, has fueled the development of automotive AI and computing platforms. Stricter safety and emission regulations, such as those in California, have pushed automakers to invest in semiconductor solutions for electric vehicles.

Moreover, Europe is a hub for luxury and high-performance vehicle manufacturers, leading to a demand for advanced semiconductor solutions for infotainment, connectivity, and safety features. Emerging markets in Latin America, the Middle East, and Africa are experiencing increasing demand for affordable vehicles with basic safety and infotainment features, influencing semiconductor choices and supporting the automotive semiconductor market growth. Furthermore, regional automotive manufacturers often collaborate with local and international semiconductor companies to develop customized solutions and gain a competitive edge in the market.

COMPETITIVE LANDSCAPE

The global automotive semiconductor market is highly fragmented, with many local and international players. The global automotive semiconductor market is fragmented due to local and international players. The leading global automotive semiconductor market vendors are Robert Bosch, Continental, Infineon Technologies, NXP Semiconductors, DENSO Corporation, Renesas Electronic Corporation, and others. The competition among these players is intense. The rapidly changing technological environment can adversely affect vendors as customers expect continual innovations and upgrades in the automotive industry. The present scenario forces vendors to refine their unique value proposition to achieve a strong market presence.

The market concentration in developed countries like the U.S. and other Western European countries is high. In contrast, the automotive semiconductor industry is promising in developing economies, such as China, Japan, and India, due to the entry of many international brands and the growing adoption of electric vehicles. Vendors compete based on features, offerings, variety, and pricing. Vendors use new business models and focus on developing the portfolio of their establishments to drive growth. The focus has shifted toward using high-quality raw materials and efficient semiconductor sources.