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 and reach USD 123.04 billion by 2032, exhibiting a CAGR of 6.9% during the forecast period. Asia Pacific dominated the automotive semiconductor market with a market share of 41.5% in 2023.

One of the primary factors driving market growth is the increased adoption of electric and hybrid vehicles, as well as the development of highly autonomous vehicles to improve safety. Increasing electronic content in vehicles and increasing digital connectivity will boost semiconductor adoption in the automotive industry. 

Furthermore, the growing integration of advanced driver monitoring systems, digital cockpits, and next-generation infotainment platforms powered by semiconductors is reshaping modern vehicle architecture and driving up demand for high-performance chipsets.

Rising automotive manufacturing in various countries has helped to drive market expansion. While nearly 80 million autos were produced globally in 2021, the graph is predicted to trend upward during the forecast period, helping the global semiconductor sector. OEMs are increasingly moving to modular vehicle platforms, which enable the reuse of semiconductor-rich E/E systems across many vehicle lines, thereby scaling demand and optimizing design cycles.

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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.

Semiconductor vendors are also intensifying R&D efforts to meet the rising thermal and power efficiency requirements of advanced automotive platforms, particularly in harsh environments. This shift is accelerating innovations in wide-bandgap materials like silicon carbide (SiC) and gallium nitride (GaN) to improve energy efficiency in power electronics.

The pandemic caused industry uncertainty and panic, prompting global governments to take stringent measures. Social distancing and lockdowns lowered automobile demand, disrupting production and supply chains. Global vehicle production declined by 16% in 2020. Despite a strong 2021 recovery, semiconductor shortages and pandemic concerns impacted showroom traffic. Semiconductor companies experienced revenue losses. The pandemic has sparked interest in electric vehicles. Electric and hybrid vehicle sales are expected to reach 145 million globally by 2030. Despite pandemic challenges, the electric vehicle market is expected to grow rapidly following the 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.

Furthermore, AI-powered semiconductor platforms are being optimized for real-time decision-making capabilities in mission-critical environments, particularly fully autonomous driving scenarios, allowing for faster edge inference with low latency.

Despite the technological potential of autonomous vehicles and in-car assistants, apprehension about safety concerns, and a desire to ensure that users have a smooth and glitch-free experience, these AI systems will most likely be implemented gradually via smart semiconductors. Thus, the increasing integration of artificial intelligence in vehicles is one of the key trends driving market growth.

In October 2023, BOS Semiconductors, a South Korean tech startup, partnered with Tenstorrent, a U.S. artificial intelligence hardware company, to develop semiconductors for vehicle use and manufacturing. This collaboration gives BOS access to Tenstorrent's AI Tensix core technology. The goal of this collaboration is to integrate Tensix cores into BOS chips to improve the processing speed of automotive semiconductors through artificial intelligence.

Automotive Semiconductor Industry Growth Factors

Increased Adoption of Electric and Hybrid Electric Vehicles will Drive Market Growth

Electric and hybrid vehicles require significantly more electronic components than conventional internal combustion engine vehicles. Semiconductors are critical components in electronic systems because they power battery management systems, power electronics, control units, and sensors.

Advanced safety features commonly found in electric and hybrid vehicles include collision avoidance systems (CAS), adaptive cruise control (ACC), and lane departure warning systems (LWDS). These features require sophisticated sensor arrays and semiconductor components to function properly, which contributes to the increased demand for automotive semiconductors.

As EV platforms adopt 800V systems and higher energy densities, the demand for high-voltage semiconductors and next-generation IGBT and MOSFET modules grows rapidly, reinforcing semiconductors' role in future-proof powertrain design.

Furthermore, electric and hybrid vehicles use complex powertrain systems that necessitate precise control and monitoring. Semiconductor devices play an important role in improving the efficiency and performance of these systems, which include motor control, battery management, and energy conversion. Thus, the transition to electric and hybrid vehicles is reshaping the automotive industry and opening up significant opportunities for semiconductor manufacturers to meet the growing demand for advanced electronic systems and components in the automotive market.

According to the IEA (International Energy Agency), EV passenger car sales will total 10.2 million units in 2022, up from approximately 6.5 million in 2021. Thus, the rise in demand for electric and hybrid vehicles will fuel the automotive semiconductor market's growth over the forecast period.

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

The rise of self-driving vehicles is altering demand for automotive semiconductors, forcing OEMs to seek in-house design. The significant focus on autonomous vehicles (AVs) has already impacted demand patterns for semiconductors in the automotive industry, with sales of specialty silicon chips customized to specific applications increasing dramatically. These customized chips are only accessible from a few semiconductor vendors, and some OEMs are now building them in-house to shorten development time and gain more control.

With the demand for specialty silicon increasing, other OEMs may follow suit. Furthermore, as autonomous features in vehicles become more prevalent, semiconductor companies are investing in the development of advanced components such as fusion and SoC (System on a Chip) devices, as well as a diverse portfolio of microchips that incorporate machine learning and AI technologies.

Safety is a key selling point for the use of advanced autonomous features. ADAS systems, which include features like traction control, lane departure warning, adaptive cruise control, and anti-lock brakes, can help to prevent vehicle accidents. However, these systems require significant development to achieve full autonomy (Level 5). To ensure vehicle safety, they require complex components such as memory controllers, data links, sensors, and high-speed processors. Sensors, in particular, are critical to facilitating a transition to high-level autonomy.

As autonomy levels increase, the number of sensors required will grow exponentially.  For example, Level 4 may require up to 29 sensors, compared to Level 2's 6.  These features will also make their way into budget and mid-range models, where volume movement will be much higher, rather than just high-end vehicles.  As a result, increased development and adoption of self-driving technology to improve safety is driving market growth.

Furthermore, LIDAR and radar modules built on high-frequency semiconductor substrates are becoming increasingly miniaturized and cost-effective, allowing for greater integration in non-luxury vehicles and commercial fleets.

Increasing Electronic Content in Automotive to Support the Market Growth

The automobile industry has been steadily integrating electronics into cars in innovative ways to improve safety (radar and collision avoidance, automatic braking), infotainment (satellite radio and Bluetooth), navigation (GPS mapping), system monitoring, onboard computers, and many other areas, including emerging self-driving cars. This has led to a significant increase in demand for electronic components. The expanding automotive market provides a significant opportunity for automotive semiconductors to support EV battery performance, increased connectivity, improved 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.

Furthermore, the shift to centralized computing architectures, which replace multiple ECUs with domain controllers, is driving up demand for high-performance SoCs and memory chips, significantly increasing semiconductors' role in modern automotive ecosystems.

RESTRAINING FACTORS

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

A failing component can degrade vehicle performance. Microprocessors and SoCs are complex components with many interlinked controls that affect one another. As a result, even if one component fails completely or is tampered with, the vehicle may not function properly. Because of the increased cost burden, cars with MCU-controlled features rarely include secondary backups to compensate for human error. As a result, a faulty MCU can present a significant safety risk in critical 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 require additional labor costs. Furthermore, repairing an MCU is a highly precise and technical process. It entails disassembling the module, running diagnostics, and performing critical electronics and circuitry work that requires specially trained technicians.

Furthermore, these components are highly vulnerable to hacking, and a malicious attack can result in the failure to deliver critical information for systems such as crash avoidance and control braking, among others. As a result, these factors limit market growth.

Furthermore, the scarcity of skilled semiconductor engineers with experience in functional safety and automotive-grade chip design creates a critical talent gap, potentially slowing time-to-market for innovative solutions.

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

Leading market players must comply with various environmental, data privacy, labor, and health and safety laws and regulations in each country where they operate. Companies must also obtain environmental permits and other authorizations or licenses from governmental authorities for certain operations. As a result, regulatory, tax, judicial, and administrative bodies must adhere to different standards and practices.

Companies that violate or fail to comply with laws, regulations, permits, and other authorizations or licenses may face fines or other sanctions from regulatory authorities. Furthermore, if regulators sanction one or more customers or distributors for failing to comply with laws and regulations, players may see a decrease in product demand.

For example, import and export regulations, such as the US Export Administration Regulations administered by the US Department of Commerce, are complex, change frequently, have generally become more stringent over time, and have intensified in recent years.  As a result, such factors may have a negative impact on the market if they require the suspension of activities with specific customers or suppliers in response to future regulatory changes.

 Furthermore, global privacy legislation, enforcement, and policy activity, such as the EU General Data Protection Regulation, are rapidly expanding, resulting in a complex regulatory compliance environment.  As a result, different regulations or legal challenges around the world may impede market growth.

Ongoing geopolitical tensions and export control restrictions, particularly between major chip-producing nations, jeopardize global supply continuity, forcing automakers to diversify sourcing strategies or form strategic alliances with local manufacturers.

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 had the largest market share in 2023 and is expected to maintain its dominance throughout the forecast period. The increased use of electronics components in vehicles is one of the primary factors driving the segment's growth. However, discrete power devices are expected to have the highest CAGR of 8.8% during the forecast period.

Memory devices are expected to be the second fastest growing segment. The demand for power devices like MOSFET and IGBT is increasing due to the electrification of key automotive applications, including powertrain. To enhance safety and innovation, autonomous vehicles require more memory devices to program multiple control systems.

With the increasing use of zonal and domain-based vehicle E/E architectures, semiconductor manufacturers are investing in system-on-chip (SoC) solutions that consolidate processing power into fewer, more centralized units. This is expected to increase design complexity while improving power efficiency and lowering latency for a wide range of in-vehicle features.

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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 car segment led the market in 2023 and is expected to dominate by 2032 in terms of revenue. The growth is due to rising global demand for passenger automobiles. The growing use of automotive entertainment systems in passenger vehicles, including hands-free phone connectivity, climate control, navigation, voice control, two-way communication tools, parking assistance, and internet services, is driving sector growth.

The commercial vehicle segment is expected to experience the fastest growth rate during the forecast period. Road infrastructure improvements, rapid urbanization, the expansion of e-commerce, and mining operations are all expected to boost commercial vehicle sales. Furthermore, leading commercial vehicle manufacturers are focusing on the development and implementation of various autonomous features in commercial vehicles to improve safety. As a result, the commercial vehicle segment is expected to grow at a significant CAGR over the forecast period.

The growing use of Vehicle-to-Everything (V2X) communication systems in both passenger and commercial vehicles is increasing the demand for high-reliability semiconductors capable of low-latency data processing and real-time connectivity, particularly in urban and smart city environments.

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 has the largest market share in 2023 and is expected to maintain its dominance throughout the forecast period. This is primarily due to the implementation of stringent vehicular safety regulations in response to rising road accident rates in various countries. To comply with vehicle safety regulations, auto manufacturers include a variety of safety-related features such as emergency braking systems and advanced driver assistance systems in vehicles. Such factors are propelling market growth.

The telematics and infotainment segment is expected to experience the fastest growth rate during the forecast period. Rising in-car connectivity and infotainment demand for navigation systems, audio and video players, Over-the-Air updates, and smartphone connectivity are key factors driving segment growth. In addition, leading countries such as the United States and Europe require e-call services in vehicles, which is fueling segment growth.

Furthermore, as automakers shift their focus to providing improved digital user experiences, the demand for high-bandwidth, multi-core automotive-grade chipsets capable of supporting augmented reality (AR) dashboards and AI-based virtual assistants grows, particularly in premium vehicle segments.

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 expected to have the largest market in 2023. Modern ICE vehicles increasingly include advanced infotainment systems, necessitating high-performance semiconductors. In addition, the integration of ADAS and other developed automotive technologies drives semiconductor demand in ICE segment vehicles.

The electric segment is expected to grow at the fastest CAGR between 2024 and 2032. Several government and regulatory bodies provide incentives and subsidies to encourage the adoption of electric vehicles. This encourages consumers to switch to electric vehicles, which indirectly increases demand for semiconductors for electric vehicles. This drives segmental growth during the forecasted period.

For example, according to the International Energy Agency's data on global passenger car sales, approximately 13.8 million passenger cars were sold in 2023, representing a 35.3% increase over the previous year, 2022.

Furthermore, the shift to 800V electrical architectures in EVs to allow for ultra-fast charging is driving demand for wide bandgap semiconductor materials like silicon carbide (SiC) and gallium nitride (GaN), which outperform traditional silicon-based solutions in terms of thermal and efficiency.

REGIONAL INSIGHTS

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The Asia Pacific region dominated the global market and is expected to maintain that position throughout the forecast period. The region is also expected to have the highest CAGR from 2024 to 2032. The market growth is being driven by a rapidly expanding automotive industry in countries such as China, India, and Japan, as well as government support for the expansion of the semiconductor industry throughout the region. The widespread adoption of electric vehicles in China has fueled market growth.

Furthermore, increasing commercial electric vehicle penetration in APAC's emerging markets, such as India, South Korea, Japan, and others, is expected to boost market growth in the near future. For example, the China Passenger Car Association reports that total passenger electric vehicle sales in China increased by 169.1% between 2020 and 2021, reaching nearly 2.99 million.

The market is growing due to the increased adoption of electric and hybrid electric vehicles, as well as the development of highly autonomous vehicles to improve safety. Increased electronic content in vehicles, as well as increased digital connectivity, will boost semiconductor adoption in the automotive industry. Furthermore, the automotive semiconductor market in the United States is expected to expand significantly, reaching an estimated value of USD 24.88 billion by 2032.

In addition, governments in the region are investing heavily in establishing local semiconductor manufacturing hubs, such as India's Production Linked Incentive (PLI) scheme for semiconductor fabrication and packaging, which is expected to reduce reliance on imports while strengthening the local supply chain.

After Asia-Pacific, North America is expected to experience the highest growth rate. Sales of electric commercial and passenger vehicles in the United States are increasing significantly, driving market growth. Furthermore, the growing emphasis on the development and commercialization of electric autonomous vehicles and ch 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 key market players, as well as major automobile manufacturers, is driving market growth in Europe. Furthermore, tighter regulations on vehicle emissions, increased support for electrification, and increased investment in autonomous vehicle innovations are all boosting market expansion in Europe.

The rest of the world is expected to experience a significant CAGR from 2024 to 2032. Increasing adoption of battery-electric cars in countries such as Brazil, UAE, South Africa, and Saudi Arabia, among others, combined with increased investment in public charging infrastructures in regions such as Latin America and the Middle East, is expected to drive electric vehicle adoption, thereby fueling 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 numerous players worldwide.  Companies operating in the market are increasing strategic moves such as partnership, collaboration, and acquisition to expand their businesses and capitalize on untapped opportunities in emerging markets.  For example, in December 2021, NXP Semiconductors collaborated with Hailo, a cutting-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.

Furthermore, companies are increasingly focusing on chiplet-based designs and 3D packaging technologies to improve processing power and energy efficiency in compact automotive systems. This innovation is especially important in the development of zonal controllers in next-generation vehicle E/E architectures.

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

Infineon Technologies AG is a world-leading semiconductor manufacturer. Power semiconductors, sensors, microcontrollers, digital, mixed-signal, and analog integrated circuits, discrete semiconductor modules, switches, interface ICs, motor-controlling ICs, RF power transistors, voltage regulators, and electronic safety components are among the products offered by the company. Its headquarters are in Neubiberg, Germany. Volkswagen, General Motors, BMW Ford, Toyota Renault, Porsche, PSA, Honda, BharatBenz, Schmitz, Volvo, Freightliner Trucks, Koegel, and Daimler AG are among Infineon's major customers.

In April 2020, Infineon Technologies AG completed its acquisition of Cypress Semiconductor Corporation. Cypress now offers a unique portfolio of microcontrollers, connectivity components, software ecosystems, and high-performance memories. The addition of Cypress' strong R&D capabilities, as well as its presence in the United States and Japan, strengthens Infineon's global customer connections.

Infineon is also at the forefront of sustainable semiconductor manufacturing, using green energy-powered facilities and water reuse systems to meet OEMs' increasingly stringent ESG requirements.

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 analyzes the market in detail, focusing on key aspects such as leading companies, product types, and leading product applications. Aside from that, the report provides insights into market trends and highlights major industry developments. In addition to the factors listed above, the report discusses several factors that have contributed to the market's growth in recent years.

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