Automotive Semiconductors Automotive Semiconductors: Where we are and where we are headed
With vehicles on the road becoming ever more like computers on wheels, the level of innovation in semiconductor technology is at an all-time high, making it the perfect occasion to take a look at what the future holds for these critical components—and the industry itself.
With the automotive semiconductor market growing at a compound annual growth rate of 8 percent, the industry is on track to be worth more than USD 75 billion by the end of this decade.
Automotive semiconductors: a catalyst for innovation
Automotive semiconductors can be thought of as the key that opens the door to vehicle development. They are the fundamental building blocks behind everything from mapping applications, connectivity platforms and data-bases to graphics processing units, advanced driver warning systems (ADAS) and much more. As car manufacturers around the world seek to make e-mobility more cost-efficient, practical and safer than vehicles with internal combustion engines, so the number of semiconductors in new cars will continue to grow. The automotive sector currently accounts for 9 percent of global semiconductor revenue, but with electric cars set to take a global market share of 30 percent by 2030, this percentage will only increase with time.
The semiconductor market today, tomorrow and beyond
With so much revenue up for grabs, many semiconductor companies are aggressively seeking to carve out a market share while they have the chance. Even those semiconductor manufacturers that were not previously involved in the automotive industry—including heavyweights such as Intel, NVIDIA, Samsung, Sony and Panasonic—are now producing products designed to capitalize on the wave of e-mobility. The consumer demand is certainly there: in 2018, just under 90 percent reported that they would repurchase a vehicle containing innovative semiconductor technology. In other words, the market is set to become rather crowded, and may see a number of eye-catching mergers and takeovers before the next decade is over.
In terms of the major markets for automotive semiconductors, China currently leads the way for annual sales growth, though the green energy powerhouse is expected to account for no more than EUR 9.6 billion (or 23 per-cent) by 2020. Europe, on the other hand, is set to surge to EUR 11.2 billion (27 percent), putting it in pole position, and is followed by the USA, Canada and Mexico on EUR 10.2 billion (24 percent). Japan, while not forecast to make major strides in annual sales growth, rounds out the top six with EUR 4.4 billion (10 percent). This means that even if car sales do drop off (as was the case in 2019), this market will be well insulated from its effects—which can only be of benefit in the long term.
Adapting to an ever-changing market landscape
To take advantage of the market, semiconductor companies would be well advised to hone their focus on specific product categories. Microprocessors, microcontrollers and digital signal processors, for example, will be especially lucrative as further breakthroughs are made in autonomous driving. Mean-while, the safety segment, which covers early-warning detection systems and innovative microsensors, experienced strong growth (22 percent) in the period from 2015–2020 and is forecast to keep rising well into the next decade—also due, in part, to automated driving.
If the Electric Vehicles Initiative—which is supported by the likes of China, the UK, Canada, India, Japan and France—meets its target to put 44 million vehicles on the road each year up to 2030, it is safe to say that the automotive semiconductor market will only seek to benefit from the e-mobility revolution. The only question is which market players will emerge on top by the end of the next decade—and which innovations will become commonplace.