Global Automotive Semiconductor Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Global Automotive Semiconductor Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The global automotive semiconductor market is expected to grow by registering a CAGR of 16.2% during the forecast period. With the introduction of numerous technologies over the past few years, including 3D mapping applications, the rise of electric vehicles, automotive automation, and many more, the automotive sector has undergone rapid development. Due to this, there is now a greater need for a variety of advanced semiconductors, including ICs, sensors, memory devices, and memory devices.

Key Highlights

• The electrification and automation of automobiles are primary drivers of the market studied and have led to increased demand for semiconductor wafers. Semiconductor ICs with different functionalities are used in various automotive products, such as navigation control, infotainment systems, and collision detection systems. The inclusion of these features has an impact on automobile sales.
• The automotive market is racing toward standardization, and A-PHY (serializer-deserializer (SerDes) physical layer interface) is expected to be the leading connectivity solution in the future. Clearly, the automotive ecosystem is merging around this standard, and, likely, A-PHY will soon become a dominant connectivity solution in cars worldwide.
• For the past few years, advanced technologies have been increasingly incorporated into the mass production of cars, including matrix LED lights, enhanced LiDAR sensors, and ADAS systems. The industry has also witnessed improvements in 3D mapping applications, EV batteries, and augmented-reality technologies, such as head-up displays.
• Also, the 5G networks have enabled the next generation of mobility solutions in the sector. They are owing to the rising demand for safety features that have been designed to avoid collisions and accidents by offering technologies that alert drivers about potential problems (or to avoid collisions by implementing the safeguards and taking over control of the vehicle), the ADAS (Advanced Driver Assistance Systems) sales are expected to flourish in the future.
• Moreover, connected vehicles are key drivers for consumers accustomed to rich user experiences. The resulting expectations have transformed the infotainment systems from bulky, purpose-built devices into sleek, connected, upgradeable, and integrated platforms. They require the latest technology-featured semiconductors. Thus, the future of connected and autonomous cars is anticipated to create potential opportunities for the semiconductor industry.
• Further, the automotive sector is undergoing various challenges, such as reduced purchasing power due to COVID-19, charging infrastructure improvements, and consumer expectations of further technology improvements to lower vehicle prices and give better range.
• The COVID-19 pandemic has led to a decline in the automotive semiconductor market, as the major automotive manufacturing plants have completely stopped their production in response to the lockdown being enforced by many countries across the world. Moreover, according to Korea Automotive Technology Institute, or Katech, the global shortage of automotive semiconductors that started around the end of 2020 may continue to affect the global car industry for the first half of 2022. Even after 2023, some companies may still feel its effects.

Key Market TrendsPassenger Vehicle Segment to Occupy the Largest Market Share

• Passenger automobiles focus more on greener technologies as the trend towards mobility-on-demand grows. Various governments are taking steps to boost the usage of electric vehicles in public transportation to minimize CO2 emissions by offering incentives and tax breaks to e-passenger vehicles such as e-buses.
• Thus, with the widespread adoption of these advanced technologies, there will be greater demand for autonomous vehicles. This is where e-drive systems come in handy for reducing vehicle weight, presenting an excellent opportunity for automakers to adopt various solutions, including discrete power devices, integrated ICs, sensors, and other components, to enhance their passenger vehicles.
• For instance, India set Corporate Average Fuel Efficiency rules, requiring manufacturers to increase their fuel efficiency by 30% or more from 2022. Companies like Toshiba and NXP Semiconductor improve fuel-saving technologies in passenger vehicles by storing the electric energy generated during deceleration using battery management systems, among other things.
• In addition, several nations in North America, Europe, and the Asia Pacific have passed legislation requiring various versions of ADAS in passenger vehicles. The European Union, for example, has announced Vision Zero, a plan to reduce traffic fatalities to zero by 2050. By 2030, the authority hopes to have cut deaths and injuries in half.
• Furthermore, by 2022, the strategic plan will include essential safety features like autonomous emergency braking, lane departure warning, and tiredness and attentiveness detection to be mandatory in new passenger vehicles. Major automakers use ADAS systems to attain improved safety ratings and attract more customers.
• As a result, top automakers either standardize safety systems across models or offer them as options. Overall, the demand for ultrasonic sensors, radar sensors, sophisticated automotive ICs, and LiDAR would increase due to the rising penetration of ADAS features.

Asia Pacific to Witness Highest Market Growth

• The Asia Pacific automotive semiconductor market is fueled by increased automotive manufacturing and continued partnerships between automotive OEMs and semiconductor manufacturers. Cost and fuel efficiency are no longer the most important factors to consider when buying an automobile; instead, the comfort and luxury offered by the vehicle are more important.
• The Asia-Pacific region offers a potential market for the automotive semiconductor industry. This may be attributed to the strong demand for luxury and semi-luxury vehicles, pressuring automobile manufacturers to install more electronic components, thereby propelling the Asia-Pacific automotive semiconductors market.
• Further, the rapid expansion of the Asia-Pacific automotive semiconductor industry is expected to be fueled by the rising demand for electric vehicles. Automobile manufacturers must continue to innovate, create, and develop self-driving cars, which have already attracted many customers in key automotive manufacturing countries. The growth trajectory of fully-autonomous automobiles is expected to be heavily influenced by several factors, including technology advancements, consumer willingness to accept fully-automated vehicles, pricing, and suppliers' and OEMs' capacity to address major concerns about vehicle safety.
• China is one of the major contributors to the automotive semiconductor market in the region. This is due to an increase in the use of safety features in vehicles and an increase in infotainment applications such as navigation. ADAS systems have also grown in popularity in the country, with features like parking assist, adaptive cruise control, lane-departure warning, forward collision warning, and blind-spot recognition contributing significantly to the market's growth. Domestic OEMs dominate the Chinese EV industry, with a sales share of roughly 94% (Source: IEA).
• In addition, China has put a quota on automakers for 100% electric or hybrid vehicles, which may account for at least 10% of total new vehicle sales. Furthermore, some large cities and provinces are enacting stricter regulations. Aside from that, manufacturers in the country are working to minimize their present GHG emissions by optimizing their powertrain system design and focusing on lightweight and smaller powertrain systems that deliver higher performance.
• Raw materials, equipment, and small active-passive components drive Japan's semiconductor industry. Japan also offers several advantages in terms of upstream semiconductor materials. Here, semiconductor materials have stringent purity criteria that Japan can only meet. This factor increases the need for semiconductors in the United States. Furthermore, while the country's semiconductor performance is not well known, its profound industrial experience is anticipated to propel its expansion. As a result, such advances may help drive the Japanese automotive semiconductor market.
• Apart from the factors mentioned above, the rising rate of scrapping of automobiles and engines tends to boost demand for original equipment engines. Due to the more rigorous environmental regulations in industrialized countries, scrap rates are increasing, resulting in more frequent replacement of motor vehicles and engines than in developing countries. On the other hand, India has emerged as one of the world's fastest-growing economies with a large population. According to the projections, the automotive semiconductor market in the country may increase rapidly in the coming years.

Competitive Landscape

The Global Automotive Semiconductors market is moderately competitive and consists of several major players, such as STMicroelectronics, NXP Semiconductor NV, etc. The competitive environment requires technological upgrades, significant capital requirements, and investment in research and development for scalability.

• August 2022 - NXP Semiconductor announced the expansion and strong customer engagements for its entire S32 family of the domain and zonal automotive processors. This includes the selection of NXP’s S32 family of automotive processors and microcontrollers by a major automotive OEM to be used across its fleet of future vehicles. The resulting multi-year supply agreement spans the S32 family, including the upcoming 5nm ASIL-D processors.
• August 2022 - Infineon Technologies AG has added HYPERRAM 3.0 to its portfolio of high-bandwidth, low-pin count memory solutions. The device features a new,16-bit extended version of the HyperBus interface that doubles throughput to 800 MBps. With HYPERRAM 3.0, Infineon offers a portfolio of high-bandwidth memories with low pin count and low power. It is ideal for applications requiring expansion of RAM memory, which includes Automotive vehicle-to-everything (V2X).
• September 2021 – ROHM announced the development of new SerDes ICs and PMIC mainly designed for vehicle satellite cameras to support Advanced Driver Assistance Systems (ADAS). These products will help in low power consumption, low electromagnetic noise, and compact the ADAS system modules.
• July 2021 – STMicroelectronics announced an anchor partnership with startup Autobahn; there are major car brands and vendors in Autobahn’s anchor partnership; with STMicroelectronics support through semiconductors, the main emphasis will be given on smart mobility for electric and smart connected driving vehicles.

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