Automotive Chip Market Size, Share & Trends Analysis Report By Product Type (Microcontrollers (MCUs), Logic ICs, Memory Chips, Analog ICs, Power Management ICs), By Application (Powertrain, Infotainment & Telematics, Advanced Driver Assistance Systems (ADAS), Body Electronics, Safety Systems), By Vehicle Type (Passenger Vehicles, Commercial Vehicles), By Propulsion Type (Internal Combustion Engine (ICE) Vehicles, Battery Electric Vehicles (BEVs), Hybrid Electric Vehicles (HEVs), Plug-in Hybrid Electric Vehicles (PHEVs)), By End-User (OEMs (Original Equipment Manufacturers), Aftermarket) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2025-2033

Automotive Chip Market Size

The global automotive chip market size was worth USD 45.96 billion in 2024 and is estimated to reach an expected value of USD 50.14 billion in 2025 to USD 100.65 billion by 2033, growing at a CAGR of 9.1% during the forecast period (2025-2033).

An automotive chip is a specialized semiconductor device designed for vehicles to manage various electronic functions such as engine control, infotainment, safety systems, and autonomous driving. These chips process sensor data and enable real-time decision-making to enhance vehicle performance, fuel efficiency, and security. They are built to withstand extreme temperatures, vibrations, and electromagnetic interference common in automotive environments. Modern cars rely on a variety of chips, including microcontrollers (MCUs), system-on-chips (SoCs), and power management integrated circuits (PMICs), to support advanced driver-assistance systems (ADAS) and electric vehicle (EV) functionalities.

The global market is expected to grow significantly due to advancements in electric vehicles and autonomous driving technology. Incorporating AI and IoT into cars has drawn the requirement for complex semiconductor components. Economic factors, such as trade tensions and investment in chip-making equipment, also impact the industry landscape.

The graph below shows the growing sales of global electric vehicles in China, the UK, and the rest of the world. EVs are one of the significant factors in influencing the global market due to the heavy use of automotive chips in EVs. The growth of EVs runs parallel to the growing automotive chip market, thus showing a growing potential in the global market.

Source: Straits Research

As per the data in the graph, the sales of EVs have substantially increased from 2022 to 2024, in which China is leading the market as EV sales in that region were around 10.1 million in 2024, which is 2 million additional EV sales when compared to 8.1 million EVs sold in 2023. Additionally, government policies worldwide aim to turn around internal chip production to boost supply chain resilience, showcasing a significant opportunity for the global market.

Latest Market Trends

Integration of AI and modern features in-vehicle systems

The automotive industry has increasingly adopted artificial intelligence to improve vehicle functionalities, including advanced driver assistance systems (ADAS) and autonomous driving.

• For instance, the Autonomous Vehicles Factsheet, published by the University of Michigan in October 2024, states autonomous vehicles (AVs) are expected to reduce vehicle weight and size, reducing fuel consumption by 5 to 23%, due to their modern features, including in the vehicle.

This trend shows the potential for the growth of the global market, as autonomous vehicles are being increasingly adopted due to their added benefits over traditional cars.

Shift toward domestic chip production

Countries now prioritize local semiconductor manufacturing to reduce their dependence on foreign suppliers.

• For instance, the domestic chips produced in China have a share in overall electric vehicles, which have grown to about 15 % while conducting a near-total reliance on foreign chips. Additionally, the Chinese government is urging its country’s major carmakers to use up to 25% of local chips by 2025, as stated in the Financial Times news published on May 23, 2024.

This effort aligns with the government's long-term strategy of controlling the EV supply chain while improving self-sufficiency in critical technologies.

Automotive Chip Market Growth Factors

Expansion of electric vehicle (EV) market

The surge in electric vehicle adoption (EV) is a key driver of the market, as EVs require higher-quality and more advanced chips than traditional internal combustion engine (ICE) vehicles. The transition towards EVs, hybrid electric vehicles (HEVs), and plug-in hybrid electric vehicles (PHEVs) is accelerating demand for power management chips, AI-based processors, and high-efficiency semiconductor components.

• For instance, according to the International Energy Agency (IEA), China had an EV stock of 5.8 million PHEVs and 16.1 million BEVs in 2023, compared to 1.6 million PHEVs and 6.2 million BEVs in 2021. Major automotive manufacturers like Tesla, BYD, and Volkswagen are increasing their EV production, further propelling demand for advanced semiconductor technologies.

Governments worldwide are introducing EV subsidies, emission regulations, and charging infrastructure investments, reinforcing the need for cutting-edge automotive chips. This rapid increase in EV adoption, particularly in Asia-Pacific and Europe, highlights the growing potential of the global market, with automakers investing in efficient battery management systems (BMS), onboard chargers, and inverters, all of which require specialized chips.

Advancements in connected car technologies

Developing connected vehicles with integrated Wi-Fi, AI-driven automation, and real-time telematics drives demand for high-performance automotive chips. These connected cars rely on sophisticated semiconductors for real-time GPS tracking, data analytics, vehicle-to-vehicle (V2V) communication, and smart infotainment systems.

• For instance, a whitepaper published by Vodafone on December 16, 2024, states that the internet in cars is now available in over 30 European countries and 42 countries with uninterrupted roaming. This enables automobiles to maintain seamless connectivity through single-SIM technology. Automakers such as BMW, Mercedes-Benz, and Ford are investing in autonomous driving technology, which requires AI-driven processing units, LiDAR sensor chips, and cybersecurity-enhanced microcontrollers.

The increasing demand for edge computing, cloud-based vehicle diagnostics, and over-the-air (OTA) updates further pushes the need for advanced automotive chips with higher processing power. The expansion of connected vehicle technologies, combined with the rise of smart transportation systems, is fueling market growth for semiconductor components, ensuring continued innovation in automotive chipsets.

Market Restraint

Geopolitical trade tensions

Ongoing trade conflicts, particularly between the U.S. and China, have resulted in export controls, semiconductor tariffs, and restrictions on chip manufacturing equipment exports, creating uncertainty in the global supply chain. These geopolitical disputes directly impact the automotive chip market, leading to supply shortages, increased production costs, and disrupted partnerships.

• The U.S. government’s export restrictions on semiconductor technologies have forced companies like NVIDIA and Intel to rethink supply chains and investment strategies. Similarly, China’s response, with its self-sufficiency initiatives in semiconductor production, has led to increased R&D spending but also raised concerns over long-term market fragmentation.

Other regions, such as the European Union and Japan, work on semiconductor supply chain diversification policies that impact global production capabilities. These tensions pose challenges for automotive chip manufacturers, leading to longer lead times, reduced availability of advanced semiconductor technologies, and increased reliance on alternative supply sources.

Market Opportunity

Increasing role of 5G and connectivity

The evolution of 5G, AI-powered telematics, and vehicle-to-everything (V2X) communication creates new opportunities for automotive chip innovation. Advanced semiconductor solutions are essential for next-generation vehicles, enabling high-speed connectivity, remote software updates, and smart city integration. 5G connectivity enables real-time vehicle monitoring, enhancing autonomous driving capabilities, predictive maintenance, and cloud-based vehicle management.

• For instance, a news report published by the National Institute of Standards and Technology (NIST) on January 3, 2025, states that the Semiconductor Research Corporation Manufacturing Consortium (SRC) received a USD 285 million grant from the U.S. Department of Commerce’s CHIPS for America initiative to focus on digital twin technology in semiconductor manufacturing.

Automakers like Tesla, Toyota, and General Motors are integrating AI-powered processors, ultra-fast memory chips, and cybersecurity-enhanced microcontrollers to ensure safer and more efficient driving experiences. As the automotive industry shifts toward autonomous mobility and smart vehicle ecosystems, the demand for high-performance automotive chips with advanced AI processing capabilities continues to rise, positioning semiconductor manufacturers for substantial growth opportunities in the global market.

Regional Insights

North America: Dominant region with a significant market share

North America is the dominating region in the global automotive chip market. The U.S. has been a substantial part of this region's dominance within the market due to its multiple partnerships with different countries and initiatives to enhance the automotive chips industry.

• For instance, “The U.S. Department of Commerce” has finalized USD 1.4 billion in funding. “The CHIPS National Advanced Packaging Manufacturing Program (NAPMP)” to establish a self-sustaining, high-volume domestic advanced packaging industry, ensuring that advanced node chips are manufactured and packaged within the U.S., as stated in the news article published on January 16, 2025, by National Institute of Standards and Technology (NIST).

Such initiatives indicated the dominance and advancement of the region in the global market, along with partnership and innovation.

United States Automotive Chip Market Trends

The U.S. is a prominent country in the global automotive chips market due to its policies and government investments. For instance, according to a report published by the Semiconductor Industry Association on September 11, 2024, after introducing the CHIPS Act in 2020, more than 90 projects were announced across 28 states and USD 450 billion in private investments. This is expected to boost the domestic chip production capacity and support the automotive industry.

Asia-Pacific: Rapidly growing region

Asia-Pacific is the fastest-growing region as a market share holder for the global automotive chip market. A significant reason for the growth is the increasing demand for the EV and autonomous vehicles, thus increasing the demand for automotive chips.

• For instance, an article published by “The India Brand Equity Foundation (IBEF)” in October 2024 states that almost 85% of chip requirements for India are met by relying on imports from the global market.

Thus, rising demand for the end-use case of automotive chips has been one of the major factors boosting the region’s growth for the automotive chip market, placing this region as the fastest growing region in the global market.

Japanese Market Trends

Japan continues to invest in advanced semiconductor technologies to maintain its competitive edge in automotive electronics. Work carried out jointly by government and private sectors hopes to improve the availability of chips for the automotive industry's changing needs. For instance, an article published by “The World Economic Forum” on November 20, 2023, states that in 2022, eight leading Japanese companies invested approximately JPY 73 billion (~ USD 48.3 million) together in a new company named “Rapidus,” which is dedicated to mass production of next-generation semiconductors, for autonomous driving and AI features.

Countries Insights

• South Korea: South Korea has committed to grow its semiconductor sector by providing vast investments, collaboration, and incentives, which aims to nurture its automotive industry as it moves towards electric vehicles and autonomous vehicles. For instance, according to a report published by the Semiconductor Industry Association on September 11, 2024, South Korea has collaborated with the U.S., which includes the U.S.- – Korea Supply Chain and Commercial Dialogue (SCCD) which established a semiconductor-specific working group to enhance industry supply chains and promote joint R&D efforts.
• Taiwan: Taiwan is another significant country in the global market, mainly due to government initiatives and policies. For instance, according to a report published by the Semiconductor Industry Association on September 11, 2024, Taiwan passed incentives for the semiconductor industry under the “Taiwan Chips Act” in 2023, which offers investment tax credits of 25% for R&D expenses and 5% for equipment.
• China: China is another significant country in the global market, majorly due to government initiatives to domesticate chip production and increasing demand in end-use automotive. China believes in attaining self-sufficiency in key critical technologies, which include automotive semiconductors. For instance, an article by “The International Trade Administration” in 2023 states that China has the world’s largest vehicle market in annual sales and manufacturing output.

Segmentation Analysis

By Product Type

Microcontrollers (MCUs) dominate the market due to the increasing integration of advanced vehicle features, such as automated climate control and advanced driver assistance systems (ADAS), leading to a higher demand for MCUs. Improving vehicle functionality demands a substantial amount of technology from these components.

By Application

Infotainment and Telematics dominate the market due to the demand for improved in-car entertainment and connectivity, which has surged with the incorporation of superior infotainment and telematics systems. These systems depend on advanced chips to provide seamless usage experiences.

• For instance, according to an article published by the International Trade Administration on June 24, 2024, the growing smartphone penetration and adoption of high internet speed is one of the reasons for the growth of automotive infotainment systems sales.

By Vehicle Type

Passenger vehicles dominate the market due to sophisticated touchpoints added to enhance safety, comfort, and connectivity, and automotive chip demand has soared in this category.

• For instance, according to a report by the Federation of Automobile Dealers Associations (FADA) published on February 12, 2024, there were 43,188 three-wheeler passenger vehicles and 3,93,250 passenger vehicles other than three-wheelers, which covers a significant portion of the total vehicles in India.

This indicates the dominance of passenger vehicles, thus showing the potential growth for the global market.

By Propulsion Type

ICE vehicles dominate the market due to their predominant infrastructure and are well-known to consumers.

• For instance, there are a total of 20,41,847 ICE vehicles in India, covering a majority share of the market compared to electric vehicles, as stated in the report by the Federation of Automobile Dealers Associations (FADA) published on February 12, 2024.

Most ICE vehicles include advanced infotainment systems and ADAS requiring high-performance semiconductors.

By End-User

Original Equipment Manufacturers (OEMs) dominate the global automotive chip market due to the increasing installation of advanced electronics in vehicles to cater to consumer demand for enhanced features such as connectivity, safety, and automation. This growth stimulates the automotive chip market, as manufacturers warrant such innovations by requiring sophisticated semiconductors.

Company Market Share

Key market players are investing in advanced Global Automotive Chip technologies and pursuing collaborations, acquisitions, and partnerships to enhance their products and expand their market presence.

Qualcomm Incorporated: An Emerging Player in the Global Automotive Chip Market

Qualcomm Incorporated has rapidly become one of the emerging companies in the international automotive chip market. Using its vast experience with mobile technology, it has diversified into automotive solutions, delivering advanced platforms that boost vehicle connectivity, infotainment, and autonomous driving capabilities. By collaborating with vehicle manufacturers and technology companies, Qualcomm has contributed to the transformation of smart and connected vehicles.

Recent Developments:

• In October 2024, Qualcomm announced its collaboration with Alphabet's Google to develop next-generation integrated chips and software applications for automotive purposes. Automakers will create custom AI-powered voice assistants that could work independently of drivers' smartphones powered by Google's Android Automotive OS, optimized for Qualcomm's processors. In this initiative, in-car computer systems are expected to be streamlined with developing complexities for the manufacturers as they reduce.

Recent Developments

• February 2025- R&D Institute of Dongfeng Motor Corporation and Xiangyang Da'an Automobile Test Center signed cooperation agreements with the National New Energy Vehicle Technology Innovation Center. These strategic collaborations will establish laboratories for automotive chip evaluation and testing. The detailed working partnership will focus on domestic chip selection, evaluation, standardization, and quality management, thus enabling China to better compete in the automotive chip business.
• October 2024- Bosch and U.S. startup Tenstorrent announced a cooperation to develop a standardized platform for automotive chips. This partnership focuses on developing a unified method of incorporating chiplets for automotive requirements. Integrating combined chiplets into processors is aimed at enhancing cost efficiency and quickening the pace of launching new silicon products in the automotive sector.

Analyst Opinion

As per our analyst, the global automotive chip market has much growth potential, fueled by fast-growing consumer bases for electric vehicles and improvements in autonomous driving technologies. Government regulations to ramp up home-grown semiconductor production, particularly within the Asia-Pacific region, are now affecting the dynamics of supply chains and raising self-sufficiency in the area, as well as Latin America's rapidly growing pace, making it another significant region. Additionally, geopolitical trade tensions and persistent needs for technological advancement still need to be resolved. Partnerships, including government with industry stakeholders or different governments, must collaborate to navigate these difficulties and keep the market momentum going.