Automotive Microcontroller Market

Market Overview

The global automotive microcontroller market size was valued at USD 11,225 million in 2021 and is projected to reach USD 21,521 million by 2030, registering a CAGR of 7.5% during the forecast period (2022 – 2030).

Microcontrollers are embedded processors containing memory, CPU, input/output devices, and peripherals on a single integrated circuit. They are put in items and electrical devices that are automatically controlled, such as remote controls, machinery, and others. The technology utilized in microcontrollers is intended to manage advanced car components, enhancing the driving experience efficiently. The development of improved driving systems and advancements in the automation industry has expanded the use of automotive microcontrollers. In addition, greater automation has generated a substantial need for microcontrollers responsible for the autonomous operation of car features. Utilizing microcontrollers, automobiles are equipped with automatic functions such as keeping the exhaust system and fuel consumption low and distributing electricity to various vehicle components. During the forecast period, the market for automotive microcontrollers is anticipated to rise with increasing electrification and several rules and regulations about vehicle safety and security that various governments around the world have established.

Market Dynamics

Market Driving Factors

Rapid Developments in the Automotive Industry

A microcontroller is used in the automotive sector to handle electrical control unit operations, control fail-safe systems, and automotive fault-tolerant systems, which alert the driver to errors that occur in the vehicle (accelerator, anti-lock brake interface, and broken lights). For instance, fault tolerance would be highlighted if a car loses control on icy roads. In these circumstances, the sensor microcontroller detects the occurrence and triggers the anti-lock braking upon the car operator using the brakes. Therefore, microcontrollers are an essential component of the automotive sector, and the industry's rapid development supports the market's growth.

High Demand for Safety Features

Due to an increase in traffic accidents globally, there is a growing demand for safety technologies, including parking assistance, collision avoidance systems, lane departure warnings, traction control, electronic stability control, tire pressure monitors, airbags, and telematics. Objects on the road can be detected and classified by vehicles with fitted ADAS, which can then alert the driver to the road conditions. According to the state of the road, these systems can also automatically slow down or stop cars. Additionally, it has been noted that the death rate from traffic accidents has significantly increased. For instance, a report from the World Health Organization states that over 1.25 million people every year pass away in traffic accidents. These elements add to the rising need for safety measures in automobiles. To satisfy consumer demand, automakers are creating and releasing safety measures. Therefore, the market for automotive microcontrollers is expanding due to the rising demand for safety features.

Market Restraining Factors

Operational Failures in Extreme Climatic Conditions

These devices' operational shortcomings primarily constrain the market for automotive microcontrollers in freezing and extremely hot climates. Microcontrollers tend to melt down or malfunction in scorching environments, and this causes the signal to become too weak and fail. On the other hand, resistance is decreased, and it becomes stable when it is brought to an ideal temperature. Furthermore, high cold is not suitable for microcontrollers since it causes them to stop functioning. It can operate at temperatures as low as -25°C and as high as +150°C on average. As a result, nations like Canada and Russia favor using fewer microcontrollers. This causes consumers to switch to using mechanical devices, impacting the automotive microcontroller market.

Key Market Opportunities

The Rise in Demand for Electric and Hybrid Vehicles

Globally, interest in electric and hybrid automobiles is rising. The main element projected to lead to the development of a mainstream market for electric vehicles in the near future is the declining cost of components such as lithium-ion batteries, sensors, and microcontrollers. Furthermore, governments worldwide are vigorously promoting electric vehicles due to their critical role in reducing carbon emissions and addressing air pollution. Only 1% of newly purchased automobiles are electric, but buyers and manufacturers are moving toward electric vehicles as component costs come down. By 2040, the market for electric vehicles is anticipated to expand by 35%, according to Bloomberg. Microcontroller manufacturers have a chance to expand internationally because they play a crucial role in electric car technology.

Regional Analysis

Region-wise, the global automotive microcontroller market is analyzed across North America, Asia-Pacific, Europe, and LAMEA.

Asia-Pacific dominated the global automotive microcontroller market and is estimated to grow at a CAGR of 8.8%. The Asia-Pacific region's automobile industry has developed recently. The region is one of the most profitable investment markets and has substantially contributed to global automobile sales. The major companies in the automobile industry have concentrated on growing in Asia by setting up their corporate offices or manufacturing facilities in nations like China, Japan, and India, which are the region's automotive hubs. Such initiatives taken by automakers result in increased production of sophisticated automotive components that need microcontrollers to function. Due to robust economic conditions and an ongoing increase in disposable population income, the market for automotive microcontrollers is expected to grow in Asia. This is because luxury cars typically have a variety of high-tech components installed inside them. Such developments and investments carried across the region by different players supplement the growth of the automotive microcontroller market.

The Europe automotive microcontroller market is the second largest. It is estimated to reach an expected value of USD 5515 million by 2030, growing at a CAGR of 6.8%. Europe includes Germany, France, the UK, Italy, and the rest of Europe. Europe is the most significant revenue contributor to the global automotive microcontroller market, owing to the high demand for comfort driving and the implementation of Euro-NCAP car ratings. This boosts the automotive microcontroller market owing to its broader adoption in ADAS systems. Technical developments in the automobile sector for efficient enforcement of safety features and better drive quality lead to the growth of the automotive industry. The adoption of ADAS for car safety has expanded along with the popularity of autonomous driving. Supportive laws and affordable vehicles fuel the use of safety systems in cars to increase safety and comfort. By adopting several safety-ensuring programs like eSafety awareness and other educational efforts making the inhabitants aware of the safety precautions to be taken while driving, automotive manufacturers in the area have concentrated on minimizing road deaths. This supports the market expansion for automotive microcontrollers. This supplements the automotive microcontroller market growth.

The North American automotive microcontroller market is the third largest. The North American region includes the U.S., Canada, and Mexico. The global automotive microcontroller market is predicted to grow significantly in this region due to continuous technological developments and the adoption of ADAS in vehicles. By offering advanced sensors, automotive manufacturers in North America have targeted key automobile players such as Ford Motors and General Motors. In addition, they are also providing ADAS products to North America's aftermarket. The regional agencies have mandated using TPMS sensors in all passenger vehicles to check tire pressure at any time. Advancements in auditory and tactile warning systems improve drivers' performance and are more effective than dual-modal systems (auditory-visual and tactile-visual). Automotive manufacturers have focused on developing low-cost assistance systems that cannot be tampered with. These developments supplement the growth of the automotive grade microcontrollers across the region, as all these systems are installed with microcontrollers.

Segmental Analysis

The global automotive microcontroller market is segmented based on application, vehicle type, technology, and region.

Based on application, the global market is categorized into powertrain & chassis, safety & security, body electronics, and telematics & infotainment system. The powertrain & chassis segment was the highest contributor to the market and is estimated to grow at a CAGR of 6.2% during the forecast period. Microcontrollers have a broader application in powertrain and chassis to optimize the vehicle's performance. Automotive microcontrollers are gaining traction in the powertrain & chassis of vehicles, owing to their feature of reducing vehicle fuel consumption. In addition, they help operate various other features associated with the vehicle, such as an advanced driving system, which supplements the market growth.

The safety & security segment is the second largest. Automotive microcontroller enables many safety features of vehicles, thereby maintaining the safety and security of the vehicle. Numerous safety and security features, such as airbags systems in vehicles, operate in an emergency due to the presence of microcontrollers. In addition, increased demand for better and more efficient electronic components in vehicles fuels the automotive microcontroller market growth.

 Based on technology, the global market is divided into a park assist system, blind spot detection system, adaptive cruise control, and tire pressure monitoring system. The adaptive cruise control segment was the highest contributor to the market and is estimated to grow at a CAGR of 6.4% during the forecast period. An adaptive cruise control system enables a vehicle to automatically adjust its speed depending on the response of the vehicle in front of it. It helps in maintaining traction or speed, especially on highways. Several governments have mandated the installation of similar technologies as mandatory features in cars to reduce the frequency of accidents. These systems use radar or laser sensor technology to detect an obstacle, which allows vehicles to adjust speed based on the situation. The adaptive cruise control system has been gaining popularity due to its capability to reduce the frequency of accidents through add-on applications such as collision warning, mitigation, and avoidance. These factors supplement the growth of automotive microcontrollers as they have wide applications in adaptive cruise control systems designed for vehicles.

By vehicle type, the global market is classified into passenger vehicles, commercial vehicles, and electric vehicles. The passenger ice vehicle segment was the highest contributor to the market and is estimated to grow at a CAGR of 7.2% during the forecast period. A passenger ICE vehicle is designed for a seating capacity of not more than nine people (including the driver) and is used to carry passengers. A passenger vehicle is the largest segment among all vehicle types. It contributes significant revenue to the global vehicle market, owing to high sales of passengers compared with other vehicles. The passenger vehicle segment is expected to be the fastest-growing vehicle type in the market, owing to its vital role in the transportation industry and the increased demand for better and more efficient vehicles equipped with advanced components. Further, extensive support from governments and developments in the advanced driving system for passenger vehicles contribute toward the growth of this segment. This is because the advanced driving system has various features such as blind spot detection, tire pressure monitoring system, and others which find a broader application of automotive microcontrollers. This increased application supplements the growth of automotive microcontrollers in passenger vehicles.

The commercial vehicle segment is the second largest. Commercial ICE vehicles are a form of a motor vehicle having an internal combustion engine and are used for transporting goods or passengers from one place to another. With the introduction of automation in the automobile sector, various components have found application in commercial vehicles, which results in better driving of the vehicles, thereby boosting the application of microcontrollers in them. An increase in safety concerns and a rise in government support for developing advanced driving system infrastructure in commercial vehicles is expected to boost the adoption of microcontrollers in these vehicles. Which, in turn, is anticipated to lead to the growth of the automotive microcontroller market.

Recent Developments

• August 2022 - NXP Semiconductors (NASDAQ: NXPI) today announced expanded and robust customer engagements for its entire S32 family of the domain and zonal automotive processors. This includes a major automotive OEM's selection of NXP's S32 family of automotive processors and microcontrollers to be used across its fleet of future vehicles, beginning mid-decade. The resulting multi-year supply agreement spans the S32 family, including the upcoming 5nm ASIL-D processors. This includes several recent awards with leading automotive OEMs in Europe, the Americas, Asia, and China and highlights the appeal and traction of the S32 platform for software-defined vehicles (SDV).
• July 2022 - NXP Semiconductors (NASDAQ: NXPI) today announced that it had signed a memorandum of understanding with Hon Hai Technology Group ("Foxconn") to jointly develop platforms for a new generation of smart connected vehicles. Hon Hai (Foxconn), the world's largest electronics manufacturer and leading technology solution provider, will leverage NXP's portfolio of automotive technologies and longstanding safety and security expertise to enable architectural innovation and platforms for electrification, connectivity, and safe automated driving. The collaboration builds on the company's initial digital cockpit partnership, based on the NXP i.MX applications processors and NXP Software Defined Radio platform.