The global automotive semiconductor market size was valued at USD 42.08 billion in 2021 and is projected to reach USD 72.43 billion by 2030 at a CAGR of 6.22% from 2022 to 2030. Semiconductors are a unique class of electronic parts that, under specific circumstances, have the ability to conduct electricity. In order to guarantee that the corresponding component functions effectively under all circumstances, semiconductors are utilized in cars. The fundamental elements required for the proper operation of automotive electronics are the semiconductors used in automobiles, which are constructed of silicon and germanium. The installation of semiconductors in automobiles aids in the control of several functions, including the regulation of the air conditioning system and the maintenance of the vehicle's security.
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In the automotive sector, a semiconductor is used to control the fail-safe system, manage electrical control unit operations, and automotive fault-tolerant systems, where it handles the error that occurs in the vehicle (accelerator, anti-lock brake interface, and broken lights) and communicates the same to the microcontrollers and safety system installed throughout vehicles. For instance, if a car loses control on icy roads, fault tolerance would be highlighted. In these circumstances, the sensors and semiconductor devices detect the occurrence, and when the driver applies the brakes, the anti-lock braking system is activated. As a result, semiconductors are an essential component of the automotive sector, and throughout the forecast period, the industry's rapid development is anticipated to support market growth.
Due to the rise in road accidents globally, there is a rising demand for safety technologies like parking assistance, collision avoidance systems, lane departure warnings, traction control, electronic stability control, tyre pressure monitors, airbags, and telematics. Automotive semiconductors are a key component in many advanced driver assistance systems (ADAS) technologies, which aid ADAS systems in operating effectively and can detect and classify objects in the path of the vehicle and subsequently alert the driver about the nearby surroundings and road conditions. According to the road conditions, these systems can also automatically slow down or stop the car based on calculations made by semiconductors and related parts. A significant increase in the number of fatalities related to traffic accidents has been seen in recent years, and they constitute a leading cause of mortality worldwide.
Because of its operating flaws in extreme climatic circumstances like extreme cold and high heat, the automotive semiconductor business is primarily constrained. Extreme heat tends to cause failures in semiconductor devices because the resistance rises, the signal becomes too weak, and the semiconductors are likely to melt or break. The resistance decreases, and the system becomes stable when it is adjusted to the ideal temperature. Additionally, semiconductors lose their functionality in extremely cold temperatures. The temperature range for operation is typically between -25°C and +150°C. Consequently, nations like Canada and Russia favor using fewer chips. As a result, consumers have started using different electronic components like microcontrollers, ICs, and others, which has an impact on the expansion of the automotive semiconductor business.
Globally, there is an increasing demand for electric and hybrid automobiles. The primary element that is projected to lead to the development of a mainstream market for electrical vehicles in the near future is the declining cost of components like lithium-ion batteries, sensors, and microcontrollers. Additionally, electric vehicles are being strongly encouraged by governments worldwide because of their critical role in reducing carbon emissions and addressing air pollution. Only 1% of newly sold vehicles are electric at the moment, but as component costs come down, both buyers and manufacturers are moving toward electric cars.
The main driver of innovation in the automobile industry for many years has been ICE, or internal combustion engine, powered vehicles. However, the need for high-tech vehicles with enhanced functionality, supported by semiconductors and chips, is anticipated to increase as autonomy and electrification are increasingly adopted in the automotive sector.
This market can be segmented on the basis of components, vehicle types, applications, geographical regions and competitors. The processor, discrete power, sensor, memory, and others are the market segments based on components. The other component sector, which includes analog and logic integrated circuits (ICs), had the biggest revenue share of around 30% in 2020 and is anticipated to grow at a CAGR of more than 3.0% throughout the forecast period. All component types are in high demand in the automotive sector for semiconductors. These elements improve shared mobility services, connectivity, and vehicle electrification. In the event of an accident or crash, the automotive chip, which is built into the car, warns the driver and assists them in taking the proper action. Information and entertainment systems frequently use logic integrated circuits. The in-car entertainment systems in ultra-luxury automobiles are also increasingly sophisticated, and as the market for these vehicles grows, so too is the demand for logic integrated circuits (ICs).
In 2020, the passenger car segment held the biggest market share of almost 65%, and it is anticipated that it will hold that position throughout the forecast period. The enormous demand for passenger automobiles around the world is to blame for this expansion. Further encouraging the segment's growth is the rise in the installation of automotive infotainment systems in passenger cars for hands-free phone connectivity as well as providing navigational services, climate control, voice control, parking assistance, two-way communication tools, and access to the internet.
With a market share of roughly 42% in 2020, the body electronics sector is anticipated to grow at a CAGR of more than 4% between 2022 and 2030. Telematics and infotainment, the powertrain, and safety are the three automotive applications that are consuming semiconductors at the highest rate. The sector of telematics and infotainment is estimated to have the highest CAGR of more than 9% throughout the forecast period and to have the greatest market share at the conclusion of the forecast period.
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The global automotive semiconductor market was led by the Asia Pacific region. In 2020, the region held a market share of more than 40%. Due to the expansion of the automotive sector, particularly in developing nations like India, China, and Japan, the area is predicted to have the fastest growth rate during the projected period. China was the market leader in the Asia Pacific in 2020, and it is anticipated that it will hold that position throughout the projected period. Additionally, it is projected that in the upcoming years, the region's expanding e-commerce sector will drive up demand for commercial cars.
Over the forecast period, Europe is anticipated to have the second-highest CAGR of over 5.3%. The market expansion in Europe is projected to be fueled by the rising demand for electric vehicles. Automakers continually concentrate on creating, developing, and innovating autonomous vehicles because they have attracted a substantial portion of buyers in key automobile-producing nations. In the upcoming years, semiconductors are expected to play a crucial role in the developments in the automobile sector due to consumer desire for smart and completely autonomous cars.
With a number of international and regional companies, the market is moderately consolidated. Players in the market emphasize acquisitions as a way to diversify their product portfolios and gain access to new markets. Analog Devices, Inc., Infineon Technologies AG, NXP Semiconductors, Renesas Electronics Corporation, Robert Bosch GmbH, ROHM CO., LTD, Semiconductor Components Industries, LLC, Texas Instruments Incorporated, TOSHIBA CORPORATION, and others are some of the leading companies competing in the global automotive semiconductor market.