The growing focus on vehicle safety systems and a significant increase in the adoption of engine control units (ECUs) in modern automobiles are anticipated to drive the demand for automotive semiconductors, driving the global automotive semiconductor market to reach $ 63.92 billion by 2028.
According to a new report by Grand View Research, the automotive semiconductor market is expected to expand at a CAGR of 6.2% between 2021 and 2028.
The report said that emerging technologies such as 5G and IoT are expected to play an instrumental role in increasing the demand for automotive semiconductors. In addition, electric vehicles and all levels of assisted driving technologies are expected to create considerable growth opportunities over the next eight years.
The key players in the automotive semiconductor market include Analog Devices, Infineon Technologies, NXP Semiconductors, Renesas Electronics Corporation, Robert Bosch, ROHM, Semiconductor Components Industries, STMicroelectronics, Texas Instruments and Toshiba.
Insights & Findings
The market research and consulting company said that in 2020, the other component segment, which includes analogue ICs and logic ICs, accounted for the highest share as logic ICs are widely used in navigation and infotainment systems.
In terms of vehicle type, passenger vehicles emerged as the dominant segment in 2020 and are anticipated to retain dominance over the forecast period.
The telematics and infotainment segment is projected to expand at the highest CAGR of more than 9% and is anticipated to hold a dominant share by the end of the forecast period.
The Asia Pacific market emerged as the dominant region in 2020 and is projected to register the highest CAGR over the period.
Electrification Influence
Electrification in the automotive industry is proliferating due to the rising need to reduce carbon emissions. Realising the importance of electric vehicle business opportunities, several manufacturers are increasingly investing in smart technologies, electronics, and safety systems. Such components of electric vehicles comprise semiconductors equipped with advanced technologies to improve the functionalities of smart electronics. For instance, the applications include shock sensors, MEMS accelerometers, MEMS gyroscopes, inertial sensors, tilt sensors, and MEMS microphones for roll-over detection, electronic braking, dynamic head lighting, inertial navigation, and airbag safety systems. Hence, as the demand for hybrid and electric vehicles increases, the need for semiconductors is anticipated to increase over the forecast period, Grand View Research noted.
The outbreak of the COVID-19 pandemic hampered the overall business scenario in 2020, and the economy is expected to continue experiencing its aftermath over the next few years. The market witnessed a negative impact as major automotive fabricating units were shut, and their production was completely halted in response to lockdown measures across the world.
In addition, the pandemic caused an unrealistic disturbance in the production and supply chain network. This influenced R&D and capital investments. As a result, the market experienced a substantial decline, of nearly -7%, in 2020. However, the impact of the pandemic started reducing with the reduction in positive cases and the launch of vaccination campaigns across several countries. As a result, governments across the globe eased the lockdowns and restrictions, thereby leading to a restart in manufacturing operations in the automotive semiconductor industry.
Governments' safety guidelines and regulations are expected to play a critical role in driving the demand for semiconductors in North American and European markets. For instance, a special focus on accident avoidance through ADAS is expected to help drive market growth in countries across these regions. The Asia Pacific region, led by China, is projected to emerge as the fastest-growing market owing to rapid EV adoption and strong government support, the research firm said.
Courtesy: Grand View Research. NB: Photo is representational; courtesy: Texas Instruments.