Automotive semiconductor market, huge potential!

Adroit Market Research predicts that the global automotive semiconductor industry will grow at an annual rate of 10%, reaching $153 billion by 2032.

The automotive semiconductor market is expected to reach $59.9 billion by 2022, with a compound annual growth rate (CAGR) of 10.3% from 2023 to 2032, reaching $153.11 billion. The report attributes this growth to the increasing popularity of in-car infotainment and connectivity features, the rising demand for electric vehicles (EVs), the continuous integration of electronic systems in vehicles, and advancements in autonomous driving technology.

The report states that this growth is driven by the increasing prevalence of in-car entertainment and connectivity features, the growing demand for electric vehicles (EVs), the increasing integration of electronic systems in vehicles, and advancements in autonomous driving technology.

Despite the initial challenges brought by the COVID-19 pandemic to the supply chain, the market has proven to be resilient and continues to grow. This is primarily due to the rebound in the automotive industry and the rapid adoption of cutting-edge semiconductor technology.

The automotive market is becoming increasingly important for chip manufacturers.

Automotive and industrial sectors lead the growth of the chip market.

The automotive semiconductor industry is flourishing.

The shift towards electric and hybrid vehicles has led to a significant demand for power management semiconductors, such as those used in battery management systems and semiconductor devices for electric propulsion systems.

Another driver for the automotive semiconductor market is the demand for complex semiconductors for tasks related to the creation and implementation of Advanced Driver Assistance Systems (ADAS), including sensing, processing, and driving functions. Additionally, the development of smart and autonomous vehicles, along with the integration of connected solutions, has increased the demand for automotive semiconductors, particularly for applications related to advanced processing, in-vehicle networks, and Vehicle-to-Everything (V2X) communication.

Analysts state that the semiconductor market has reached a turning point.

In the long term, chip shortages may impede the automotive industry.

The transition to electric transportation has led to a continuous growth in demand for semiconductor solutions designed specifically for electric power systems, battery management systems, and charging infrastructure. This shift provides semiconductor companies with the opportunity to create advanced control and power management systems tailored for electric and hybrid vehicles.

The Asia-Pacific region is a significant participant in the automotive semiconductor industry, with the market expected to be driven by the increasing popularity of the Internet of Things (IoT) and artificial intelligence in the region's automotive semiconductor industry.

Automotive chips: A $840 billion semiconductor revolution.

In 2028, automotive semiconductor devices will reach 100 billion units.

The semiconductor device market is projected to grow from $43 billion in 2022 to $84.3 billion in 2028, with a high compound annual growth rate of 11.9%. The current market indicates that by 2022, the semiconductor device value per vehicle is approximately $540, and by 2028, this number is expected to increase to around $912, driven by the implementation of ADAS and electrification.

Electrification and ADAS are the main drivers of technological innovation. The xEV power device market will experience significant growth with the support of the electrification trend, driven by the strong promotion of SiC MOSFET modules. MCUs with advanced technology nodes as small as 16nm/10nm will be used for ADAS, including radar and other sensor controls. In the long term, vehicles with autonomous driving capabilities beyond Level 3 (unmanned) will drive the increasing demand for memory (DRAM) and computational capabilities.

Wafer shipments for all wafer sizes are expected to increase from approximately 37.4 million pieces in 2022 to about 50.5 million pieces in 2028. Memory and logic are the main contributors to the 300mm wafer shipment volume for automotive applications. The 300mm wafer shipment volume is crucial for this industry because MCUs and memory are processed on wafers of this size.

In terms of nodes, most wafers will adopt technology nodes of 350nm and above. Discrete power devices and modules are mostly larger than 350nm, accounting for the majority of wafer shipment volume.

From shortage to resilience: reshaping the automotive semiconductor supply chain.

For electrification, vertical integration is becoming increasingly popular within the entire vehicle factory and can be achieved through various means, such as comprehensive integration to the component level, system integration, and subcontracting to produce parts according to the diagram, strategic cooperation/direct investment with key component suppliers. Traditional automotive supply chains need to thoroughly examine their positioning and transform through joint ventures, mergers and acquisitions, new investments, and divestitures to maintain a competitive product portfolio. The strategies of vehicle manufacturers vary by industry segment and region: power electronics is a popular sub-segment, with many vehicle manufacturers making direct investments; some OEMs focus on powerful processors primarily used for ADAS/AD and cockpit applications; Chinese OEMs are more enthusiastic about semiconductor investment, partly due to lessons learned from the US-China trade dispute.

Despite the crucial importance of semiconductors for the ongoing transformative shift in the automotive industry, most participants, whether original equipment manufacturers or first-tier suppliers, have not yet formulated clear semiconductor strategies.

Preparation for the future requires specific expertise in semiconductor technology and supply chain. The complexity of managing semiconductors is necessary. OEMs need to prioritize essential Electronic Control Units (ECUs) and semiconductors and establish new relationships with equipment manufacturers and contract manufacturers. Different procurement strategies can be implemented: direct purchasing (OEM purchases equipment directly from semiconductor manufacturers) or directed purchasing (OEM designates which sub-supplier to purchase semiconductors from). Semiconductor supply remains constrained, especially as mature nodes remain unattractive to contract manufacturers. In this situation, equipment manufacturers are provided with two options: redesign equipment using smaller nodes (e.g., as desired by TSMC) or rely more on Chinese contract manufacturers, with the number of Chinese contract manufacturers expected to significantly increase over the next few years, thanks to government subsidies. Chinese contract manufacturers at mature nodes may account for 33% of the entire market in the coming years.

Electrification, ADAS, and Advanced Computing: The Trifecta Driving Innovation in Automotive Semiconductors

Passenger cars and light commercial vehicles are beginning to innovate in the "market-driven" period. At the same time, medium and heavy-duty commercial vehicles are starting the electrification process, mainly driven by incentives and regulations. Powertrain and electrification have identified four technological trends: the integration of multiple high-voltage systems; 800V enables fast charging; 800V key component SiC is building a new supply chain; specialized pure electric vehicle platforms are becoming increasingly popular; in addition to SiC, the application of Si IGBT is still increasing, especially the potential Si IGBT/SiC MOSFET hybrid module solution, which can overcome the inherent high cost barrier adopted by SiC. In recent years, automotive applications have been the main driving force for SiC power devices, and we expect this to continue over the next five years due to the strong penetration of 400V and 800V batteries in the BEV field. EV/HEV is the main driving force for SiC.

Under the push of safety regulations and some OEMs aiming for higher levels of autonomy, the adoption of ADAS is increasing rapidly. ADAS sensors come in various forms but are mainly composed of cameras, radar, lidar, and ultrasonic. Following cameras and radar, lidar is entering the autonomous driving market. Although the EU or US restricts lidar to F-level vehicles, Chinese OEMs are now introducing D-level vehicles. These vehicles are much cheaper than F-level vehicles, and they have higher production volumes, so lidar will be produced. In fact, more than 25 different Chinese original equipment manufacturers are implementing LiDAR in their vehicles.

Processors need to handle the continuously growing data flow from these three sensors. This sensor diversity is expected to remain, as no single sensor can monitor the vehicle's surroundings in all conditions. The required computing power depends on the complexity of the task, the number of sensors, the resolution of these sensors, the complexity of the situation, and the level of redundancy required.