Automotive Semiconductor Market Trends

Growth Drivers

• Rising Installation Advanced Driver Assistance System (ADAS) - Semiconductors play a crucial role in a variety of functions in modern automobiles, including safety. Owing to several road accidents nowadays the demand for safety features in automobiles is rising. One of the most important safety features is an advanced driver assistance system that can detect paths on both sides of vehicles and can alert the driver about road conditions. The surge in the installation of the Advanced Driver Assistance Systems (ADAS) is expected to boost the automotive semiconductor market in the forecasted period. It was found that ADAS features were installed in 10% of the 1 billion cars worldwide in 2020.
• Increasing Research & Development (R&D) Expenditure – Growing research and development activities in the field of automotive semiconductor is anticipated to drive the market in the future times.  For instance, USD 136 billion was spent globally on R&D in the automotive sector in 2020.
• Growing Semiconductor Manufacturing Industry – It was found that the complex manufacturing process of semiconductor chips was around USD 500 billion industry. The public is asking for more luxurious and comfortable vehicles for their transport around the globe. This led to the expansion of the semiconductor manufacturing industries. Semi-luxury and luxury cars solely depend on semiconductor technology owing to the manufacturing of semiconductors is rising.
• Increasing Connectivity in Vehicles –In the coming years, most automobiles will be connected and 5G networks are going to be next-generation mobility solutions that will offer ample growth opportunities for the market.  It is estimated that between 2020 and 2025, there will be 80 million new connected cars in the United States and 27% of new vehicles will have 5G by 2025.

Challenges

• Shortage of Semiconductor Chips – The automobile industry currently problem in the shortage of semiconductor chips. As a result, to covid-19 pandemic, many countries implemented a full pandemic owing to which the supply of semiconductor chips was shortened. Though it’s been three years since the pandemic hit the world, the crisis is still on and there is a shortage of semiconductor chips. Without semiconductor chips, vehicles cannot be manufactured.

• Need of Huge Capital Expenditure
• Fluctuation in the Availability & Prices of Raw Material