Automotive Chip Market Growing at 9.6% CAGR Reach $121.3 Billion by 2031

The global Automotive Chip Market size was valued at $49.8 billion in 2021, and is projected to reach $121.3 billion by 2031, growing at a CAGR of 9.6% from 2022 to 2031. Increase in demand for ADAS, rise in demand for electric vehicles, and surge in demand for autonomous driving drive the growth of the global automotive chip market. However, complexity of design and high manufacturing costs are hampering the automotive chip market growth. On the contrary, increased focus on cybersecurity, and rise in demand for connected cars are expected to offer remunerative opportunities for expansion of the automotive chip market during the forecast period.

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The automotive chip market refers to the semiconductor chips that are specifically designed for use in vehicles. These chips are made up of material, such as germanium or silicon, that exhibits electrical conductivity characteristics falling between those of conductors (like metals) and insulators. Its conductivity is close to that of metals at high temperatures and nearly non-existent at low temperatures. This property makes semiconductors and chips crucial in automotive electronic devices and technology. In vehicles, chip are used in multiple important functions such as power management, safety features, vehicle control, displays, and sensing in modern technologically advanced automobiles. More semiconductors are being used in electric and hybrid vehicles (EVs).

Based on product, the microcontrollers segment held the highest market share in 2021, accounting for nearly one-third of the global automotive chip market revenue and is estimated to maintain its leadership status throughout the forecast period. Microcontrollers provides automotive chip to support the growing demand for advanced driver assistance systems (ADAS) and autonomous driving technologies that helps in increasing demand in this segment. However, the sensors segment is projected to manifest the highest CAGR of 11.3% from 2022 to 2031, as it offers automotive chip with various applications such as engine control, safety systems, and driver assistance.

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The demand for electric and hybrid vehicles is growing globally. The decreasing cost of components such as lithium-ion battery, sensors, and microcontrollers are the major factors that is anticipated to develop a mass market for electrical vehicles in the near future. Furthermore, as electrical vehicles play a vital role in cutting carbon emissions and dealing with air pollution, it is getting heavily promoted by governments of all countries. Electric car sales, which include both battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), surpassed 10 million units in 2022, marking a 55% increase compared to 2021.

Based on application, the safety system segment held the highest market share in 2021, accounting for more than one-fourth of the global automotive chip market revenue and is estimated to maintain its leadership status throughout the forecast period. The growth is attributed to the rise in awareness of the important safety features in vehicles, as well as the implementation of new regulations and standards such as Euro NCAP and NHTSA. Moreover, the same segment is projected to manifest the highest CAGR of 10.5% from 2022 to 2031, owing to their use in advanced driver assistance systems (ADAS), collision avoidance systems, electronic stability control (ESC), and airbag control systems.

The key players profiled in this report include

Analog Devices, Inc.
Infineon Technologies AG
NVIDIA Corporation
NXP Semiconductors
Renesas Electronics Corporation
Robert Bosch GmbH
ROHM CO.
LTD, STMICRO Electronics
Texas Instruments Incorporated
TOSHIBA CORPORATION

The report provides a detailed analysis of these key players of the global Automotive Chip market. These players have adopted different strategies such as new product launches, collaborations, expansion, joint ventures, agreements, and others to increase their market share and maintain dominant shares in different regions. The report is valuable in highlighting business performance, operating segments, product portfolio, and strategic moves of market players to showcase the competitive scenario.

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According to Bloomberg, the electrical vehicle market is expected to grow by 35%, by 2040. These increasing numbers of EVs across globe encouraged the chip manufacture invest in semiconductor foundry to fulfil further demand from EVs. For instance, in April 2023, Germany based Bosch Group acquired crucial assets from California-based chip manufacturer TSI Semiconductors Thus, it is major driver for chip manufacturers to grow globally, as chip are integral part of electric vehicles. Thus, surge in demand of electric and hybrid vehicles coupled with investment from chip suppliers propel the automotive chip market.

Based on propulsion type, the ICE vehicles segment accounted for the largest share in 2021, contributing to around four-fifth of the global automotive chip market revenue and is estimated to rule the roost throughout the forecast period. ICE vehicles help many manufacturers investing in more efficient engines and lightweight materials to improve fuel economy. These innovations require advanced chips to control and monitor engine performance. However, the electric vehicles advertising segment is expected to portray the largest CAGR of 16.3% from 2022 to 2031. This is due to a rise in the governments incentives and subsidies to encourage the adoption of EVs as a part of their efforts to reduce carbon emissions and combat climate change.

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In addition, the increase in demand for advanced driving assistance system (ADAS), surge in demand for electric vehicles, and rise in demand for autonomous driving accelerate the growth of the market. However, complexity of design and high manufacturing costs hamper the growth of the automotive chip market. Conversely, increased focus on cybersecurity, and increase in demand for connected car are expected to provide lucrative opportunities for the expansion of the global market of automotive chip.

For instance, in April 2021, NVIDIA Corporation launched its DRIVE Atlan platform, which is designed for autonomous vehicles and offers up to 1,000 TOPS of performance. The platform is based on NVIDIA's Grace CPU and Ampere GPU architectures and is capable of running a variety of AI-powered applications for self-driving cars.

Regional Analysis:

Based on region, North America held the highest market share in terms of revenue in 2021, accounting for nearly one-third of the global automotive chip market revenue, owing to rise in the adoption of advanced driver assistance systems (ADAS) and electric vehicles. However, the Asia-Pacific region is expected to witness the fastest CAGR of 11.4% from 2022 to 2031 and is likely to dominate the market during the forecast period, owing to the increase in demand for electric and autonomous vehicles, as well as the developments in the automotive industry in this region.

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