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The automotive IC market size is forecast to increase by USD 23.3 billion, at a CAGR of 10.82% between 2023 and 2028. The automotive IC market is experiencing significant growth, driven by several key factors. Firstly, the declining cost of ICs is making it more economical for automakers to incorporate advanced electronic systems into their vehicles. Secondly, the increasing demand for electronics in modern vehicles, particularly in areas such as safety systems, infotainment, and powertrain control, is driving up the need for ICs. Lastly, the growing demand for powertrain systems that rely on sensors, microcontrollers, and analog converters is further fueling market expansion. These trends are expected to continue, leading to robust growth in the automotive IC market.
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Automobile automation is reshaping the automotive industry, integrating advanced memory devices and sophisticated electronic elements to enhance vehicle functionality. These advancements influence vehicle sales and production trends, driven by increased semiconductor deployment and rigorous regulatory scrutiny to meet stringent safety requirements and ensure zero-defect quality. Achieving functionally safe design within demanding design timelines is critical for developing cutting-edge infotainment applications and navigation systems, as well as ADAS (Advanced Driver Assistance Systems) such as parking assist and lane departure warnings. Market dynamics, including market consolidation and ongoing technological advancement, are influenced by geopolitical scenarios affecting IDMs (Integrated Device Manufacturers) and foundries. Maintaining strong brand identity hinges on ensuring quality and supply stability, alongside effective knowledge transfer to sustain innovation in automotive electronics.
The dropping price of ICs and increasing demand for electronics in vehicles is shaping the market. Electrification of the drivetrain, vehicle intelligence (such as active safety innovations and connectivity-enhanced driving), and consumerization of auto electronics are the major factors fostering the growth of the automotive semiconductor market. The demand for electronic components in the drivetrain is increasing due to the adoption of hybrid and EVs, making the drivetrain the largest segment for automotive semiconductor usage. The drivetrain is expected to account for almost 30% of the overall IC used in the automotive industry.
Moreover, Toyota has focused on and highlighted fast switching rate and efficiency by using semiconductors such as isolated gate bipolar transistors (IGBT) and power metal-oxide-semiconductor field-effect transistors (MOSFETs). Hybrid and electric vehicles have a huge opportunity in the IC market during the forecast period. The electric drivetrain changes substantially in each vehicle generation. The design of the drivetrain is still evolving with pure EVs. EVs with internal combustion engine charging and internal combustion engine assistance are competing for market share and will be the option for the next dominant engine type.
The potential demand for EVs is the major trend shaping the global market. In the last few years, EVs have gone from being novelty products to serious contenders. The primary reasons are tremendous torque, power on demand, low maintenance, and a greener and cleaner environment. In EV, electric engines are vastly more efficient, delivering upward of 90% efficiency as compared with 30% of internal combustion engines (ICE). A push toward green vehicles that run on electricity and/or another power source, such as solar, wind, and biofuels, is a major solution to fuel emissions that help reduce greenhouse gas (GHG) emission levels in the atmosphere to an acceptable level. Countries across the world have come up with stringent emission norms to reduce the cause of global warming to an extent.
Moreover, efforts are being made by governments worldwide to minimize the adverse effects of global warming and reduce GHG emissions. For instance, the EU norms of 2009 set the CO2 emission level for new passenger cars as 130g/Km. The target is to reach 95 grams of CO2 per kilometre by 2022. In the last few years, battery density has doubled and is expected to double again in the next few years, thereby driving the sales of EVs.
Complexity in design is one of the major challenges for the market. Generally, microprocessors contain many transistors and lengthy copper lines. Additionally, the transistors should be highly reliable. The design chain of these materials is much more complex than those of mobile phones or electronic home appliances, such as televisions and remote controllers. This makes the designing of highly reliable ICs a difficult task. ICs must also have high dependability as their replacement is highly expensive and incur huge amounts, thus affecting the vehicle price.
However, the features and functionality of any new designs should be able to work under the harsh environment and internal complexities of the vehicle. Over-design of the IC may also lead to problems. Vehicle sub-components designed with excessive performance margins will make the product expensive. If an IC fails or a chip is detected as the root cause of the issue, the cost of recall exceeds the revenue budget of an automotive. OEMs need to ensure a high level of reliability and should focus on reliability tests such as the six-sigma design and zero-defect design to avoid IC failure. Such factors will pose a challenge for the market during the forecast period.
The market share growth by the discrete segment is significant during the forecast period. Discrete ICs in automotive include sensors such as micro-electro-mechanical system (MEMS), which has torque, force, pressure, accelerometer, and proximity sensor. Sensors have shown exponential growth in the last few years.
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The discrete segment was valued at USD 8 billion in 2018. Discrete ICs in automotive include sensors such as micro-electro-mechanical system (MEMS), which has torque, force, pressure, accelerometer, and proximity sensor. Sensors have shown exponential growth in the last few years. The demand for smart sensors is increasing in the automotive industry. Smart sensors provide more accurate and reliable data without being affected by environmental factors. They form an integral part of the current IoT ecosystem, which is crucial in connected vehicles.
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APAC is estimated to contribute 61% to the growth of the global market during the forecast period. Technavio’s analysts have explained the regional trends and drivers that shape the market during the forecast period. The potential market and economic growth of emerging countries such as China and India are boosting the number of market opportunities for vehicles and attracting global automobile manufacturers to this region. Global players are investing significantly in the production and R and D of new technologies and are contributing to market growth. Japan, China, and India are the key countries in APAC that are leading the market in terms of vehicle demand.
The report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Automotive IC Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
KLA Corp.- KLA Corp. is a public company headquartered in US. Its revenue from the global automotive IC market contributes to its overall revenues along with its other offerings, but it is not a key revenue stream for the company. Under the semiconductor process control segment, the company looks after the activities of comprehensive portfolio inspection, metrology and data analytics products, and related services.
The report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including:
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments.
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The automotive industry is evolving rapidly with advancements in semiconductor technology and digital ICs, driving innovations in automobile automation and ADAS systems like adaptive cruise control and automatic emergency braking. Stringent qualification processes ensure high reliability and long product life cycles, critical for meeting legislation and enhancing vehicle safety in various climatic conditions. In-vehicle screens and virtual assistants integrate voice recognition, personalization, and gesture control for enhanced user experience. Technologies like A-PHY enable robust connectivity solutions for connected cars, facilitating digital services and in-vehicle communication. With rapid electrification and the rise of passenger electric vehicles, semiconductor manufacturers are pivotal in supplying SoCs and ECUs for efficient vehicle control and infotainment systems. The automotive microelectronics sector, including Monolithic integrated circuits and Mixed signal ICs, supports premium car production and advances in driver assistance systems amid a landscape of evolving in-vehicle networking and Internet of Things integration.
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Market Scope |
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Report Coverage |
Details |
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Page number |
191 |
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Base year |
2023 |
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Historic period |
2018 - 2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 10.82% |
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Market growth 2024-2028 |
USD 23.3 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
9.51 |
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Regional analysis |
APAC, Europe, North America, South America, and Middle East and Africa |
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Performing market contribution |
APAC at 61% |
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Key countries |
China, US, Germany, UK, and Japan |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Allegro MicroSystems Inc., Analog Devices Inc., Infineon Technologies AG, Intel Corp., KLA Corp., Microchip Technology Inc., Micron Technology Inc., NXP Semiconductors NV, ON Semiconductor Corp., Power Clinic Inc., Qualcomm Inc., Renesas Electronics Corp., Robert Bosch GmbH, ROHM Co. Ltd., Samsung Electronics Co. Ltd., Siemens AG, STMicroelectronics International N.V., Texas Instruments Inc., Toshiba Corp., and Wanxiang America Corp. |
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Market dynamics |
Parent market analysis, Market forecasting growth inducers and obstacles, Fast-growing and slow-growing segment analysis, Market growth and Forecasting, COVID 19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period |
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Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Type
7 Market Segmentation by Vehicle Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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