Inside the World of Automotive Semiconductors

April 12, 2023

Imagine driving a car that can sense its surroundings, communicate with other vehicles, and make decisions on its own. A car that can park itself, avoid collisions and optimize fuel efficiency. A car that is not just a vehicle, but a smart and connected device.

Sounds futuristic, right? Well, this is not science fiction. This is the reality of automotive semiconductors, the tiny chips that power the modern vehicles we use every day.

Automotive semiconductors are a major component used in various automotive products, like navigation control, infotainment systems, and collision detection systems. They help perform efficiently, detect and classify objects, and alert the driver about the surroundings and road conditions. They also enable most of the innovations in vehicle development and are the catalyst for the growth which is driving consumer demand.

They include different components, such as processors, sensors, memory devices, integrated circuits, and discrete power devices. They are used in vehicles with different fuel types, including diesel, gasoline, electric, and hybrid. They are one of the fastest-growing segments of the global semiconductor industry and are influenced by other applications, such as 5G, Artificial Intelligence (AI), and the Internet of Things (IoT).

In this blog post, we will take you inside the world of automotive semiconductors and show you how they are transforming the automotive industry and society. We will explore:

  • The impact of autonomous vehicles on automotive semiconductors
  • The challenges and opportunities for semiconductor companies in the automotive market
  • The future trends and technologies that will shape the automotive semiconductors

If you are interested in learning more about this fascinating topic, keep reading. You will discover how automotive semiconductors are making our cars smarter, safer, and more sustainable.

The Impact of Autonomous Vehicles on Automotive Semiconductors

Autonomous vehicles (AVs) are vehicles that can drive themselves without human intervention. They use a combination of sensors, semiconductors, and software to perceive their environment, plan their route, and execute their actions. AVs have the potential to improve road safety, reduce traffic congestion, lower emissions, and offer new mobility options for people and goods.

The Impact of Autonomous Vehicles on Automotive Semiconductors
The Impact of Autonomous Vehicles on Automotive Semiconductors

However, AVs also pose significant challenges and opportunities for the automotive semiconductor industry. AVs require more and better semiconductors than conventional vehicles, as they need to process huge amounts of data in real-time and perform complex tasks such as object detection, lane keeping, and collision avoidance. According to McKinsey, autonomous chips—those used to enable AV functions—are expected to generate $29 billion in revenue by 2030.

The demand for autonomous chips is driven by the level of automation of AVs, which ranges from 0 (no automation) to 5 (full automation with self-driving capabilities) according to the Society of Automotive Engineers (SAE). The higher the level of automation, the more sensors and compute-electronics content are needed. For example:

  • A level 2 vehicle may have a few cameras and radars
  • A level 5 vehicle may have dozens of cameras, radars, lidars, and ultrasonic sensors


  • A level 2 vehicle may have a single processor or a system-on-chip (SoC)
  • A level 5 vehicle may have multiple processors or SoCs with high performance, low power consumption, reliability, and safety

To meet the requirements of AVs, semiconductor companies need to develop new technologies and capabilities, such as:

  • Specialized chips tailored to specific applications
  • Advanced packaging solutions that enable higher integration and connectivity
  • Software platforms that support machine learning and mapping

Semiconductor companies also need to collaborate with automakers and software players to ensure compatibility and interoperability among different components and systems.

The competitive landscape and potential collaboration models among semiconductor companies, automakers, and software players in the AV market are still evolving. Some examples are:

  • Some automakers are developing their own chips in-house or partnering with specific semiconductor companies to gain more control and differentiation
  • Some semiconductor companies are expanding their offerings beyond chips to include sensors, software, and services
  • Some software players are entering the automotive market as suppliers or competitors of automakers

The AV market is still nascent and uncertain, with many technical, regulatory, and consumer barriers to overcome. However, it also offers tremendous opportunities for innovation and growth in the automotive semiconductor industry. Semiconductor companies that can understand the impact of AV technologies on chip demand, develop new solutions that meet the needs of AVs, and collaborate effectively with other players along the value chain will be well-positioned to capture the value of this emerging market.

The Future of Automotive Semiconductors

The automotive semiconductor market is expected to grow at a compound annual growth rate (CAGR) of 6.2% from 2020 to 2030, reaching $67.5 billion by 2030. The growth is driven by the increasing vehicle production, increasing electronic content per vehicle, and growing demand for advanced vehicle safety and comfort systems.

However, the automotive semiconductor market is also facing some challenges and uncertainties, such as the impact of the COVID-19 pandemic, the trade tensions between the US and China, the regulatory and consumer barriers for AV adoption, and the competition from new entrants and substitutes.

The Future of Automotive Semiconductors
The Future of Automotive Semiconductors

To overcome these challenges and seize the opportunities, the automotive semiconductor industry needs to keep pace with the emerging trends and technologies that will shape the future of automotive. Some of these trends and technologies are:

  • 5G: The fifth generation of mobile networks will enable faster data transmission, lower latency, higher reliability, and more connectivity for vehicles. 5G will support various applications for AVs, such as vehicle-to-everything (V2X) communication, cloud computing, edge computing, and over-the-air (OTA) updates. 5G will also enable new mobility services, such as ride-hailing, car-sharing, and robo-taxis. Semiconductor companies need to develop 5G-compatible chips and modules that can meet the requirements of automotive applications.
  • AI: Artificial intelligence (AI) is the technology that enables machines to learn from data and perform tasks that normally require human intelligence. AI is essential for AVs, as it enables them to perceive their environment, plan their route, and execute their actions. AI also enhances other automotive functions, such as infotainment, personalization, diagnostics, and maintenance. Semiconductor companies need to develop AI-enabled chips that can provide high performance, low power consumption, scalability, and security for automotive applications.
  • IoT: Internet of Things (IoT) is the network of physical objects that are embedded with sensors, software, and connectivity that enable them to exchange data with other devices and systems. IoT enables vehicles to connect with other vehicles, infrastructure, devices, and cloud services. IoT also enables vehicles to collect and analyze data from various sources, such as sensors, cameras, GPS, and weather. Semiconductor companies need to develop IoT-based semiconductors that can integrate multiple functions and features on a single chip or module.
  • UWB: Ultra-wideband (UWB) is a wireless technology that uses short pulses of radio waves to transmit data over a wide frequency range. UWB offers high accuracy, low power consumption, high security, and low interference for wireless communication. UWB can be used for various automotive applications, such as keyless entry, theft prevention, parking assistance, collision avoidance, and indoor navigation. Semiconductor companies need to develop UWB-compatible chips and modules that can meet the standards and specifications of automotive applications.

These are some of the trends and technologies that will shape the future of automotive semiconductors. They will create new opportunities and challenges for the automotive semiconductor industry. Semiconductor companies that can innovate and adapt to these changes will be able to gain a competitive edge and capture a larger share of this growing market.

AI is essential for AVs
AI is essential for AVs


This blog post has shown you how automotive semiconductors are changing the automotive industry and society. You have learned about the impact of autonomous vehicles, the challenges and opportunities for semiconductor companies, and the future trends and technologies in this field. Automotive semiconductors are a key driver of innovation and growth in the automotive sector and beyond. If you want to know more, you can read our related blog posts or contact us. Thank you for reading and sharing this blog post. We hope you enjoyed it and learned something new.