Automotive Chip Market

Rising advanced driver assistance system is driving the market growth

The rising advanced driver assistance system drives market CAGR for automotive chip. ADAS technologies, such as adaptive cruise control, lane-keeping assist, and automatic emergency braking, rely heavily on automotive chips for real-time data processing and decision-making. These systems require high-performance chips capable of handling complex algorithms and sensor fusion to ensure accurate and reliable detection of objects and potential hazards on the road. 

The demand for automotive chips in the ADAS segment is surging as automakers strive to improve vehicle safety and meet regulatory requirements. Furthermore, the evolution towards autonomous driving further amplifies the need for powerful automotive chips to enable higher levels of automation.

Another prominent trend in the automotive industry is the growing adoption of electric vehicles (EVs) as a cleaner and more continuable alternative to traditional internal combustion engine (ICE) vehicles. This shift towards EVs drives the demand for higher power efficiency and increased processing capabilities for automotive chips. Electric vehicles require sophisticated semiconductor solutions for battery management, power electronics, and electric drivetrains.

Moreover, integrating advanced features like regenerative braking and infotainment systems necessitates using more powerful and efficient chips. As a result, semiconductor manufacturers are investing heavily in developing automotive chips tailored for electric vehicles to meet the rising demand in this segment.

The Automotive Chip Market has recently experienced significant disruptions due to supply chain challenges, which have profoundly impacted the industry. The COVID-19 pandemic exposed vulnerabilities in global supply chains, disrupting the production and distribution of automotive chips. The closing of factories and restrictions on international trade hampered chip manufacturing, leading to a supply shortage. This shortage and the increasing demand for automotive chips resulted in production delays and higher vehicle prices. 

Automakers and chip manufacturers are now focusing on diversifying their supply chains, enhancing domestic production capacities, and implementing measures to mitigate future disruptions. The supply chain challenges faced by the automotive chip market serve as a reminder of the importance of building resilient and flexible supply networks. For instance, the industry has faced supply chain disruptions, leading to production delays and higher prices. 

Overcoming these challenges and ensuring a resilient supply chain will be crucial for the sustained growth of the Automotive Chip Market. As the automotive industry continues to evolve, semiconductor manufacturers and automakers must stay at the forefront of technological advancements to meet the demands of the future mobility landscape to drive the Automotive Chip market revenue.

The Global Automotive Chip Market Industry is projected to experience substantial growth over the next decade. With a market value of 57.0 USD Billion in 2024, it is anticipated to reach 173.6 USD Billion by 2035. This growth trajectory indicates a compound annual growth rate of 10.66% from 2025 to 2035. Such projections reflect the increasing reliance on semiconductor technologies in automotive applications, driven by trends such as electrification, connectivity, and advanced safety features.

The Global Automotive Chip Market Industry experiences a notable surge in demand for electric vehicles, driven by increasing consumer awareness of environmental issues and government incentives promoting sustainable transportation. As electric vehicles require advanced semiconductor technologies for battery management, power distribution, and infotainment systems, the market is projected to reach 57.0 USD Billion in 2024. This shift towards electrification not only enhances the functionality of vehicles but also necessitates a robust supply chain for automotive chips, indicating a transformative phase for the industry.

Regulatory support for stringent emission standards plays a crucial role in shaping the Global Automotive Chip Market Industry. Governments worldwide are implementing policies that mandate lower emissions, prompting manufacturers to adopt more efficient technologies. This shift necessitates the use of advanced automotive chips that optimize engine performance and reduce fuel consumption. As a result, the industry is likely to witness increased investments in semiconductor technologies, aligning with global sustainability goals and enhancing the overall market landscape.

The Global Automotive Chip Market Industry is significantly impacted by the increasing connectivity and integration of Internet of Things (IoT) technologies in vehicles. As cars become more connected, they require a multitude of chips to support features such as vehicle-to-vehicle communication, real-time navigation, and infotainment systems. This growing demand for connectivity not only enhances user experience but also drives the need for advanced semiconductor solutions. Consequently, the market is poised for substantial growth, reflecting the evolving landscape of automotive technology.

Technological advancements in autonomous driving systems significantly influence the Global Automotive Chip Market Industry. As manufacturers invest in sophisticated sensors, cameras, and processing units to enable self-driving capabilities, the demand for high-performance chips escalates. These chips are essential for real-time data processing and decision-making in autonomous vehicles. The industry's growth trajectory suggests that by 2035, the market could expand to 173.6 USD Billion, reflecting the increasing complexity and integration of automotive technologies.

The integration of Advanced Driver Assistance Systems (ADAS) is a pivotal driver in the Global Automotive Chip Market Industry. ADAS technologies, which enhance vehicle safety and convenience, rely heavily on automotive chips for functionalities such as collision avoidance, lane-keeping assistance, and adaptive cruise control. As consumer demand for safety features rises, manufacturers are compelled to incorporate more chips into their vehicles. This trend is likely to contribute to a compound annual growth rate of 10.66% from 2025 to 2035, underscoring the critical role of semiconductor technology in modern automotive design.

By Region, the study provides market insights into North America, Europe, Asia-Pacific, and the Rest of the World. The North American Automotive Chip market area will dominate this market due to the presence of major automobile manufacturers and the well-established semiconductor industry.

The region has been at the forefront of adopting new automotive technologies, such as EVs and autonomous vehicles, which has increased the demand for automotive chips. Furthermore, government initiatives to promote electric mobility and stringent safety regulations have also propelled the growth of the automotive chip market in North America.

Further, the major countries studied in the market report are The U.S., Canada, German, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Figure 2: Automotive Chip Market Share By Region 2022 (%)

Source: Secondary Research, Primary Research, Market Research Future Database, and Analyst Review

Europe's Automotive Chip market accounts for the second-largest market share owing to the presence of renowned automobile manufacturers like Volkswagen, BMW, and Daimler. The region has actively invested in developing EV infrastructure and promoting sustainable mobility solutions.

Stringent emission regulations and the introduction of Euro 6 standards have accelerated the adoption of EVs, boosting the demand for automotive chips. Further, the German Automotive Chip market held the largest market share, and the UK Automotive Chip market was the rapid-growing market in the European region.

The Asia-Pacific Automotive Chip Market is subjected to growth at a rapid CAGR from 2023 to 2032 due to rapid urbanization, increasing disposable incomes, and a great consumer base in the region have fueled the demand for automobiles, thereby driving the automotive chip market. Moreover, China’s Automotive Chip market held the largest market share, and the Indian Automotive Chip market was the rapid-growing market in the Asia-Pacific region.

For instance, as the automotive industry continues to evolve with the advent of electric and autonomous vehicles, the demand for automotive chips will further escalate, making regional analysis crucial for understanding market dynamics and identifying growth opportunities.

Leading market players are investing heavily in research and development to expand their product lines, which will help the Automotive Chip market grow even more. Market participants are also undertaking various strategic activities to expand their global footprint, with important market developments including new product launches, contractual agreements, mergers and acquisitions, higher investments, and collaboration with other organizations. The Automotive Chip industry must offer cost-effective items to expand and survive in a more competitive and rising market climate.

Manufacturing locally to minimize operational costs is one of the key business tactics manufacturers use in the global Automotive Chip industry to benefit clients and increase the market sector. The Automotive Chip industry has recently offered some of the most significant medical advantages. 

Major players in the Automotive Chip market, including STMicroelectronics (Switzerland), Infineon Technologies (Germany), Toshiba Corporation (Japan, ON Semiconductor (US), Renesas Electronics (Japan), Robert Bosch GmbH (Germany), NXP Semiconductors (Netherlands), Texas Instruments Incorporated (US), ROHM Semiconductor (Japan), Denso Corporation (Japan), and others, are attempting to increase market demand by investing in research and development operations.

Tesla, Inc., founded in 2003, located in Austin, Texas, United States, is an American multinational automotive and clean energy company. It designs and manufactures electric cars and trucks, solar panels, battery energy storage, solar roof tiles, and all the other related products.

In September 2021, Tesla launched its new Model S Plaid, which includes a new infotainment system powered by a custom-built chip, the Tesla Full Self-Driving (FSD) computer. This chip is designed to provide the necessary computing power for the vehicle's advanced ADAS features and is a key component in Tesla's strategy to develop fully autonomous vehicles.

Microchip Technology Inc., founded in 1989 and located in Chandler, Arizona, United States of America, is an American Corporation that manufactures microcontrollers, analog, mixed-signal, serial EEPROM devices, embedded security devices, linear interfaces, and wireless products. In October 2020, Microchip Technology Inc. announced the acquisition of Tekron International Limited, a global leader in providing high-precision GPS and atomic clock time-keeping technologies and solutions for the smart grid and other industrial applications.