Automotive Chip Market Size

Market Size Snapshot

Note – Market size depicts the revenue generated over the financial year

The car chip market is projected to grow at a CAGR of 13.1 per cent, from $26 billion in 2023 to $68.3 billion by 2032. The CAGR from 2024 to 2032 is projected to be 10.6 per cent. The integration of advanced technologies such as electric vehicles, self-driving, and enhanced infotainment features in vehicles is expected to drive this growth. In order to meet the demand for smarter, safer, and more efficient vehicles, car manufacturers are increasingly relying on advanced semiconductor solutions. The increasing popularity of electric vehicles, which require more chips for batteries, power electronics, and charging stations, is also expected to drive the growth of the car chip market. The growing demand for connected cars and the Internet of Things (IoT) is also driving the growth of the car chip market. Several major players in the industry, such as NVIDIA, Intel, and Qualcomm, are investing in research and development, forming strategic alliances, and launching new products to capture market share. NVIDIA’s advancements in artificial intelligence-based car solutions and its collaborations with leading car manufacturers reflect the competitive and evolving nature of the car chip market.

Regional Market Size

Regional Deep Dive

Despite the high cost of chips, the automobile chip market is growing significantly in various regions. This growth is driven by the increasing demand for ADAS, EVs and connected car technology. North America is characterized by a strong presence of leading automobile manufacturers and technology companies, which has driven innovation and cooperation. Europe has strict regulations for vehicle safety and emissions, and Asia-Pacific is experiencing a rapid development of EVs and smart mobility. The Middle East and Africa are gradually emerging as promising markets with increasing car production and improving road conditions. The growth in Latin America is driven by rising car ownership and the modernization of the automobile industry.

Europe

• The European Union has implemented the European Green Deal, which includes regulations that mandate a significant reduction in carbon emissions from vehicles, driving the need for advanced automotive chips that support electric and hybrid vehicles.
• Companies like Infineon Technologies and NXP Semiconductors are at the forefront of developing innovative automotive chips tailored for safety and efficiency, responding to the region's regulatory landscape.

Asia Pacific

• China's aggressive push towards electric vehicles, supported by government subsidies and policies, is significantly increasing the demand for automotive chips, particularly those used in battery management systems and power electronics.
• Japanese automakers, such as Toyota and Honda, are investing in next-generation automotive chips to enhance their autonomous driving capabilities, reflecting a shift towards smart mobility solutions.

Latin America

• Brazil is witnessing a surge in automotive production, with local manufacturers increasingly adopting advanced technologies that require sophisticated automotive chips, particularly in infotainment and safety systems.
• Government incentives aimed at promoting electric vehicles in countries like Mexico are expected to drive demand for automotive chips that support EV infrastructure and battery management.

North America

• The U.S. government has introduced initiatives to bolster domestic semiconductor manufacturing, such as the CHIPS Act, which aims to reduce reliance on foreign suppliers and enhance the resilience of the automotive supply chain.
• Major automotive players like Ford and General Motors are investing heavily in electric vehicle technology, leading to increased demand for specialized automotive chips that support EV functionalities.

Middle East And Africa

• The UAE is investing in smart city initiatives, which include the integration of connected vehicles, thereby increasing the demand for automotive chips that facilitate communication and data exchange.
• Local automotive manufacturers in South Africa are beginning to adopt advanced technologies, leading to a gradual increase in the demand for automotive chips as they modernize their production processes.

Did You Know?

“Approximately 30% of the total cost of an electric vehicle is attributed to the semiconductor components, highlighting the critical role of automotive chips in the future of transportation.” — International Energy Agency (IEA)

Segmental Market Size

The car chip market is a vital part of the overall car market, which is currently growing at a fast pace, largely due to the growing demand for advanced driver-assistance systems and electric vehicles. The main driving forces are the growing preference for enhanced safety and the push for electrification in the wake of the carbon dioxide tax. The current shortage of silicon is also driving the investment boom in this area. The introduction of car chips is currently in a phase of gradual implementation, with companies such as Tesla and Volkswagen leading the way in introducing these new features into their cars. The main applications are power management, entertainment systems, and V2X (vehicle-to-everything) communication, which are essential for the development of smart and connected vehicles. The development of new semiconductors such as silicon carbide and gallium nitride will also have a significant impact on the evolution of the market, enabling higher performance and efficiency in the car chip market.

Future Outlook

The market for automobile chips will show a remarkable growth from 2023 to 2032. The value of the market will rise from 50.74 billion to 129.08 billion, a hefty CAGR of 10.66 percent. This growth will be driven by the increasing integration of ADAS, the growing popularity of electric vehicles, and the digital transformation of the automobile industry. In addition, the increasing demand for automobile chips will result in the penetration of automobile chips in new models of vehicles, which will rise from around 50 percent in 2023 to around 80 percent in 2032. Also driving the market will be technological developments, such as the integration of 5G and artificial intelligence (AI) in automobile applications. In addition, the growing importance of sustainability and stricter emissions regulations will result in the increasing popularity of electric and hybrid vehicles. These vehicles will require more chips for the management of the batteries and the power electronics. Also, government policies to promote the adoption of electric vehicles and to develop the supporting infrastructure will be conducive to market growth. And finally, the growing importance of vehicle-to-everything (V2X) communication and the increasing focus on security in automobile systems will also have a significant impact on the future development of the market.