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This market research report was originally published at Yole Développement’s website. It is reprinted here with the permission of Yole Développement.

The automotive sector is undergoing radical changes, both industrially and technologically. The covid-19 pandemic has accelerated this transition, which has already started with the switch to all-electric vehicles. Indeed, covid-19 is now one of many factors responsible for the chip shortage facing carmakers, along with the technical-economic war between China and the United States. This chip shortage has increased the price of semiconductors by 30-40%. It has also greatly disrupted the supply chain, as the automotive sector wants semiconductors for more advanced technological nodes.

With the covid-19 crisis, passenger car and light vehicle sales decreased drastically from 87.1M units in 2019 to 76.6M units in 2020, falling by 10.5%, according to Yole Développement’s new report Automotive Semiconductor Trends 2021. This decrease already started in 2019. In 2021, growth is expected to resume in the automotive industry, thanks to two main factors, the fear of public transportation making people use their own car to commute and incentives from governments to buy new cars.

Four major trends are driving advanced developments for the car today, what is called Connectivity, Advanced Driver Assistance Systems (ADAS), Sharing and Electrification (CASE). We could also add a fifth, supply chain. An important trend is related to the development of automated driving functionalities in cars, leading to the use of more sensors and more computing in cars. This trend is impacting the car architecture moving from one Engine Control Unit for one function to the creation of domain controllers, leading to more centralized car architecture. We estimate more than 300 million lines of code will be necessary in the future car’s supercomputer.

The CASE module market is estimated to grow from $73B in 2020 to $148B in 2026. Our projection to 2035 estimates this market will then reach $317.8B. In terms of the value of semiconductors in a car today, it’s estimated to be $450, and $700 in 2026.

This growth represents exciting opportunities for semiconductor manufacturers. Yole estimates that shipments will equate to 45 million 8” wafers in 2026 for semiconductors in cars.

The consequence of this demand for semiconductors is radical upheaval in the supply chain and the arrival of disruptive players. Indeed, new car-making OEMs are coming. Companies like Tesla, Arcfox and LUCID build their cars based on electrification and sensors. They have very strong knowledge of semiconductors, but still must master volume manufacturing of cars. Other players like Xiaomi, Apple’s Project Titan and Huawei are also interested in developing their own cars based on electronics and software. Other players, such as Foxconn, could also position themselves in the assembly of cars through partnerships with Stellantis and Apple.

With the entry of new players such as Huawei, Xiaomi, Oppo, potentially Sony, and Apple, a new market could appear that would be different to ADAS and robotic vehicles. We call it Consumer Automated Vehicle. This type of vehicle will use more sensors with more performance than the sensors used for ADAS. It is likely that the price of such a car will be high, possibly over $60,000. Performance and reliability will be critical for these vehicles.

Eric Mounier, PhD.
Fellow Analyst, Yole Développement

Pierrick Boulay
Senior Technology and Market Analyst, Solid State Lighting and Lighting Systems
Photonics, Sensing and Display Division, Yole Développement

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