The automotive semiconductor market is expected to reach $70.0 billion by 2027 from $42.9 billion in 2022, growing at a CAGR of 10.1% between 2022 and 2027. The market is being propelled forward by factors such as an increase in the number of vehicles being manufactured, a rise in the number of electronic components in automobiles, and a rising desire for more technologically advanced vehicle safety and comfort systems.
Semiconductors Are An Essential Ingredient Of Connected Vehicles
Modern automobiles employ semiconductors for multiple purposes. Semiconductors operate the fail-safe system, electrical control unit (ECU), and automotive fault-tolerant systems. Further, the major trend disrupting modern vehicles today is Software Defined Vehicle Architecture (SDV). 40% of Bill of Material (BOM) of a car are software and semiconductors. Current generation of connected vehicles has almost 100 million lines of software code and runs on almost 100 plus ECUs which is more than what is in a F-35 aircraft. Advanced and intelligent features like driver assistance systems (ADAS), adaptive cruise control, and accident avoidance also need additional semiconductors. Electric and self-driving cars require strong computers and sensors, which again increases semiconductor consumption. Futuristic vehicles are trying to use the likes of High-Performance Computing (HPC) for next-generation features which require heavy processing power.
Certain government regulations mandating safety features are also increasing the semiconductor consumption. The Indian government, for instance, has mandated anti-lock braking systems (ABS) for motorcycles in the past to improve driving safety. By 2022–2023, India plans to have all new vehicles comply with international standards for electronic stability control (ESC) and automatic emergency braking (AEB).
Undeniably, semiconductors, therefore, play a vital role in the development of connected vehicles. They enable various functions and features that make the vehicles more efficient, safe, and connected.
Advancement in semiconductors create a supplementary impact on connected vehicles
For automotive industry, the semiconductors must be designed for specific functions and must meet the safety standards. Below are some good examples of how the advancements in semiconductors are enabling modern vehicle features.
AI on chip for enabling Natural Language Processing (NLP) and thereby enhance voice recognition features.
- Level 4 and Level 5 autonomous vehicles requires IoT and Edge AI functionalities and hence specialised semiconductors are needed.
- High-capacity processing chipsets are required for faster data processing, lower latency, and more dependable communication mechanisms like 5G and in future, 6G.
- Power electronics-related innovation is needed for producing energy-efficient automotives.
- Media processing chipsets are looked upon for improving content consumption like infotainment, collaboration, and the futuristic Metaverse.
- Innovations in sensor data processing chipsets coupled with on-chip analytics is necessary for designing better ADAS systems.
- Advancement in System on Chip (SOCs) to incorporate multiple functions into a single chip to reduce complexity and power consumption.
Challenges on the way
The challenges in the semiconductor industry are impacting the automotive sector as well because of the dependency discussed earlier. Chip shortage has been one of the key issues confronting the connected vehicle business which has disrupted the production and supply of vehicles. The industry is the second largest consumer of chips next to consumer electronics. During the COVID-19 pandemic, the demand for vehicles had reduced and the demand for consumer electronics increased significantly. This lack of business predictability led to chip shortage as the demand for automotives picked up later.
The other challenges include limited manufacturing capacity, rising costs, geopolitical tensions, and environmental issues. Security, data privacy, and nationwide network unreliability are few others to add. Also, automotive industry often requires custom and new semiconductors with cost and energy efficiency.
Fortunately, the future is not completely blocked by the challenges and there are some pathbreaking innovations and strategies paving the way for next generation semiconductors.
Using silicon carbide (SiC) instead of pure silicon in semiconductors, for example, can boost the efficiency and dependability of EVs. SiC outperforms silicon in several key areas, including heat conductivity, power loss, and switching frequency to improve their range by 10–15%, charge their batteries twice as quickly, and reduce the overall cost of an electric powertrain by as much as 30% compared to a silicon-only design.
Like any other sector, software will play a key role in the success of semiconductor design and manufacturing companies. Software technology providers can help in bringing scale, efficiency, and innovative solutions to the semiconductor industry in the following areas which will accelerate the production and in-turn will improve the supply chain for connected vehicles as well.
Development, enhancement, and management of software, which is integral to the design, operations, and testing of semiconductors.
- Maximise usage of AI and generative AI in optimal design, synthesised data for verification and validation to start with.
- Improved plant operations and management through data analytics, correlation, automation, and utilisation of cloud.
- Enhanced APIs and frameworks to improve the experience of the system designers and to help differentiate the features of the core silicon.
- Improve the overall value proposition by building bundled cloud/data solutions built around the core silicon.
To match the changing expectations and preferences, therefore, both automotive and semiconductor industry will need to embrace new strategies as well as invest in technological innovation and distinction.
Vikram Meghal is the Vice President, Engineering Services, Infosys. Views expressed are personal.