A trend toward LED-based lighting and more sophisticated and capable gateway modules will drive automotive semiconductor demand from the body domain. The body domain will grow at a CAAGR of 13.0 percent and will be an early driver for system-on-chip (SoC)-based processing requirements, as well as underpinning moves towards Ethernet-based in-vehicle networking from gateway modules. Other growth areas will include adaptive front lighting matrix, LED front lighting and near-field communication enhanced passive keyless entry systems.
Automotive semiconductor demand from the driver info domain will be driven by a move towards centralization of infotainment, driver instrumentation and other functionality. Fully flat panel and high-end hybrid primary instrumentation clusters are the high growth drivers for semiconductors demand, as vehicle OEMs compete to differentiate the look and feel of their products through innovations in the clusters and A/V infotainment systems. A move towards centralization of infotainment, driver instrumentation and other functionality will drive cockpit-domain controller concepts that start to bleed over into cross-domain territory with ADAS systems. This will further positively impact driver information architectures and semiconductor requirements.
Semiconductor demand from the chassis domain will remain the most conservative over the forecast timeframe, but there are some notable areas of growth in drive-by-wire systems for braking and steering.
This will translate to semiconductor content per vehicle increasing by over 181 percent over the 2022 to 2027 timeframe. By 2030 there will be on average $1400 of semiconductor content, including semiconductor-based sensors, per vehicle. These trends will be reflected in the breakdown of the automotive semiconductor market by device type, with automotive processor demand accounting for the largest share of the automotive semiconductor market followed by demand for power semiconductors and linear devices.
- Memory exhibits the highest CAAGR from 2022 to 2027 and will be shaped by continued demand for high performance processing in ADAS applications and high-end infotainment graphics.
- Processor demand will also see an increasing shift towards SoCs versus microcontrollers as the market adopts zonal architectures and looks to high performance compute capabilities to meet the needs of the battery electric SDV.
- Power semiconductor growth will be driven by the move towards electrification driving opportunities for SiC and GaN as well as mainstream silicon power semiconductors.
- Linear devices incorporate a broad range of devices. Growth will be driven by demand for RFICs from automotive radar applications, ADC-based battery management ICs and demand for in-vehicle network transceivers like CAN/CAN-FD, LIN, Ethernet, MOST, FlexRay, etc.
- Optoelectronic device demand will come from exterior and interior lighting as well as the use of optoisolators in xEV platforms.
ARE WE AT THE END OF SEMICONDUCTOR SHORTAGES YET?
During the global lockdown period, the decision by many automotive OEMs to stop ordering materials as they shuttered production effectively put the industry at the back of the queue. When production started up again, a feeding frenzy placed an excessive strain on automotive-specific semiconductor technologies, especially those based on older process nodes like 28 nm, 40 nm, etc. The fabs running these processes had typically not been upgraded so they filled up very quickly. With little overhead, these facilities have continued running at full capacity leading to significant bottlenecks and forming one of three contributing factors that resulted in the automotive semiconductor shortage.
While the supply of these more mature products started to close the gap with demand in the second half of 2022, the push towards electrification provided the other two contributing factors to the semiconductor shortage. As automotive OEMs started to follow early leader Tesla into electrification, the premium sector became the primary target as companies looked to retain profitability amidst the significantly higher costs associated with the electrified powertrain. The push to premium sector vehicles brought with it a near doubling of semiconductor content compounding the bottleneck even as overall production volumes remained low.
The third contributor centered around electrification plus the associated trends around ADAS/AD, infotainment systems, connectivity, domain and zonal/centralized architectures. This shifted focus towards higher performance and specialized semiconductor requirements that were not in place before 2021. This shift in focus represented a supply-demand imbalance that continued to be worked through in 2022 and has rolled over into 2023.
Consequently, suppliers were playing catch-up to demand in 2022 with global automotive semiconductor revenue growth continuing to outstrip year-on-year vehicle production and resultant semiconductor demand from vehicles produced. At the same time, semiconductor demand per vehicle has also been growing. This combination of strong demand and constrained supply further translated into semiconductor pricing increases which served to bolster revenues.
However, there were signs that the mismatch between automotive semiconductor industry revenues and actual semiconductor demand was closing, with 21 percent year-on-year semiconductor demand from vehicles produced translating to a $54 billion market in 2022. TechInsights estimates that 2022 automotive semiconductor vendor revenues increased 27 percent year-on-year, growing from $46 billion in 2021 to $59 billion. Moving into 2023, analysis on lead times and inventories at companies such as NXP, Renesas and Rohm affirms a trend that shows the overall move towards a more normal supply-demand dynamic. However, TechInsights believes that while we are starting to see the beginning of the end of the semiconductor shortage, a normalization of the supply-demand balance will not start to be observed until the second half of 2023.
AUTOMOTIVE SEMICONDUCTOR MARKET LEADERS
Figure 3 2022 automotive semiconductor market snapshot. Source: TechInsights.
TechInsights’ annual “Automotive Semiconductor Vendor Market Share”3 survey and top-down analysis of automotive semiconductor vendor sales revenues and market shares concluded that 2022 automotive semiconductor vendor revenues increased 27 percent year-on-year, growing from $46 billion in 2021 to $59 billion. Infineon maintained the top spot in the 2022 automotive semiconductor vendor market share rankings while NXP remained in second place. Renesas, blighted by the effects of a weak Yen, slipped from third position to fifth. STMicroelectronics took third place and Texas Instruments jumped into fourth place. Collectively, these top five vendors accounted for 49 percent of the 2022 automotive semiconductor vendor revenues. The bottom half of the top 10 includes onsemi, Bosch, ADI, Micron and Qualcomm. The top 10 companies grew their collective share of global automotive semiconductor revenues in 2022 to 71 percent versus 69 percent in 2021. Figure 3 shows the 2022 snapshot of the automotive semiconductor market share.
The automotive sector has, to date, been relatively resilient and consequently, automotive semiconductor demand is bucking the broader consumer electronics trend. This is reflected in the TechInsights Auto Semi Index shown in Figure 4 as presented in the quarterly “Automotive Semiconductor Industry Performance Snapshot,”4 This report tracks the automotive revenues for 10 of the leading publicly quoted automotive semiconductor companies and shows continued quarter-on-quarter growth.
Figure 4 Automotive semiconductor index. Source: TechInsights.
CONCLUSION
Despite the headwinds created by geopolitical events like the conflict in Ukraine, property sector issues in China, a global increase in energy prices and the subsequent global inflationary pressures that these and other events have stirred up, the automotive sector has been resilient. In the face of dampened consumer confidence and decreasing disposable income, global demand for automotive semiconductors grew by 24 percent year-on-year to $54 billion in 2022. A combination of strong demand and constrained supply translated into semiconductor pricing increases which have bolstered revenues for the automotive semiconductor industry. With these headwinds conspiring to reduce demand for smartphones, data centers and consumer electronics, the automotive sector has been a powerful growth engine for the semiconductor industry.
The TechInsights “Automotive Semiconductor Demand Outlook 2021 to 2030” report forecasts that automotive semiconductor demand will grow by 19 percent in 2023, enabled by the continued momentum towards electrification. This will translate to automotive semiconductor demand serving as the growth engine for the overall semiconductor industry, growing at a CAAGR of almost 17 percent over the 2022 to 2027 five-year period. The result will be automotive semiconductor demand almost tripling to $144 billion by 2030.
References
- “Automotive Semiconductor Demand Outlook 2021 to 2030,” TechInsights, Web: library.techinsights.com/strategy-analytics/analysis-view/PBC-2306-801#sidebar=true.
- “xEV Semiconductor Demand Outlook 2021-2030,” TechInsights, Web: https://library.techinsights.com/strategy-analytics/analysis-view/EVS-2307-802#sidebar=true.
- “Automotive Semiconductor Vendor Market Share, ”TechInsights, Web: https://library.techinsights.com/strategy-analytics/analysis-view/PBC-2303-802#sidebar=true.
- “Automotive Semiconductor Industry Performance Snapshot,” TechInsights, Web: https://library.techinsights.com/strategy-analytics/analysis-view/PBC-2306-803#sidebar=true.
