Vehicle electrification boosts automotive semiconductors to $100bn

TrendForce projects a robust growth trajectory for the automotive silicon market over the next five years, driven by the rapid advancement of vehicle electrification and "vehicle intelligence." The research firm forecasts that the global automotive semiconductor market will climb from approximately $67.7 billion in 2024 to nearly $96.9 billion by 2029, representing a compound annual growth rate (CAGR) of 7.4% during the 2024–2029 period.

As automotive electronics undergo a significant transformation, the focus is shifting towards high-performance compute, connectivity, and AI-enabling silicon. This shift carries implications for product roadmaps, supply chain strategies, and the competitive landscape among European Tier 1s, OEMs, and semiconductor vendors, signaling a new era of innovation and collaboration in the industry.

HPC chips outpace traditional components

TrendForce highlights the uneven growth pattern across automotive semiconductor categories, with high-performance computing (HPC) devices such as logic processors and advanced memory outpacing traditional components like microcontrollers. This disparity reflects a swift reallocation of market value towards core technologies essential for supporting electrified powertrains and software-driven vehicle intelligence.

The acceleration of electrification is a key driver, with global electric vehicle (EV) penetration, including battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), fuel cell vehicles (FCVs), and hybrid electric vehicles (HEVs), expected to reach 29.5% of new-vehicle sales. Automakers are also fast-tracking the integration of vehicle intelligence, relying on multi-sensor configurations, high-speed connectivity, and AI models to enhance the driving experience.

E/E architectures move to centralized compute

Simultaneously, a transition is underway in vehicle electrical/electronic (E/E) architectures, evolving from distributed systems to domain-centric and ultimately fully centralized designs. As sensor data volumes increase and AI models grow in complexity, the demand for automotive compute capacity is surging, prompting a shift towards centralized computing solutions, as reported by TrendForce.

Automakers are exploring various levels of functional integration in critical areas like body control, telematics, intelligent driving, and smart cockpits, where chip suppliers play a crucial role. The commercialization of integrated cockpit-ADAS Systems-on-Chip (SoCs) is set to begin in 2025, marking a significant milestone as the industry moves towards more integrated and efficient architectures.

Controller consolidation is streamlining operations by reducing the number of electronic control units (ECUs), promoting component sharing, simplifying wiring harnesses, and driving cost efficiencies. TrendForce predicts that automotive logic processors will experience a CAGR of 8.6% from 2024 to 2029, outpacing the overall market growth rate.

New entrants turn up the competitive heat

With competition intensifying as growth rates diverge across semiconductor segments, TrendForce notes the entry of new players into the market landscape. Companies like Nvidia and Qualcomm are making significant inroads in automotive intelligence by leveraging high-performance processors and comprehensive hardware-software ecosystems. Concurrently, Chinese suppliers such as Horizon Robotics are rapidly gaining traction through technological advancements and localized solutions, reshaping the competitive dynamics in the industry.

While traditional automotive semiconductor suppliers face mounting pressure, TrendForce emphasizes the importance of their broad product portfolios, established reliability, and strong customer relationships as key advantages. The company underscores the significance of strategic alliances and enhanced hardware-software integration for long-term success in a rapidly evolving automotive semiconductor market.