The global chip shortages result in severe spillover damages in many sectors, mainly in the automotive industry. The struggle to cope with skyrocketing demand, natural disasters, and lockdowns are revealing the fragility of supply chains. Semiconductor consumers are currently undergoing a huge supply chain transformation as the semiconductor shortage have halted their production lines of the final product. The relationship between the essential dynamics, such as high fab utilization, high geographic concentration, high market entry barriers, and long manufacturing cycles, is the reason why skyrocketing demand and external shocks are disrupting the value chain since 2020.
The shortage in semiconductors can be attributed to the impact of COVID-19. Since the second half of 2020, homeschooling and working from home have been the new normal in many countries. Staying at home due to lockdown and curfews meant many people invested in gaming consoles and other gadgets, requiring semiconductors. This have directed the supply of semiconductors to the consumer electronics industry and have resulted to the shortage of semiconductors in the automotive industry.
China’s reported semiconductor consumption market is more significant than most of the countries in the world. That is because a considerable portion of the semiconductor devices consumed in China remains purchased outside of China. In China, owing to supply chain considerations such as toll processing business models, control of essential inventory items, and intellectual property protection, will force China to buy semiconductor devices outside of the country and transship them to China for use and consumption.
More cars and light vehicles are now manufactured in developing countries than developed nations. These will turn out to be critical markets for auto manufacturers, the semiconductor industry, and their suppliers. Advancements in semiconductor technology have facilitated the rapid growth in the last 50 years. The use of electronics in vehicles is the primary driver of change in the sector. Virtually all automotive revolution arises indirectly or directly from developments in electronics.
Practically all innovation in the automotive industry is electronic rather than mechanical. Technologies/features launched to the luxury end of the market are being applied in more standard vehicles more rapidly than ever as the prices continue to fall and innovation hastens.
The trend towards increasing comfort levels, entertainment, and communications will spur growth in the semiconductor content in each vehicle. The electronics control unit (ECU) will electronically control everything from lighting to heating. The dashboard is becoming fully electronic with LCD and LED displays providing drivers with all the information about their vehicle, external environment, and its performance. This again is expected to create a huge demand for semiconductor in the market.
Various regulatory initiatives will require auto manufacturers and their suppliers to include more semiconductor components. For instance, environmental standards in the European Union (EU) are likely to call out for a 20–30% reduction in emissions by 2030. As emission standards have improved over the years, they demand increasingly potent semiconductors to ensure the vehicles’ performance is in emission compliance.
Standards such as the NCAP structure offer a star-rating system that rate vehicles based on their safety performance. Achieving a five star award demonstrates a robust selling criteria for auto manufacturers. Its accomplishment relies on sophisticated and complicated assisted driving systems that demand significant semiconductors.
Furthermore, the growth of hybrid and electric cars adding to the surging demand for semiconductor equipment. Semiconductors in hybrid and electric cars will help them to achieve more excellent reliability and sophistication in power and battery performance. Usage such as managing and monitoring battery performance will become increasingly complicated, as will stop/start systems and more cost-effective systems for charging at multiple speeds and regulating electric motors will further demand even more semiconductors in cars. In addition, e-mobility will depend strongly on complex intelligence and information handling, both in-vehicle and infrastructure. Also, the advancement in the intelligent grid could be a driver for boosting the sales of EVs by permitting their drivers to feed power back in the electricity grid as well pay securely for charging by recharging judiciously.
The automotive sector would create a strong demand for semiconductor content in vehicles as mote regulations and greater efficiency and features continue to increase the need for sophisticated electronics. The development of intelligent mobility will create new technologies and performance challenges for semiconductor manufacturers. They will need to ensure high levels of reliability and provide guaranteed levels of service for wireless connections
Report Coverage
Revenue forecast, Company Analysis, Industry landscape, Growth factors, and Trends
Segment Covered
This text is related
to segments covered.
Regional Scope
North America, Europe, Asia Pacific, Middle East & Africa, South & Central America
Country Scope
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to country scope.
- NXP Semiconductors
- Texas Instrument
- ON Semiconductor
- Maxim
- Vishay Intertechnology
- Qualcomm
- NVidia Corporation
- Rohm Semiconductor
- STMicroelectronics N.V.
- Analog Devices, Inc.
The Insight Partners performs research in 4 major stages: Data Collection & Secondary Research, Primary Research, Data Analysis and Data Triangulation & Final Review.
- Data Collection and Secondary Research:
As a market research and consulting firm operating from a decade, we have published many reports and advised several clients across the globe. First step for any study will start with an assessment of currently available data and insights from existing reports. Further, historical and current market information is collected from Investor Presentations, Annual Reports, SEC Filings, etc., and other information related to company’s performance and market positioning are gathered from Paid Databases (Factiva, Hoovers, and Reuters) and various other publications available in public domain.
Several associations trade associates, technical forums, institutes, societies and organizations are accessed to gain technical as well as market related insights through their publications such as research papers, blogs and press releases related to the studies are referred to get cues about the market. Further, white papers, journals, magazines, and other news articles published in the last 3 years are scrutinized and analyzed to understand the current market trends.
- Primary Research:
The primarily interview analysis comprise of data obtained from industry participants interview and answers to survey questions gathered by in-house primary team.
For primary research, interviews are conducted with industry experts/CEOs/Marketing Managers/Sales Managers/VPs/Subject Matter Experts from both demand and supply side to get a 360-degree view of the market. The primary team conducts several interviews based on the complexity of the markets to understand the various market trends and dynamics which makes research more credible and precise.
A typical research interview fulfils the following functions:
- Provides first-hand information on the market size, market trends, growth trends, competitive landscape, and outlook
- Validates and strengthens in-house secondary research findings
- Develops the analysis team’s expertise and market understanding
Primary research involves email interactions and telephone interviews for each market, category, segment, and sub-segment across geographies. The participants who typically take part in such a process include, but are not limited to:
- Industry participants: VPs, business development managers, market intelligence managers and national sales managers
- Outside experts: Valuation experts, research analysts and key opinion leaders specializing in the electronics and semiconductor industry.
Below is the breakup of our primary respondents by company, designation, and region:
Once we receive the confirmation from primary research sources or primary respondents, we finalize the base year market estimation and forecast the data as per the macroeconomic and microeconomic factors assessed during data collection.
- Data Analysis:
Once data is validated through both secondary as well as primary respondents, we finalize the market estimations by hypothesis formulation and factor analysis at regional and country level.
- 3.1 Macro-Economic Factor Analysis:
We analyse macroeconomic indicators such the gross domestic product (GDP), increase in the demand for goods and services across industries, technological advancement, regional economic growth, governmental policies, the influence of COVID-19, PEST analysis, and other aspects. This analysis aids in setting benchmarks for various nations/regions and approximating market splits. Additionally, the general trend of the aforementioned components aid in determining the market's development possibilities.
- 3.2 Country Level Data:
Various factors that are especially aligned to the country are taken into account to determine the market size for a certain area and country, including the presence of vendors, such as headquarters and offices, the country's GDP, demand patterns, and industry growth. To comprehend the market dynamics for the nation, a number of growth variables, inhibitors, application areas, and current market trends are researched. The aforementioned elements aid in determining the country's overall market's growth potential.
- 3.3 Company Profile:
The “Table of Contents” is formulated by listing and analyzing more than 25 - 30 companies operating in the market ecosystem across geographies. However, we profile only 10 companies as a standard practice in our syndicate reports. These 10 companies comprise leading, emerging, and regional players. Nonetheless, our analysis is not restricted to the 10 listed companies, we also analyze other companies present in the market to develop a holistic view and understand the prevailing trends. The “Company Profiles” section in the report covers key facts, business description, products & services, financial information, SWOT analysis, and key developments. The financial information presented is extracted from the annual reports and official documents of the publicly listed companies. Upon collecting the information for the sections of respective companies, we verify them via various primary sources and then compile the data in respective company profiles. The company level information helps us in deriving the base number as well as in forecasting the market size.
- 3.4 Developing Base Number:
Aggregation of sales statistics (2020-2022) and macro-economic factor, and other secondary and primary research insights are utilized to arrive at base number and related market shares for 2022. The data gaps are identified in this step and relevant market data is analyzed, collected from paid primary interviews or databases. On finalizing the base year market size, forecasts are developed on the basis of macro-economic, industry and market growth factors and company level analysis.
- Data Triangulation and Final Review:
The market findings and base year market size calculations are validated from supply as well as demand side. Demand side validations are based on macro-economic factor analysis and benchmarks for respective regions and countries. In case of supply side validations, revenues of major companies are estimated (in case not available) based on industry benchmark, approximate number of employees, product portfolio, and primary interviews revenues are gathered. Further revenue from target product/service segment is assessed to avoid overshooting of market statistics. In case of heavy deviations between supply and demand side values, all thes steps are repeated to achieve synchronization.
We follow an iterative model, wherein we share our research findings with Subject Matter Experts (SME’s) and Key Opinion Leaders (KOLs) until consensus view of the market is not formulated – this model negates any drastic deviation in the opinions of experts. Only validated and universally acceptable research findings are quoted in our reports.
We have important check points that we use to validate our research findings – which we call – data triangulation, where we validate the information, we generate from secondary sources with primary interviews and then we re-validate with our internal data bases and Subject matter experts. This comprehensive model enables us to deliver high quality, reliable data in shortest possible time.
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