The Contribution of Semiconductors to the Automotive Industry

Published Date

April 25, 2022


6 minutes

Written By

ACL Digital

All the gadgets that we use in our daily lives are made of many semiconductors within that device. Semiconductors are the backbone behind all the technological advancements that are happening around us. It is broadly used in telecom industries, IT industries, automotive industries, cloud computing services, etc. In the automotive industry, it is extensively used for providing power management, sensing, safety features, etc. Semiconductors are the building blocks for the innovation of better engines named ICE (Internal Computing engine). And without automotive semiconductors, the rapid growth and advancement of electric vehicles will be stalled.  

The Benefits of Semiconductors in the Automobile Sector

The entire automobile sector solely relies on semiconductors as the global demands are surging day by day. Semiconductor provides some of the best benefits that become the need of this industry. Here are a few essential benefits of semiconductors is discussed below 

Semiconductor 03 (1)


Better Connectivity

We have become used to the features like mapping routes and road closures using the GPS in our vehicles with the help of the internet, red light alerts, parking assistance, and all essential services that you need while you are driving your vehicle. Advanced type legacy node semiconductors are used to fine-tune all the preinstalled systems in your vehicle. The semiconductor is used for processing & sensing critical data on the vehicle's computing systems, resulting in accurate, reliable, and timely control over the vehicle.

Electrifying Vehicles

Some of the features & functions of vehicles are now being replaced from mechanical to electric systems. Due to the excellent efficiency and accuracy of the electric systems equipped in the vehicles now, the automotive sector is rapidly switching to this system. Semiconductors also play a vital role in achieving this in the automobile sector. Electrification has now added some great features like managing batteries in hybrid vehicles, increasing the efficiency of fuel combustion in the vehicles, and restoring energy in electric vehicles from a regenerative braking system. 

Increased Safety

Modern technology has evolved the modern automobile industry to new heights. Apart from revolutionizing other aspects of automobile sectors, technology has helped us improve the braking of vehicles drastically over a decade. And to improve the braking system, semiconductors played a crucial role in enabling better safety systems in vehicles, especially in AVs. Features like blind-spot detection systems, cruise control, parking camera assist, emergency braking system, colliding avoid sensors, etc. now become lifesaving tools for a vehicle owner.  

Increasing Growth of AVs

One of the major revolutions in the automobile sector is AVs (Autonomous Vehicles). AVs are generally known as driverless self-driving vehicles. These vehicles can drive without any human assistance and easily can go from one point to another point in "Autopilot Mode" with the help of AI-based technology. But to fine-tune this highly sophisticated mechanism, advanced semiconductors are required in the development of these AVs.  

Advanced Driving Assistance

Various features like cruise control, anti-braking system (ABS), Voice control GPS navigation, OTA updates, active steering, etc., completely relies on the software integration used in the vehicle. AUTOSAR (Automotive Open System Architecture) manages all these processes. 
It is a standardized open ECU software architecture specially designed & developed for the automotive industry. Its primary function is to create a bridge between vehicular functions and application software in all AUTOSAR enabled vehicles.  

Automobile Manufacturers and OEMs at One Place

Semiconductors are becoming an essential part of the modern automobile sector to bring innovative revolutions. Original Equipment Manufacturers (OEMs) can play a crucial role in providing a seamless supply of vehicle-specific sophisticated semiconductors. OEMs basically are the companies that manufacture parts of the automobiles and sell to the parent company, which markets the products under their brand names. To meet the high demand for semiconductors due to technological advancement in automotive industries, the collaboration between OEMs and automotive manufacturers can be rewarding. This collaboration leads to dynamic changes in the tier 2 semiconductor supply chain.

The OMEs have expertise in mass production of the semiconductors because they primarily focus on producing that particular product. They build and supply electronic components more inexpensively than the automakers. The automakers can expect quality semiconductors from the OEMs as they have experts who precisely deal with every component. Moreover, some OEMs provide a manufacturer's warranty on the products.

However, in the current scenario, it has been observed that the OEMs are only focusing on investing in manufacturing leading-edge legacy nodes rather than manufacturing legacy nodes, which eventually increases the demand for semiconductors and creates a supply crunch in the automobile sector. As a solution to the shortage of semiconductors in the automotive industry, both sectors have to work collaboratively. Both OEMs and Automobile sectors are well aware that if any shortage or crisis of the advanced semiconductors arises in the future, how many losses they have to bear and the disruption that the automobile sector has to face.

The Future of Semiconductor in the Automobile Sector 

Semiconductors are the primary wheel driving the automotive industry to a new age of ICE (Internal Computing Engine). Future vehicles will be based on mobility as a service or MaaS, autonomy, electrification & connectivity. Future vehicles will only focus more and more on electronics, software-based features, and the integration of hardware with software based on the cloud.  

According to a recent market research report, the automotive semiconductor industry can go up to $210b by 2040 from $44b in 2020 with a CAGR of more than 7.5 percent. This signifies how crucial semiconductors are to this industry. Just like the other industries, such as the smartphone industry, the computer & laptop industry, the automobile industry is on the verge of a revolution that is going to take place soon.

In the future, the demand for semiconductors and semiconductor solutions will skyrocket. If the OEMs and automobile manufacturers do not work side by side, there will be a crisis of semiconductors in the coming future. Also, there is an excellent dimension for companies to grow at a higher pace as per the projection given by reputable organizations and news agencies regarding the future of semiconductors. 

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ACL Digital

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