Vehicles require powerful semiconductors for connectivity, electrification, and more. Since the pandemic, the semiconductor market has been growing again. Read here about the trends driving demand.
Since the pandemic, the demand for semiconductors has been growing.
The chip crisis during the pandemic highlighted the vulnerability of the supply chain and affected industries worldwide. The automotive industry was hit the hardest. The reason: between 1,000 and 3,000 semiconductors are installed in every vehicle. After overcoming the crisis, the global market for automotive semiconductors is expected to grow to more than 88 billion dollars by 2027. A series of trends are driving this demand.
Software As A Key Component of the Automobile
The software-defined vehicle is a reality: New models are developed based on their substantial software content—a typical vehicle contains around 100 million lines of code.
Automotive software encompasses a wide range of systems and applications. It enables the functionality, performance, safety, and user-friendliness of a vehicle. Applications control engine parameters such as injection timing, air-fuel ratio, ignition timing, and idle speed. They also regulate safety systems, including airbags and anti-lock braking systems, to name just a few. Advanced driver assistance systems (ADAS) have transformed the driving experience with features like adaptive cruise control, lane-keeping assist, blind spot monitoring, collision avoidance, traction control, and traffic sign recognition.
These features result in the need to process large amounts of data, which in turn drives a high demand for silicon and semiconductors. These components capture and analyze sensor data and trigger reactions almost in real time. Semiconductors also enable software applications to be repaired, maintained, and updated over-the-air. The Software Defined Vehicle (SDV) transitions existing vehicle software to virtualization and containerization technologies, which have already proven effective in the IT world.
The Trend Toward Autonomous Driving
The software-driven automation of functions (like those mentioned above) has now become mainstream. This is a step toward autonomous vehicles, which require up to 300 million lines of code and powerful semiconductors to process vast amounts of data. These data are generated by the sensors integrated into vehicles. For example, the sensors of the Lidar (Light Detection and Ranging) system measure the time it takes for emitted laser pulses to bounce off objects and return—calculating the vehicle's distance to these objects.
Semiconductors with enormous data processing and machine learning capabilities link this information with additional sensor data, such as that from cameras. This enables the Lidar system to create a 3D map of the surroundings. This processing occurs in real time, allowing the vehicle to make immediate decisions to navigate safely through traffic and other conditions. High-performance computing (HPC) infrastructure in the vehicle is required through edge data processing and edge AI.
Companies like Qualcomm, Intel, and Nvidia are investing in the development and production of powerful semiconductors used in self-driving vehicles. Nvidia, for instance, offers a platform with hardware, software, and processes for data centers. This supports the development of autonomous driving technologies—from data collection to testing and validation.
Strongly Connected Vehicles
Driverless cars cannot function in isolation. They must continuously connect with other systems, such as vehicles, traffic infrastructure, automakers, service providers, and even pedestrians. They exchange information on speed, location, traffic conditions, road hazards, road closures, vehicle diagnostics, etc. The global market for connected vehicles is growing rapidly and is expected to reach $500 billion by 2033.
5G mobile technology is crucial for reliable real-time connectivity of vehicles. It also enables over-the-air software updates to vehicle systems. Automotive semiconductors support this by safeguarding data integrity during transmission, thus allowing secure communication.
Growth Market Electric Vehicles
The electrification of motor vehicles offers a range of advantages. These include higher fuel efficiency (and thus lower emissions), improved battery management in hybrid vehicles, and energy recovery through regenerative braking. Semiconductors not only execute these complex processes efficiently but also drastically reduce power losses by switching on and off in less than a millisecond. This extends battery life as well as the range of the vehicles.
Date: 08.12.2025
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Power electronics semiconductors are also required to operate the high-voltage component (HV) in the vehicle. The high voltage drives the vehicle's powertrain. High-performance semiconductors, on the other hand, reduce the size of the battery. This improves handling and energy efficiency while simultaneously cutting costs. This triggers a positive cycle: the growth of electric vehicles increases the demand for energy-efficient automotive semiconductors to further optimize the vehicles' power consumption.
Personalization of the Vehicle Experience
Plush seats, stylish tires, stickers, and custom license plates are a thing of the past. The personalization and customization of cars have reached a new level today, primarily thanks to connectivity, software, and the semiconductors that power them.
The ADAS system of a vehicle can, for example, adapt driving behavior to the driver's style and preferences. Other systems provide calendar functions, synchronize GPS with meeting points, or adjust the temperature and ambient lighting. The seating position can also be configured according to the driver's wishes. Additionally, in-car infotainment systems offer extensive personalization options, from display settings to playlist curation.
If software drives the modern car, then semiconductors are its foundation. Vehicles require powerful semiconductors—as they are essential for enabling self-driving cars, connectivity, electrification, and personalization. Moreover, they allow the numerous applications in the vehicle to be updated over-the-air. A modern car, which on average weighs nearly 3,307 pounds, is powered by semiconductors, each weighing less than a gram.
*Raghavendra K.A. is SVP and Global Head of Engineering at Infosys.