Auto demands for semiconductor and software solutions on the rise

Auto demands for semiconductor and software solutions on the rise

By Anil Kempanna

Car companies have for long updated vehicles with technology. However, the level of tech-enabled voice and gesture controls, scrolling and swiping options that we see now make the experience akin to a sophisticated electronic device. Edge technologies such as robotics, artificial intelligence (AI), Machine Learning, Internet of Things (IoT), Augmented Reality (AR), Cloud solutions and advanced analytics are moving us into a new era of possibilities in Transport Mobility. Experience design that puts greater emphasis on safety, performance, sustainability and optimisation now disrupts Mobility, with the focus shifting towards building a differentiated customer experience that delights and exceeds expectations. The growing complexity of such smart vehicles and the market’s insatiable appetite for advanced tech means that semiconductors are becoming increasingly important.

Semiconductor technology has evolved over the years, allowing car manufacturers to consolidate multiple functions onto a single chip, reducing board space and enhancing performance. Semiconductors have been a key driving force in this revolution, with integrated electronics playing a significant role. As per Markets and Markets, the auto semiconductor market is projected to grow from $42.9 billion in 2022 to $70 billion by 2027, with a compound annual growth rate (CAGR) of 10.1% between 2022 and 2027.

Chips in vehicles empower various critical systems such as Advanced Driver Assistance Systems (ADAS), infotainment, sensors, powertrains, and battery management. Such Software-Defined Vehicles (SDV) outperform their hardware-defined predecessors in many ways. Not only they are safer, but they also offer more comfort and convenience. These smart vehicles have advanced safety measures like anti-collision systems and driving aids; heightened comfort through integrated infotainment systems for music and video streaming; more comprehensive understanding of vehicle health via telematics and diagnostic tools, facilitating efficient preventative maintenance; and empower car manufacturers to seamlessly introduce new features and capabilities through over-the-air updates.

Thus, manufacturers now have the ability to improve the driver experience even after a car leaves the factory. This is a significant shift in the automotive industry, since hardware-defined vehicles typically see little to no alterations after the vehicle is sold off.

A combination of information technology (IT) and operational technology (OT) is reshaping the auto industry, creating efficiencies and delivering powerful insights across the entire value chain. The controller area network (CAN) sends signals (via alerts on apps or in-car screens) to enable, disable things or even repair/replace them. What’s available in luxury vehicles today will be available in budget cars tomorrow.

Another key growth area in auto industry is sustainable mobility. New entrants and even ride-sharing platforms are looking to aggressively expand into the EV space. Advances in battery capacity, charging time, conducive infrastructure and better vehicle range is spurring this broad trend. According to an IEA report, EV sales exceeded 10 million in 2022. A total of 14% of all new cars sold were electric in 2022, up from around 9% in 2021 and less than 5% in 2020. As people become more conscious of the carbon impact of the choices they make, shared mobility and EVs are gradually coming to the forefront of popular mobility options. While EV is currently being portrayed as a popular sustainability mobility option, the future energy source for automotive could be a combination of batteries, hydrogen fuel cells, or solar. Other alternative fuels include:

Biofuels, such as bioethanol and biodieselElectricitySteamKineticHeatHydrogenAirNitrogen

The rise of HEVs and EVs is likely to be a huge opportunity for automotive semiconductor manufacturers. The government is offering several incentives to promote electric and hybrid car sales in the country, like the deeper penetration of EV charging stations, byproviding capital subsidies through the FAME India Programme, and other such state-level measures.

The European Union (EU) has agreed to ban the sale of new petrol and diesel cars from 2035. The EU member states have given final approval to a plan that would require all new cars sold in the EU to be zero-emission vehicles starting in 2035. The EU law for this ban is expected to pass in Q4 2022.

The EU has also adopted new CO2 standards for cars and vans. These standards require a 55% and 50% reduction in emissions of new cars and vans by 2030, and 100% for both by 2035.

The demand for such advanced and fuel-efficient vehicles on the rise is fuelling semiconductor consumption. According to Deloitte, the Indian semiconductor industry will reach $55 billion by 2026, with three industries accounting for more than 60% of the market and these are–smartphones and wearables, automotive components, as well as computers and data storage. The software and semiconductor industry is gearing up for the change.

The author is the CEO of Cientra.

Disclaimer: The views and opinions expressed in this article are solely those of the original author. These views and opinions do not represent those of The Indian Express Group or its employees.