It was suggested that the automotive semiconductor market will continue to grow at an average annual rate of 12.3% until 2025, and that a portfolio centered on automotive semiconductors will provide growth opportunities for the semiconductor industry.

Omdia recently released a report titled 'Automotive Semiconductor Market Tracker - 2H21 Analysis'. According to the report, the automotive semiconductor industry is expected to surge at a CAGR (compound annual growth rate) of 12.3% through 2025, driven by a strong recovery from the pandemic.

The report noted that while semiconductor content in automobiles has been steadily increasing over the past decade, several recent trends have combined to accelerate automotive semiconductor revenue.

These trends include increasing sales of battery electric vehicles (BEVs) and increasing demand for advanced driver assistance systems (ADAS) and infotainment and telematics (I&T) systems.

Automotive semiconductor sales are expected to exceed $50 billion in 2021, accounting for about 9% of the entire semiconductor market, making it one of the top four pillars along with smartphones, PCs, and data centers.

Additionally, memory IC revenue was analyzed to account for less than 10% of the entire automotive semiconductor market in 2021, but it is analyzed to grow the fastest due to the spread of ADAS applications such as camera modules for parking assistance and collision warning, and infotainment & telematics (I&T) applications such as the transition from analog or hybrid instrument panels to digital clusters. ADAS memory IC sales increased by more than 50% year-on-year in 2021, and I&T sales also increased by 33% year-on-year.

In particular, it was analyzed that the expansion of electric vehicles is leading to an increase in sales of automotive semiconductors.

“On average, BEVs generate 2.9 times more semiconductor revenue than conventional internal combustion engine vehicles,” said Oh Sang, a researcher who wrote the report.

In addition, the top 10 automotive semiconductor companies accounted for about 60% of the entire market in 2021, and nine of the top 10 companies recorded double-digit growth in 2021.

In addition, in recent years, companies have made strategic acquisitions to expand their automotive semiconductor business, and as this sector grows rapidly, the semiconductor market is expected to provide significant growth opportunities for companies with automotive-centric portfolios.

Meanwhile, COVID-19 had a major impact on the global automotive semiconductor industry in the first half of 2020, with global automobile production halted in the early stages of the pandemic. On the other hand, the industry has shown a strong rebound since the third quarter of 2020.

The sector's recovery is expected to accelerate in 2021, with total annual revenue expected to reach $51.6 billion, up 28.6% from the previous year.

This comes at a time when the entire automotive supply chain continues to be disrupted, with global auto production expected to rise by 2.5% year-on-year in 2021, albeit at a relatively small rate.

“The recovery in the automotive semiconductor market has been much stronger than that of the overall industry, which may be due to the dramatic increase in the average selling price of automotive semiconductors due to supply constraints and the trend of advance orders from electronics manufacturers,” said Oh Sang-gyu, a researcher at MIT. “They will increase inventory and safety stocks.”