Automotive Chips to Grow to $21 billion in 2021, IDM Firms to Benefit from Supply Shortage

According to TrendForce's Topology Research Institute data, global auto sales estimates look optimistic in 2021 and could reach 83.5 million units. Auto brands and Tier 1 suppliers have been rebuilding their inventories this Q4, buoying demand for auto semiconductors.

The institute estimates the global auto chips industry value could hit USD$18.67 billion; in 2021, that could grow 12.5% to reach USD$21 billion.

Topology Research Institute researcher PP. Young said the China-U.S. trade war and COVID-19 outbreak placed automotive chips in a difficult situation. Factory operations were put at a standstill at the beginning of the year due to the outbreak, which disrupted supply. At the same time, pandemic prevention policies have led to lower demand for automotive vehicles. Disrupted production chains have forced top tier auto brands to push back release dates for new models as well.

However, auto semiconductor suppliers have continued to develop new automotive-use chips. Current chips in development could see implementation in the new model production chain after 2023, as testing and adhering to specific certifications are a timely process. For example, NXP is working with TSMC over 5nm automotive processing chips; ST and BOSCH are developing auto MCUs; Infineon will leverage Cypress' technology for auto NOR Flash and MCUs once the former completes its buyout.

The increasing demand for automotive chips, especially in automotive communications, ADAS, self-driving cars, and electric vehicles is an undeniable trend, Topology Research Institute observed. The speed of implementing new technologies and production of automotive semiconductor parts will become the deciding factors of whether a company can emerge to lead the industry.

Topology Research Institute reported that IDM firms with their foundry production capabilities would likely get a leg-up as, at present, the global supply of semiconductors is in a huge shortage. The institute indicated that the industry is unlikely to resolve the supply shortage in the short-term.