EV Boom Set to Ignite Semiconductor Demand
The electric vehicle (EV) revolution is not just transforming the automotive industry; it’s also creating a seismic shift in the semiconductor market. As automakers accelerate their transition to cleaner energy and embrace digital transformation, the demand for semiconductors is skyrocketing. These tiny chips are at the heart of many critical systems in EVs, powering everything from advanced driver assistance systems (ADAS) to battery management and infotainment systems.
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EV Boom Set to Ignite Semiconductor Demand: The Surge in EV Sales
According to the International Energy Agency (IEA), global EV sales surpassed 10 million units in 2022 and are projected to reach 30 million units annually by 2030. This explosive growth is driven by increasing consumer demand for sustainable transportation and government initiatives promoting electric mobility. Notably, each EV requires significantly more semiconductors than traditional internal combustion engine (ICE) vehicles—estimates suggest up to three times the chip content per unit.
Key Players in the Semiconductor Space
As the EV market expands, several semiconductor manufacturers are positioning themselves to meet this burgeoning demand. Industry giants like Nvidia, Infineon, MediaTek, NXP, Qualcomm, and STMicroelectronics are vying for a dominant role in the EV supply chain. Raghavan Sampath, the business development and sales head at MediaTek India, highlights the importance of tailoring semiconductor products to the specific needs of the EV sector.
“The Indian two-wheeler EV market is projected to reach ₹10,000 crore by the end of 2025, with more than three million vehicles on the road, growing at a CAGR of 50% over the next five years,” Sampath noted. To support this growth, MediaTek is collaborating with Jio Things to develop smart digital clusters and modules for two-wheelers and EVs in India.
The Role of Advanced Semiconductors
Advanced semiconductors are crucial for enhancing EV performance and efficiency. They control various vehicle systems, including speed and engine functions, while ensuring the reliability of ADAS, sensors, and infotainment systems. Sampath emphasizes that “semiconductors play a key role in EVs by controlling the vehicle’s speed, engine, and other systems.”
Moreover, AI-optimized semiconductors are revolutionizing real-time data processing, sensor fusion, and decision-making in autonomous driving systems. These chips enable intelligent transportation systems, modernizing traffic management and facilitating vehicle-to-infrastructure communication. “On a global scale, AI-powered semiconductors are transforming the automotive industry,” Sampath added.
Strengthening the Semiconductor Supply Chain
As demand for EVs continues to rise, the semiconductor industry is focusing on strengthening its supply chain. Partnerships and proactive strategies are essential for managing risks and amplifying opportunities. Sampath stresses the importance of industry-wide collaboration, stating, “The industry must adopt new strategies that focus on proactive measures to amplify opportunities and mitigate risks.”
This collaborative approach will help bring the right intelligence to inform strategic decisions and drive business growth, ultimately strengthening supply chain resilience through strategic partnerships.
Automakers Acknowledge the Shift
Automakers are also acutely aware of the challenges posed by this semiconductor demand surge. Santosh Iyer, MD & CEO of Mercedes-Benz India, remarked, “Technologies such as AI will transform customer preferences, defining the future of automobiles, and semiconductors will play a critical role in this transformation.” He emphasized the need to build a robust ecosystem that supports the rising demand for EVs in a software-driven and decarbonized future.
The EV boom is set to charge up semiconductor demand, creating a new era for chip manufacturers and automakers alike. As the industry adapts to this rapid transformation, collaboration and innovation will be key to meeting the challenges and opportunities that lie ahead. With the right strategies in place, the future of electric mobility looks promising, paving the way for a sustainable and technologically advanced automotive landscape.
