The global automotive semiconductor revenue for 2020 is forecast to exceed initial expectations, primarily due to an increase in the average semiconductor value per car sold this year, according to a new analysis by IHS Markit.
IHS Markit, now expects semiconductor revenue to contract by 9.6 percent to just over $38 billion in 2020, compared to the mid-year view where semiconductor revenues were expected to drop 20 percent by 2020-end on a year-on-year basis. IHS Markit continues to anticipate robust growth in 2021 reflecting improved demand and production conditions and especially uptick in electric vehicles, one factor which has helped boost the semiconductor market in 2020.
As per the analysis done by Phil Amsrud, senior principal analyst, automotive semiconductors at IHS Markit, two factors driving the recovery are notably low automotive inventory that will result in new car growth next year combined with stimulus packages designed to benefit the ailing car sector while favouring the switch to electric and hybrid cars, which are typically more expensive than equivalent internal combustion-driven models.
Both hybrid and electric vehicles have significantly more expensive power semiconductor content required to control components such as traction motor inverters and DC-DC converters, but the electrification trend also supports autonomy features and advanced infotainment, even in the smaller car segment.
According to Amsrud, one of the impacts of Covid-19 is that it has led to an increase in the average semiconductor value per car sold. In some parts of Europe, for instance, the government is only providing incentives for electrified vehicles. Additionally, today’s hybrid- and electric vehicles are also fitted with more features related to autonomous driving, advanced infotainment and HMI systems, even in the lower cost segments.
The analysis emphasised that the shift in propulsion type in part created by the pandemic is not a momentary burst and higher levels of electrification will continue to propel the market for semiconductors well past 2021— a year expected to see a market-corrective expansion of 18 percent over 2020. By 2026, IHS Markit forecasts the global market for automotive semiconductors to reach $67.6 billion, a healthy compounded annual growth rate of 7 percent from 2019 to 2026.