Automotive Outlook Report 2025
Key Trends Driving the Future of EVs and Automation
The automotive semiconductor market is on the verge of significant growth, driven by evolving technologies and increasing demand for electric vehicles and automation. With innovations like 5G chipsets, advanced E/E architectures, and the rise of software-defined vehicles, the industry is transforming at a rapid pace. Explore the key trends shaping this dynamic sector and what it means for the future of automotive technology.
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Five Key Market Expectations for 2025
Get ready for a transformative year in the automotive market—2025 will bring groundbreaking innovations, rising demand, and key shifts that will reshape the industry.
Here are the five key market trends to watch:
Battery Electric Vehicle Demand to Surge
While 2024 marked the end of rapid growth for EVs, 2025 will see a steady rise, driven by silicon carbide (SiC) and gallium nitride (GaN) power devices. These advanced technologies will fuel a 60% growth in efficiency, outpacing traditional silicon components.
Level 2 Automation Goes Mainstream
No longer reserved for luxury brands like Tesla, Level 2 (L2) vehicle automation will become a standard feature in mainstream models. With vehicles offering advanced support for steering and acceleration, demand for processors and memory devices is set to surpass $10 billion in 2025.
China Leads with Advanced E/E Architectures
By 2025, one-third of vehicles manufactured in China will boast cutting-edge electrical/electronic (E/E) architectures. These vehicles will feature powerful centralized controllers, accelerating the shift to software-defined vehicles that offer continuous upgrades and subscription services.
5G Chipset Demand to Outpace 4G
As infotainment systems evolve, 5G chipsets will dominate, with demand rising over 50% from 2024 to reach $900 million in 2025. Meanwhile, 4G chipsets will take a backseat, marking a pivotal moment for the future of in-car connectivity.
Semiconductor Revenues Impacted by Inventory Wind-down
Despite growing demand for semiconductors per vehicle, inventory oversupply from previous years will drag supplier revenues through 2025. However, undersupply for certain devices could arise in the second half of the year, making it a critical time for the industry.
Key Chapters at a Glance: Unlocking 2025 Automotive Market Insights
The automotive industry is set for a transformative 2025, driven by advancements in electric vehicles and automation. Demand for battery electric vehicles will rise with new efficient powertrain components, while Level 2 automation becomes standard in affordable models. China will lead the deployment of advanced electrical/electronic architectures, paving the way for software-defined vehicles. Additionally, 5G chipsets will surpass 4G in automotive applications, despite semiconductor suppliers facing challenges from inventory wind-downs. These trends signal a dynamic year ahead for automotive innovation.
Market Outlook
The automotive semiconductor market is projected to exceed $85 billion in 2025, reflecting a 12% growth driven by increased content per vehicle. While overall production remains weak, countries like India and Thailand are seeing significant demand due to rising standards. Long-term, the market will benefit from vehicle electrification and advanced safety features, with expected growth from $68 billion to $114 billion from 2023 to 2028—a compound annual growth rate (CAGR) of 11%.
Technical Outlook
It showcases advancements in semiconductor technology, with silicon carbide (SiC) and gallium nitride (GaN) enhancing power applications and GAA FETs transforming logic technology. Memory technologies, including DRAM and NAND, are scaling up, while image sensors are improving performance with better pixel designs. Additionally, Huawei is leading mobile RF advancements with new 5G-Advanced radio designs.
Procurement Outlook
The semiconductor market is set to soar in 2024, with sales expected to hit nearly $680 billion, driven by soaring demand for AI-centric chips. With average selling prices projected to rise 17%, TechInsights forecasts continued momentum into 2025, reaching almost $850 billion.
Price Outlook
The semiconductor market is experiencing significant shifts, with memory sales surging by 87% and logic sales rising 16%, fueled by the demand for AI and edge devices. While some sectors face challenges, such as analog and discrete components, overall pricing trends are expected to rebound in the latter half of 2024.
Lead Time Outlook
Lead times in the semiconductor market remain steady at an average of 14 weeks, with connectors leading at just 10 weeks, while power products face the longest delays at 19 weeks. As demand begins to return, we anticipate slight increases in lead times starting in Q4 2024.
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