Yole Group Viewpoint –  Automotive Semiconductor Innovation: Driving for the Next-Gen ADAS

In the dynamic automotive industry, two transformative trends are making waves: the push for electrification and the rapid advancement of Advanced Driver Assistance Systems (ADAS). While at first glance these trends may appear to diverge, both are fueling a surge in innovation that is driving an unprecedented demand for semiconductor content. This is not just a fleeting phase but a robust trend projected to significantly shape the ADAS and safety domains for the next five years.

The raw semiconductor content for sensors at the device level designated for ADAS in vehicles is on an impressive trajectory, expected to climb from $51 to $82 per car over the next five years. This leap is indicative of the sector’s swift evolution, underscored by the proliferation of technologies such as imaging sensors, radar sensors, and LiDAR sensors. These technologies are the backbone of modern ADAS features, offering enhanced safety measures and paving the way for fully autonomous driving in the future.

With a market valued at $2.3B, imaging sensors, for instance, have become more intricate, capable of capturing high-resolution images under various lighting conditions. This improvement is crucial for functions like pedestrian detection, lane departure warnings, and adaptive cruise control. Radar sensors, on the other hand, valued at more than $1.8B, provide valuable data about the speed and distance of objects, playing a pivotal role in collision avoidance systems, with the adoption of 4D radars going faster than expected. Meanwhile, valued at below $0.2B, LiDAR sensors offer unparalleled accuracy in mapping the vehicle’s surroundings in three dimensions, contributing significantly to the development of autonomous vehicles. Revenue from the ADAS & Safety segment is by far the largest of all automotive domains, with revenue of $8B expected to be generated by 2029 at the sensor level alone.

The escalation in semiconductor content is also indicative of the evolution in processing power within the automotive domain. Newcomers like Qualcomm are entering the fray, eager to capitalize on the growing demand for advanced computational capabilities. Qualcomm, traditionally known for its telecommunications technology, is now making deep strides in the automotive sector by offering robust solutions for ADAS systems. This move set the stage for intense competition in this $3.2B segment back in 2022 against established players such as Mobileye, Xilinx, TI, and NXP, companies that have long dominated the ADAS landscape. The rivalry extends beyond those players, with Chinese newcomers addressing their own ecosystem, impacting as well those veterans of the semiconductor industry.

Imaging and processor players specifically are increasingly handling larger silicon die areas. The size of the silicon used – measured in square millimeters (mm²) – is directly correlated with monetary value. Essentially, the larger the silicon die, the higher the potential revenue from each unit produced; larger silicon dies can accommodate more complex or numerous functionalities, which are crucial in advanced imaging and processing applications.

However, integrating these more complex and advanced semiconductor technologies into vehicles is not without its challenges. Issues such as thermal management, power consumption, and the need for robust, fail-safe systems are at the forefront of design considerations and advanced packaging. Manufacturers and semiconductor companies alike are investing heavily in research and development to address these challenges, ensuring that the next generation of ADAS solutions is not only more sophisticated but also safer and more reliable with suitable packaging.

The economic implications of these technological advancements are profound. As the cost and complexity of semiconductor content in vehicles rise, the automotive industry will likely witness shifts in market dynamics. The increased investment in ADAS technologies signals a growing emphasis on safety and autonomy, potentially reshaping consumer preferences and regulatory standards. Additionally, the rising semiconductor content underscores the strategic importance of supply chain management, with a move toward more verticalization and the need for close collaboration between automotive manufacturers and semiconductor suppliers.

Looking ahead, the trajectory of ADAS and safety technologies is set to continue its upward trend, fueled by ongoing innovations in semiconductor technology. The advent of 5G connectivity, for instance, promises to further enhance vehicle-to-everything (V2X) communications, opening new possibilities for real-time data exchange and collaborative driving scenarios. Similarly, advancements in artificial intelligence and machine learning are expected to make ADAS features more intuitive and responsive, bridging the gap to fully autonomous driving.

In conclusion, as vehicles become increasingly sophisticated, the role of semiconductors in enabling advanced safety features and paving the way for autonomous driving cannot be overstated. The next five years will be pivotal in shaping the future of automotive technology, with semiconductors at the heart of this transformative journey. The industry’s evolution offers a glimpse into a future where safety, efficiency, and autonomy converge, heralding a new era of mobility powered by semiconductor technology.