The cost of semiconductor chips used in vehicles is expected to double by 2030, rising from the current average of $600 to $1,200 per vehicle, according to a recent report released by NITI Aayog. This sharp increase is mainly driven by the growing use of advanced and intelligent technologies in modern automobiles, particularly electric vehicles (EVs). As the global automotive industry undergoes a major transformation from traditional fuel-based vehicles to cleaner, greener electric mobility, automakers are increasingly adding next-generation features to enhance performance, safety, and user experience.
These include electric powertrains, smart driving assistance systems (ADAS), Internet of Things (IoT) connectivity, and self-driving or autonomous driving capabilities. All of these cutting-edge features require highly sophisticated and efficient semiconductor chips, which ultimately boosts the demand and overall cost. NITI Aayog emphasized that with the integration of these high-tech components, the cost of semiconductor chips per vehicle is expected to double by the end of this decade, marking a major shift in the future of automotive design and technology.
As cars become more connected and smarter, the use of electronics and semiconductors in the automotive industry is growing rapidly. The report said that advanced technologies are not only changing vehicles but also reshaping global manufacturing.
The auto industry is now closely linked with sectors like electronics, semiconductors, and artificial intelligence (AI). It also has strong ties with traditional industries such as steel, textiles, leather, rubber, plastics, glass, and IT, making it one of the biggest users of industrial products worldwide.
According to the report, the global automotive component market was worth around USD 2 trillion in 2022. Out of this, nearly USD 700 billion, or about 30%, came from traded auto components, showing its major role in the global auto ecosystem.
In the last five years, the automotive industry has maintained a steady growth of 4 to 6 per cent, largely driven by strong consumer interest and a rising desire for vehicle ownership. This upward trend is expected to continue as the market leans more toward intelligent, tech-driven, and eco-friendly vehicles.
The growing shift towards electric vehicles (EVs) and smart mobility is set to boost the need for advanced components and semiconductor chips. This signals a new phase of innovation, bringing the automotive and tech sectors closer than ever before.
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