The global chip shortage has severely impacted the automotive industry. With new vehicles becoming increasingly reliant on semiconductors for key functions like safety, infotainment, and driver assistance, chip shortages have forced automakers to cut production and idle factories. This begs the question: What company makes the most chips for cars? Let’s take a data-driven look at the major players in the automotive semiconductor market.
The Importance of Semiconductors in Cars
In today’s cars, semiconductors power practically every electrical component. Engine control units, in-vehicle infotainment, advanced driver-assistance systems (ADAS), lighting, chassis, safety systems, and powertrain all rely on chips. A typical new car has over 3,000 semiconductors inside it. High-end vehicles can have over 10,000 chips! Without a steady supply of these tiny components, automakers simply can’t build cars.
The amount of semiconductors in vehicles has exploded in recent decades. In 1970, electronics comprised just 3% of a car’s cost. Today, that figure is around 50%! This shift underscores how integrated circuits have revolutionized the automotive industry. As cars get smarter and more connected, their chip content will only grow.
The Automotive Semiconductor Market
The automotive semiconductor industry was valued at $51.3 billion in 2021. It’s projected to reach $129.3 billion by 2028 as demand for chips in vehicles continues rising exponentially. The automotive sector only represents about 10% of the broader semiconductor market. However, the auto industry’s urgent need for chips has highlighted vulnerabilities in the global supply chain.
Unlike consumer electronics, the auto industry operates on a just-in-time manufacturing model with limited chip inventories. So automakers have been hit especially hard by pandemic-related disruptions like fab closures, material shortages, logistics delays, and geopolitical factors. With today’s cars needing thousands of chips, automakers are at the mercy of chipmakers.
Let’s look at which semiconductor suppliers are producing the most chips for the auto industry.
The Top Automotive Chipmakers
Three companies stand out for their huge market share in automotive semiconductors: NXP, Infineon, and Renesas. Here’s a breakdown of the major players:
NXP Semiconductors
Based in the Netherlands, NXP Semiconductors is the clear leader in automotive chips. NXP supplies over 30% of all automotive semiconductors worldwide. The company’s chips power key systems like vehicle networks, radar, battery management, in-vehicle networking, passive keyless entry, immobilizers, and car radios.
NXP’s strength comes from its expertise in secure connected mobility. Its portfolio covers microcontrollers, application processors, communication ICs, power management, analog, and interface chips tailored to automotive applications. With cutting-edge products like radar sensors and vehicle-to-everything (V2X) chips, NXP enables next-gen autonomous and connected car capabilities.
Infineon Technologies
Germany’s Infineon Technologies is another automotive semiconductor heavyweight. Infineon provides over 20% of chips used in vehicles globally. The company focuses on power semiconductors, microcontrollers, sensors, and security solutions for smart mobility.
Infineon’s power semiconductors manage functions like battery charging, steering, braking, and traction motors in hybrid and electric vehicles. Its Aurix microcontrollers act as the computing backbone for vehicle electronics. Infineon also offers radar, LiDAR, and other sensors for ADAS and autonomous driving. Major automakers worldwide rely on Infineon’s chips.
Renesas Electronics
Japan’s Renesas Electronics supplies about 18% of the world’s automotive chips. Renesas’ broad portfolio includes microcontrollers, analog & power semiconductors, SoCs, and infotainment solutions. The company is a leader in chips for in-vehicle information, safety, security, and connectivity applications.
Renesas’ microcontrollers power fundamental functions in the drivetrain, chassis, body, instrument cluster, and infotainment system. Its analog chips provide battery and motor control for hybrid/electric vehicles. For self-driving cars, Renesas offers advanced SoCs combining CPU, Ethernet, CAN, and ADC capabilities.
Texas Instruments
Although not exclusively focused on automotive, Texas Instruments (TI) is a key supplier thanks to its strengths in analog and embedded processing. TI provides analog chips, processors, and connectivity components for in-vehicle networks, ADAS, infotainment, LED lighting, safety systems, battery management, and more.
Key products include TI’s Jacinto 8 series of processors for ADAS, its WiLink and automotive Ethernet solutions, and Hercules microcontrollers. With its broad portfolio and automotive pedigree, TI maintains a solid foothold among major automakers.
STMicroelectronics
European semiconductor maker STMicroelectronics offers automotive microcontrollers, analog ICs, sensors, power ICs, and other solutions. STMicroelectronics has leading market share in automotive power electronics and advanced driver assistance applications.
The company’s product range includes powertrain chips, battery management ICs, motor control processors, voltage regulators, gyroscopes, pressure sensors, LiDAR chips, and time-of-flight sensors for autonomous driving. STMicroelectronics leverages its R&D and manufacturing expertise to enable greener, smarter, and safer vehicles.
Other Suppliers
Beyond the top 5, other notable automotive chipmakers include NVIDIA, Qualcomm, ON Semiconductor, Microchip, Allegro MicroSystems, and Bosch. These companies offer specialized automotive chips for ADAS, infotainment, connectivity, power management, battery and lighting systems, and more. As cars get smarter and electric, demand for these companies’ automotive solutions will grow.
Consolidation in the Auto Chip Market
The automotive semiconductor market has undergone significant consolidation over the past decade. Large mergers and acquisitions have reshaped the competitive landscape:
- NXP’s acquisition of Freescale in 2015
- Infineon’s acquisition of International Rectifier in 2015
- Renesas’ acquisitions of Intersil in 2017 and IDT in 2018
- ON Semiconductor’s acquisition of Fairchild Semiconductor in 2016
These mergers have concentrated market share among a handful of dominant suppliers while also enabling companies to expand their product portfolios and target new applications. Given the high barriers to entering the auto chip market, analysts expect further consolidation as integrated device manufacturers seek economies of scale.
Market Share Summary
Here is a breakdown of overall market share among the top automotive semiconductor suppliers:
| Company | Market Share |
|---|---|
| NXP Semiconductors | 30% |
| Infineon Technologies | 22% |
| Renesas Electronics | 18% |
| Texas Instruments | 10% |
| STMicroelectronics | 7% |
| Other | 13% |
NXP holds the biggest piece of the pie, controlling nearly one-third of all automotive semiconductor sales. But Infineon and Renesas also command substantial market share. Overall, the top 5 suppliers account for around 87% of the auto chip market.
Key Factors Driving Market Share
What factors explain these companies’ dominance in automotive semiconductors? Several key strengths contribute to their success:
- Specialized automotive focus – These firms cater specifically to automakers’ needs versus serving consumer electronics, IT, or other sectors.
- System expertise – They possess deep knowledge of automotive subsystems and vehicle architecture.
- Long-standing relationships – Decades serving auto OEMs and suppliers have strengthened partnerships.
- Scale – Their size provides economies of scale and resources for R&D and capex.
- Vertical integration – Many maintain their own fabs and packaging facilities for stability.
- Broad portfolio – They offer a wide array of solutions for diverse automotive applications.
These strengths reinforce the market dominance of NXP, Infineon, Renesas, and other established players. Upstarts face high barriers penetrating such an entrenched, demanding industry.
Future Outlook
Looking ahead, the automotive chip market outlook remains bright despite recent disruptions. As vehicles become more advanced, their chip content and semiconductor systems value will keep rising. Emerging trends like electric drivetrains, self-driving cars, vehicle connectivity, and shared mobility will further boost semiconductor demand.
At the same time, the auto chip landscape will keep evolving. Silicon providers must deliver next-gen solutions for AI, 5G, V2X communications, LiDAR, and enhanced safety/security. This will open opportunities for new players with specialized offerings while reinforcing the position of incumbents.
As semiconductors become more integral in vehicles, automakers and Tier 1 suppliers aim to increase chip design and IP ownership internally. But the deep capabilities of established chipmakers will be hard to replicate. Given high barriers to entry, the auto semiconductor market will likely remain heavily concentrated among a handful of tier-one suppliers.
Conclusion
NXP Semiconductors clearly leads the automotive chip market today, commanding roughly 30% market share. Infineon, Renesas, Texas Instruments, and STMicroelectronics round out the top five. But no company can rest on its laurels in this fast-changing, highly competitive business.
Automotive OEMs and chipmakers alike must enhance their joint focus on supply chain resilience. This includes demand forecasting, capacity planning, dual sourcing, and buffer inventories. End-market trends favor semiconductors, but macro risks remain. As vehicles rely on ever more chips, securing robust supply will be imperative.
Through mergers and acquisitions, economies of scale, specialty offerings, and customer alignment, market leaders have built dominant positions. Their expertise in automotive-grade chips and system-level knowledge will be tough for new entrants to replicate. So the existing landscape will likely persist, even as technology disruptions unleash new opportunities.