Why the Future of Mobility Depends on Smarter, Smaller Semiconductors

Semiconductors are the crucial parts of electric vehicles (EVs) because they allow for advanced interactive features, efficiency battery management, powertrain enhancements and safety measures. The EV revolution is not only coming; it is currently happening. Semiconductors, a sometimes disregarded yet crucial building element, are the key element of this revolution. These microscopic semiconducting chips are the brain and nervous system of EVs, driving everything from power conversion and battery management to safety systems and intelligent infotainment systems. As EV adoption increases worldwide, demand for high-performance semiconductors is also on the rise making the EV semiconductor market one the most vibrant parts of the tech-led economy.

Market Overview:

Over the last few years, the EV semiconductor industry has seen enormous growth. Based on industry reports, global market size stood at approximately $11.19 billion as of 2023 and is expected to boom to nearly $57.1 billion by 2029 with a CAGR of more than 31%. The boom is being fueled by a combination of factors: tighter environmental controls, government subsidies, growing EV infrastructure and advances in automotive electronics technology.

EVs need significantly more semiconductor devices compared to conventional internal combustion engine (ICE) cars. From motor control units and battery management units (BMUs) to infotainment systems and advanced driver-assistance systems (ADAS), semiconductors make these features functional.

Key Technologies Driving Growth

Among the most prominent trends driving the market is the trend towards wide-bandgap semiconductors, specifically Silicon Carbide (SiC) and Gallium Nitride (GaN) materials. These materials are superior to conventional silicon for high-temperature and high-voltage applications and hence, they are suited for EV powertrains as well as rapid-charging infrastructure.

SiC chips, for instance, have the potential to make inverters more efficient, thus extending driving ranges and cutting energy loss. Players such as STMicroelectronics, Infineon, Wolfspeed and ON Semiconductor are investing heavily in SiC lines to address this increasing demand.

Since they allow producers to integrate several functions into a single chip and reduce the size and weight of their parts, system on chip (SoC) solutions are gaining popularity as well. This enhances overall car performance and design versatility.

Uses:

• In EVs, semiconductors are crucial to the vehicle’s battery management system (BMS). They assist in keeping an eye on the battery pack’s temperature, health and charge level. Onboarding charging systems also use semiconductors to help convert and control voltage, which improves charging speed and efficiency.
• Advanced driver assistance systems (ADAS) based primarily on semiconductor processors are adaptive cruise control, lane-keeping assist, and collision avoidance systems. These circuits make decisions in real time using data from multiple sensors, cameras, and radar.
• Infotainment systems are driven by semiconductor chips, incorporating features such as touchscreen display, GPS navigation, car audio, and connectivity features of the smartphone.
• As the largest, with more than half of the market, is the powertrain segment. Power semiconductors control battery power so that the electric motor can operate efficiently.

Regional Perspectives: Asia-Pacific Leads

Geographically, South Korea, Japan and China dominate the Asia-Pacific EV semiconductor market.

With schemes such as “Make in India” and the FAME II scheme (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) encouraging domestic EV and semiconductor manufacturing, India is also becoming a key player.

In addition to that, Europe is also deeply investing in environmental-friendly transport as well as in semiconductor technology. With the CHIPS and Science Act, America is also strengthening its domestic production of semiconductors to try to meet its demand less on foreign chipmakers and foster a stronger EV ecosystem.

Challenges and Supply Chain Constraints

Though there is a strong growth prognosis, the market does not lack its challenges. The most critical of these is the semiconductor supply chain crisis that commenced with the onset of the COVID-19 pandemic and has since impacted industries across the globe. The highly concentrated nature of chip production—dominated by just a handful of foundries such as TSMC (Taiwan) and Samsung (South Korea)—creates vulnerabilities.

Furthermore, geopolitical tensions, most notably between the U.S. and China, are recasting global trade patterns. China’s dominance of the supply chain of rare earth minerals like gallium and germanium, critical to semiconductor manufacturing, constitutes a strategic risk for the West and has fueled demands for diversification of sources.

Market volatility is also a problem. For example, firms such as Mersen and STMicroelectronics have recently pushed back their semiconductor revenue targets owing to volatile EV demand and postponed ramp-up of new plants. Analysts now estimate that key financial milestones will be achieved by 2029–2030, rather than previous estimates of 2026–2027.

Conclusion:

The EV Semiconductor industry sits at the confluence of mobility digitalization and transport electrification, with the demand growing at an unprecedented level. Recent data indicates that the sales of EVs worldwide will surpass 20 million units by 2025, representing one in four automobiles sold globally. The growth is fueled by heightened affordability, decreased operating expenses and government support.

Further, the market for compound semiconductor materials, comprising Silicon carbide (SiC) and Gallium Nitride (GaN) is estimated to increase from $29.97 billion in 2025 to $91.03 billion in 2025, driven by the growth of 5G and EV adoption. The overall semiconductor market is estimated to be $ 697 billion in 2025, representing an 11% year-over year growth rate.

Despite supply chain risks and market instability, improvements in production, materials and system integration will continue to advance the field. Technology specialists, investors, and manufacturers view this industry as having a high rate of return and playing a key role in shaping the direction of mobility in the future.