Car Chips Could End Up Accounting for 20% of Premium Vehicle Bill of Materials

The lack of chips was, is, and will continue to remain a major concern for the automotive industry in the short term, but as far as Intel’s new CEO is concerned, semiconductors will become more and more important for carmakers, therefore turning into an essential product in the long term as well.
Semiconductors will account for 20 percent of the BoM 6 photos
Photo: Intel
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Speaking at IAA Mobility, Pat Gelsinger, who was appointed CEO of Intel back in February, explained that his company expects premium car chips to eventually account for a bigger share of the bill of materials for every single model.

And while chips represented just 4 percent of the bill of materials back in 2019, that figure is expected to grow to no less than 20 percent by 2030, with the total addressable market for automotive silicon also expected to more than double and therefore reach $115 billion.

In plain English, the next generation of cars is all about smart capabilities, and smart capabilities in their turn are all about chips.

Gelsinger’s comments don’t necessarily come out of the blue. Intel is one of the companies investing in the manufacturing of automotive chips, with a $120 billion plan supposed to give birth to a gigantic fab that should see the daylight in the coming year in the United States.

Unfortunately for the automotive industry, while the demand for chips is therefore predicted to grow significantly in the coming years, experts don’t believe the shortage would come to an end anytime soon.

Just this week, Daimler’s CEO estimated the constrained chip inventory would continue to be a problem until at least 2023, explaining that foundries across the world still have a hard time aligning their production with super-strong demand.

So in the meantime, carmakers have no other option than to temporarily suspend the production of some models. Both GM and Ford halted the operations at some of their factories earlier this month, citing the lack of chips as the reason.
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About the author: Bogdan Popa
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Bogdan keeps an eye on how technology is taking over the car world. His long-term goals are buying an 18-wheeler because he needs more space for his kid’s toys, and convincing Google and Apple that Android Auto and CarPlay deserve at least as much attention as their phones.
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