Automotive Semiconductors: Tapping into the Opportunities of the New ICE Age

Published Date : 11 December 2025

Posted by : Preeti Wani

The automotive industry is experiencing a major transformation, moving into what is being called the new ICE age, a time defined by intelligent, connected, and electric vehicles. This transformation is not just about swapping traditional engines with batteries; it is about embedding advanced technology into every aspect of vehicle design and functionality. Automotive semiconductors, the small but critical components driving smarter, safer, and more efficient cars, are at the core of this transformation.

The automotive sector’s rise is largely due to electrification. Electric vehicles (EVs) use far more semiconductors than traditional internal combustion engine (ICE) vehicles. With the production of over 8 million electric vehicles in 2023, China is demonstrating how EVs are radically reshaping manufacturing landscapes and global competition.  As cars evolve into computers on wheels, the need for these chips is rising, creating significant opportunities for manufacturers, suppliers, and investors.
In this blog, we will delve into the current state of the automotive semiconductor market, explore what’s fueling its growth, highlight emerging possibilities, and discuss how stakeholders can take advantage of this fast-changing landscape.

Knowing the New ICE Age in Automotive

The new ICE age redefines ICE from Internal Combustion Engine to Intelligent, Connected, Electric, indicating the convergence of technologies reshaping how we move. Intelligent systems consist of advanced driver-assistance systems (ADAS) and decision-making capabilities. Connected features help vehicles to communicate with their surroundings (V2X), while Electric points to the rise of battery-powered and hybrid vehicles.

This shift is fueled by consumer demand for safety, convenience, and eco-friendliness, along with regulations encouraging lower emissions. Semiconductors are necessary, powering components like engine control units and infotainment screens. For example, electronic control units (ECUs) use microcontrollers, sensors, and circuits to manage vehicle systems, turning mechanical functions into digital ones.

Key Trends Fueling Automotive Semiconductor Growth in 2025

Several factors are driving semiconductor use in the new ICE age. First, the move toward autonomy ADAS, and autonomous vehicles (AVs) need high-performance chips for sensors, radars, and computing. By 2030, ADAS could majorly increase market growth, with Level 4/5 AVs requiring eight to ten times more semiconductor content than non-autonomous vehicles.

Second is connectivity as vehicles are becoming part of a networked system, using semiconductors for 5G integration, V2X communication, and over-the-air updates. These systems allow advanced features such as remote system monitoring and real-time navigation.

Third, the shift to electric vehicles and hybrids, i.e., electrification, demands advanced power semiconductors, like silicon carbide (SiC) chips, for efficient battery management and inverters. The EV sector's growth, expected to increase semiconductors from $51 billion in 2025 to $102 billion by 2034, highlights this capability. In 2025, on-device processing and sustainable manufacturing are top trends. Chips with built-in processing lower delays in safety-critical applications, while the industry prioritizes greener production to achieve global sustainability goals.

Opportunities in the Automotive Semiconductor Sector

The new ICE age creates possibilities across the supply chain. For semiconductor manufacturers, the focus is on specialized chips for EVs and AVs. Companies like Infineon Technologies and Robert Bosch are leading with products, namely current sensor modules for EV batteries and security controllers for connected systems.

Suppliers can invest in the rising demand for sensors, such as millimeter-wave radars and image sensors, which improve driver assistance features like braking, automated parking, and navigation, fulfilling consumer priorities for safety and efficiency. Automakers can benefit by collaborating with tech companies to integrate hardware and software effectively. The combination of EVs, AVs, and mobility-as-a-service (MaaS) in fleet operations could significantly increase semiconductor demand. New players, including startups, are shaking up traditional supply chains, encouraging partnerships that speed up innovation. Regionally, Asia-Pacific holds huge potential owing to its advanced manufacturing establishments, while Europe and North America focus on innovations powered by emission control regulations. Globally, the market could hit $200 billion by the mid-2030s and $250 billion by 2040.

Conclusion

The automotive semiconductor market is at a turning point, with the new ICE age offering unparalleled opportunities. From allowing intelligent systems to supporting connected networks and electric powertrains, these components are the foundation of modern transportation. With market values expected to double in the next decade and EVs leading the way, stakeholders who act now through innovation, partnerships, and strategic investments will benefit the most.

As vehicle production increases and technology becomes more integrated into driving, the future for automotive semiconductors is promising.