Research Overview

The rising trend of the electrification of vehicles has increased automakers’ dependency on semiconductor chips, making them a critical component in new-gen cars. Toward the end of 2020, the global shortage of semiconductor chips forced many OEMs to temporarily suspend vehicle production or reduce the working shifts in their factories. Leading OEMs such as Honda, Toyota, Ford, GM, and Nissan were among the few to adjust their factory operations. Substantial investments are being made in the semiconductor industry on a global scale; this is being done to ramp-up semiconductor chip production to meet the growing demand from the auto industry and to strengthen local production.

This Frost & Sullivan study provides an overview of the global automotive semiconductor chip industry; examines chip manufacturers and the role they play in this industry; and analyzes the ongoing chip shortage crisis. The study elucidates the key issues that auto OEMs face pertaining to chip demand and supply. It also examines the current state of the market and discusses market participants’ plans to adapt to the changes in technology, particularly in terms of chip dependence, system design, and supply chains.

This study takes a deep dive into the auto chip ecosystem and the best practices adopted by some OEMs to deal with the crisis; it also recommends risk mitigation strategies to handle future crises.