Semiconductor Demand Surge Driven by Electric Vehicles (EVs)

Semiconductor Demand

Electric vehicles (EVs) are becoming the major growth engine for the global semiconductor industry. As per the International Energy Agency (IEA) and Deloitte reports, the soaring demand for EVs, combined with technological advancements, is increasing the need for sophisticated semiconductor solutions. Semiconductors now represent a critical cost and innovation driver for the automotive sector.

• Deloitte’s analysis projects that semiconductor content per vehicle will nearly triple for EVs compared to internal combustion engine (ICE) cars. The average semiconductor cost per ICE car is about $500–$600, while for EVs, it could surpass $1,500 by 2025 and $2,000 by 2030, mainly due to power modules, sensors, and AI processors.
• According to the International Energy Agency (IEA) Global EV Outlook 2024, global electric car sales surged by 35% year-over-year in 2023, reaching over 14 million units. This spike directly drives semiconductor demand, as EVs require significantly more chips for battery management, power control, infotainment, and autonomous features.
• By 2040, the automotive semiconductor market is expected to reach $250 billion, according to Deloitte. Power semiconductors, especially based on SiC (Silicon Carbide) and GaN (Gallium Nitride) materials, are seeing rapid adoption to improve energy efficiency and driving range in EVs.
• Advanced Battery Management Systems (BMS), essential for EV safety and performance, rely heavily on high-reliability semiconductor devices. The demand for intelligent BMS chips is expected to grow at a compound annual growth rate (CAGR) of 15% between 2023 and 2030.
• Leading EV manufacturers such as Tesla, BYD, and Volkswagen are increasingly forming direct partnerships with semiconductor suppliers. According to Deloitte China’s Automotive Semiconductor report, OEMs are now actively investing in chip design capabilities and securing long-term supply contracts to avoid future shortages.
• China continues to lead global EV adoption, accounting for 60% of global electric car sales in 2023 (IEA). This dominance boosts domestic semiconductor demand and, in turn, manufacturing, with Chinese players focusing on developing power ICs and microcontrollers tailored for EV platforms.
• While the shift to EVs poses challenges such as chip shortages and high design complexity, it also offers opportunities for semiconductor innovation in areas like autonomous driving, fast-charging infrastructure, and over-the-air software updates.