How the Semiconductor Industry is Taking Charge of its Transformation

Semiconductors make the connected and (soon) autonomous car a reality. McKinsey examined three aspects of the semiconductor industry: demand for automotive chips; new productivity tools; and China’s growth as a revenue source. The following focuses on automotive demand.

  • An emphasis on innovation has boosted revenues for automotive semiconductors from roughly USD 7 billion in 1996 to almost USD 30 billion in 2015.
  • Automotive chips now account for approximately 8 percent of total semiconductor sales. Current projections suggest they will see about 6 percent annual growth through 2020—more than the three to four percent growth predicted for the sector as a whole. That would put yearly automotive chip revenues in the USD 39 to 42 billion range.
  • Automotive safety systems accounted for only 17 percent of total chip demand in the industry in 2015, but will use 24 percent by 2020. Most growth will come from collision-warning systems, which will account for USD 4.1 billion in sales – far more than other segments.
  • While all semiconductor companies track these trends, high performers go a step beyond by identifying emerging pockets of growth within each segment.