Semiconductors and Connectivity Modules in Automotive Electronics Manufacturing

Introduction

Automotive electronics are no longer secondary features. These have now become central to vehicle design, performance, and safety. From infotainment units to advanced driver-assistance systems (ADAS), electronics account for up to 40% of a new car’s cost in 2025. This growing trend is driven by increasing automation, EV adoption, and consumer demand for connected mobility.

The global automotive electronics sector generated massive revenue. Demand is being fueled by the rapid integration of ADAS, electrified drivetrains, and connected car ecosystems. The Asia Pacific region remains the primary manufacturing base, while North America is emerging as a leader in high-performance control units and EV-specific electronics. Suppliers are increasingly focusing on developing compact, lightweight modules with advanced thermal management, capable of supporting AI-driven vehicle functions and high-speed data processing, these are critical capabilities for autonomous mobility and next-generation infotainment platforms.

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ADAS and Autonomy Are Driving Demand

Advanced driver-assistance systems have become standard in many mid-range models, with features like adaptive cruise control, lane departure warnings, and automated emergency braking becoming mandatory in regions such as the EU. The ADAS market growth is fueled by regulatory pressure and consumer safety expectations. Suppliers are investing heavily in sensor fusion technologies and AI-enabled control units to improve detection accuracy and system reliability.

Table of Contents

1. Industry Definition & Scope of Automotive Electronics
2. Categories: Infotainment, ADAS, Power Electronics, Connectivity
3. Role of Semiconductors in Vehicle Electronics
4. Growth of EV-Specific Electronics
5. Manufacturing Trends in Telematics and Connectivity Modules
6. Regional Production Clusters
7. Challenges in Chip Supply and Cost Management
8. Integration of AI in Automotive Electronics
9. Sustainability in Electronics Manufacturing
10. Competitive Landscape and OEM-Supplier Collaborations

Electronics in the EV Era

Electric vehicles require significantly more complex electronics than ICE vehicles, from battery management systems to regenerative braking controllers. Demand for high-voltage power electronics is increasing in line with EV sales, which are expected to reach 30 million units by 2027. Manufacturers are developing silicon carbide (SiC) and gallium nitride (GaN) semiconductors to improve efficiency and reduce heat losses in EV drivetrains, while also enabling faster charging cycles and higher power densities. These advancements are essential for meeting consumer expectations on range, performance, and charging convenience, making them a central focus for both Tier-1 suppliers and global semiconductor innovators.

The Semiconductor Supply Chain Challenge

The 2021–2023 global chip shortage exposed the vulnerabilities in the automotive electronics supply chain. Although supply conditions improved in 2024, lead times for specialized automotive-grade chips still average 12.9 weeks. Tier-1 suppliers are now diversifying sourcing and investing in local semiconductor manufacturing partnerships to avoid future disruptions, while also securing long-term supply agreements and stockpiling critical components. Additionally, collaborations with foundries dedicated to automotive-grade production are rising, ensuring compliance with stringent quality standards and enhancing resilience against geopolitical risks.

Regional Manufacturing Leadership

The Asia Pacific region dominates electronics production, with China, Japan, and South Korea hosting major semiconductor and PCB manufacturing hubs. North America is investing in domestic chip plants under initiatives like the United States CHIPS and Science Act, aiming to reduce reliance on overseas suppliers. Europe maintains a strong presence in automotive safety and infotainment electronics, with German firms leading in ADAS innovation.

Sustainability and Recycling of Electronics

With e-waste regulations tightening across major automotive markets, electronics manufacturers are embedding recyclability into the earliest stages of product design. Modular architectures allow easier disassembly, facilitating recovery of high-value metals such as gold, palladium, and copper from end-of-life vehicle electronics. Apart from compliance, this shift is creating profitable secondary revenue streams for large suppliers, while reducing dependence on volatile raw material markets. Companies adopting closed-loop recycling systems are also enhancing brand value, aligning with OEM sustainability targets, and strengthening relationships with environmentally conscious fleet operators.

Related Resources

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