Semiconductor Chip Costs in Cars to Hit $1,200 by 2030: NITI Aayog Report

Premier policy think tank of India government in its recent report said that the cost of semiconductor chips used in vehicles is likely to double by 2030 from the current average of USD 600 to nearly USD 1,200 per vehicle. This increase is being driven by the growing integration of advanced technologies in modern vehicles, especially electric vehicles (EVs), which rely heavily on sophisticated electronics.

The report highlights that a major transformation will be witnessed by the global automotive industry. Traditional fuel-powered vehicles are gradually giving way to electric alternatives, which now come equipped with features like Advanced Driver Assistance Systems (ADAS), Internet of Things (IoT) connectivity, and autonomous driving capabilities. These smart technologies demand more complex semiconductor chips, thereby increasing the overall cost.

NITI Aayog emphasized that as vehicles become more connected and intelligent, semiconductors are playing an increasingly vital role in the automotive sector. This trend is not only changing how vehicles function but also transforming the global manufacturing ecosystem. The industry’s dependence on electronics and artificial intelligence (AI) is growing rapidly, highlighting the shift towards smart mobility solutions.

Additionally, the automotive industry has strong connections with various other sectors such as steel, textiles, rubber, plastics, glass, and information technology, making it a key driver of industrial demand globally. The report revealed that in 2022, the global automotive component market was valued at around USD 2 trillion, with about USD 700 billion of that coming from traded components alone.

Over the past five years, the automotive sector has maintained steady growth of 4 to 6 percent annually. This momentum is expected to continue as consumer interest in high-tech, sustainable vehicles rises. The demand for semiconductor chips and other electronic components will grow alongside the push for innovation in EVs and smart vehicles.

This evolving scenario signals a future where the automotive and technology sectors will collaborate more closely, driving new developments in transportation and reshaping the global market landscape.

Source: The Economic Times