Cost of semiconductor chips per vehicle to double to USD 1200 by 2030 due to tech advancement: NITI Aayog

The increase is attributed to the growing use of advanced technologies in automobiles, including electric powertrains and smart driving features.

The report highlighted that the global automotive sector is undergoing a significant transformation, shifting from traditional fuel-based vehicles to electric vehicles (EVs).

These EVs are increasingly being equipped with next-generation features such as Advanced Driver Assistance Systems (ADAS), Internet of Things (IoT) connectivity, and Autonomous Driving (AD) capabilities.

These high-end features require more sophisticated semiconductor chips, resulting in a rise in demand and cost.

NITI Aayog said "With the integration of these cutting-edge technologies, the cost of semiconductor chips per vehicle is projected to double, rising from USD 600 to USD 1,200 by 2030".

As cars become more connected and intelligent, the role of electronics and semiconductors in the automotive industry is growing rapidly. The report noted that the integration of advanced technologies is not just changing the vehicles themselves but is also reshaping the global manufacturing landscape.

The automotive industry is becoming increasingly interdependent with sectors like electronics, semiconductors, and artificial intelligence (AI).

In addition to this, the automotive industry's deep linkages with other key industrial sectors--such as steel, textiles, leather, rubber, plastics, glass, and IT--make it one of the largest consumers of various industrial products worldwide.

According to the report, the global automotive component market was valued at approximately USD 2 trillion in 2022, showing its crucial role in the broader automotive ecosystem. Out of this, nearly USD 700 billion, or around 30 per cent, comes from traded automotive components.

Over the past five years, the automotive sector has shown consistent growth at a rate of 4 to 6 per cent, driven by rising consumer demand and growing interest in vehicle ownership. The increasing focus on high-tech, smart, and sustainable vehicles is expected to keep pushing this growth trajectory forward.

With the rise of EVs and smart mobility solutions, the demand for semiconductor chips and advanced components is set to surge, marking a new era of innovation and collaboration between the automotive and technology sectors.