[Chip Talk] The Core of Future Semiconductor Growth is 'Car'... Samsung Electronics and SK Hynix Accelerate Business

Executive in Semiconductor Industry Focuses on 'Automotive Semiconductors'
Market to Grow to $250 Billion by 2040

As Cars Get Smarter, Memory Demand Soars
Samsung Electronics and SK Hynix Focus on Expanding Opportunities

"Automobiles have become the most important revenue growth driver in the semiconductor industry."

This is from the semiconductor industry outlook report released in February by the Global Semiconductor Alliance (GSA) in collaboration with global accounting and consulting firm KPMG. The report includes the results of a survey conducted in the fourth quarter of last year, targeting 151 semiconductor company executives about their outlook for the semiconductor industry this year. Automobiles were identified as the most important sector for semiconductor revenue generation, surpassing other notable industries such as ▲Wireless Communication (2nd) ▲Internet of Things (3rd) ▲Cloud Computing (4th) ▲Artificial Intelligence (5th). Wireless communication had held the top spot for 18 years in annual reports covering similar topics but yielded the position to automobiles for the first time this year.

KPMG projected that sales of automotive semiconductors used in the latest vehicles will reach $200 billion annually by the mid-2030s. By 2040, this figure could exceed $250 billion. This is nearly half the size of last year’s global semiconductor market sales ($574 billion). As internal combustion engine vehicles transform into electric and autonomous vehicles, the semiconductor industry’s opportunities are expected to grow accordingly. The semiconductor industry, which expanded its scale each time new applications such as PCs and smartphones emerged, has now secured another growth engine in future vehicles.

Market research firm SNE Research forecasted that by 2035, the share of electric vehicles in total car sales could rise to 88%. With this rapid transition to electric vehicles, the number of semiconductors installed in vehicles is expected to increase from the current 200-300 units to over 1,000. The average price of semiconductors included in a single vehicle could also rise from $500 to $1,000, and potentially up to $1,500.

The semiconductor industry expects that as high-level autonomous driving becomes possible and vehicles become software-centric?entering the era of Software-Defined Vehicles (SDV)?the demand for automotive semiconductors will further increase. In this process, the variety of semiconductor types will expand, and the required performance will inevitably rise. Recently, the importance of system semiconductors such as microcontroller units (MCUs) and various sensors, along with memory semiconductors, has been growing. A representative example is German company Infineon, the number one automotive semiconductor company, which last month introduced the 'SEMPER X1' flash memory incorporating low-power double data rate (LPDDR) technology for the first time in the industry.

Memory market leaders Samsung Electronics and SK Hynix are also capitalizing on this market opportunity. Both companies belong to the 'GSA Automotive' group under the GSA. This group aims to monitor and respond to evolving future vehicle technologies alongside leading global automotive, semiconductor, and software companies. The GSA Automotive group has been actively engaged, including hosting a workshop in March in cooperation with global consulting firm McKinsey & Company. Kim Yang-peng, a senior researcher at the Korea Institute for Industrial Economics & Trade, noted, "As vehicles transition to electric and autonomous models, memory demand also increases," emphasizing that related companies inevitably focus on expanding their automotive businesses.

Samsung Electronics regards automobiles as one of the three major memory application areas alongside servers and mobile devices. The company has set a goal to become number one in the automotive memory market by 2025. It has already introduced a variety of automotive DRAM and NAND flash products, including LPDDR DRAM, solid-state drives (SSD), and embedded multimedia cards (eMMC). SK Hynix is also concretizing its business by expanding the size of its dedicated automotive memory workforce and subdividing personnel under the DRAM and NAND organizations. SK Hynix Vice Chairman Park Jung-ho announced in his New Year's address that "this year, we will add automotive customers and create new growth."