Semiconductor Chip costs in vehicles to double to US$1200 by 2030

The cost of semiconductor chips in vehicles is projected to rise significantly—from $600 to $1,200 per vehicle by 2030—driven by the growing adoption of advanced technologies such as electric vehicles (EVs), Advanced Driver Assistance Systems (ADAS), Internet of Things (IoT), and autonomous driving, according to NITI Aayog. This surge highlights a broader shift in the automotive industry, as it increasingly integrates with the tech sector and fuels demand for high-performance, intelligent components.

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The cost of semiconductor chips used in vehicles is expected to double from the current average of USD 600 to USD 1,200 per vehicle by 2030, according to a new report by NITI Aayog. This projected increase underscores the automotive sector’s accelerating shift toward advanced technologies, including electric mobility and smart driving systems.

The report emphasizes that the global automotive industry is in the midst of a major transformation, moving rapidly from conventional internal combustion engine (ICE) vehicles to electric vehicles (EVs). These modern EVs are being increasingly outfitted with next-generation features such as Advanced Driver Assistance Systems (ADAS), Internet of Things (IoT) connectivity, and Autonomous Driving (AD) capabilities. These features demand more complex and powerful semiconductor chips, thereby raising their cost significantly.

NITI Aayog stated, “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 vehicles become more connected, intelligent, and software-driven, the role of electronics and semiconductors in the automotive industry is becoming central to design, safety, and performance.

The report also highlighted the growing interdependence between the automotive and technology sectors. The increasing integration of electronics and artificial intelligence (AI) into vehicles is not only changing how cars are made but also reshaping global manufacturing strategies. From chipmakers and software developers to EV battery manufacturers, various technology sectors are becoming integral to the future of mobility.

Additionally, the automotive industry maintains deep linkages with other industrial sectors, including steel, rubber, plastics, textiles, glass, leather, and IT. This makes it one of the largest consumers of industrial products globally. As a result, the ripple effects of technological upgrades in automotive design are felt across multiple segments of the global manufacturing economy.

The report further pointed out that the global automotive component market was valued at approximately USD 2 trillion in 2022, of which nearly USD 700 billion—around 30%—was accounted for by traded automotive components. Over the past five years, this sector has seen steady growth of 4–6% annually, driven by increasing consumer demand and a rising interest in vehicle ownership.

Looking ahead, the continued push toward high-tech, sustainable, and intelligent mobility solutions is expected to drive even stronger demand for semiconductor chips and other advanced automotive components. This trend signals a new era of innovation, where collaboration between the automotive and electronics industries will play a pivotal role in shaping the vehicles of tomorrow.

As the industry navigates this transition, the focus will remain on building robust supply chains, encouraging domestic chip manufacturing, and fostering cross-sector innovation to meet the growing demands of future mobility.