The evolution to autonomous vehicles won’t just change the driving experience—it will demand massive growth in the market for automotive semiconductors. PwC’s recent ‘Global semiconductor industry outlook 2026’ report projects that fully autonomous driving will require a fivefold increase in the number—and a tenfold increase in the cost—of chips in each vehicle.

Conventional vehicles—categorised as level zero in terms of autonomous functionality—use semiconductors primarily for engine control, safety systems and infotainment systems. Most new cars contain about 200 to 300 semiconductors, often with standard capabilities. But as the level of autonomy increases, the number and sophistication of chips increase, as they become the eyes, ears, and brains of the vehicle.

Vehicles with level one autonomy offer driver assistance features such as lane-departure warnings and collision avoidance. Level two autonomy enables cars to maintain their distance from other vehicles on the road. At level three, vehicles can operate on highways without constant driver monitoring. Level four extends autonomous operations to regular roads—initially for limited services like robo-taxis in geo-fenced areas or hub-to-hub freight. These vehicles are expected to scale in select cities by around 2030. Level five, which can handle most road and weather conditions without a steering wheel, is likely to arrive much later—well into the 2040s or beyond.

Vehicles at higher levels need to gather and process much larger volumes of data. Even level three vehicles need more than 1,000 semiconductors to sense real-time information, high-performance computing (HPC) chips to process data, advanced driver-assistance systems (ADAS) and electronic control units to manoeuvre the car. More advanced designs will require chips for vehicle-to-everything (V2X) communication, as cars exchange data with the road and the vehicles around them. Meanwhile, the shift to electric vehicles will continue to boost demand for power semiconductors for EV systems such as inverters and battery management.

Given these shifts, companies across the automotive value chain will need new capabilities to succeed.

• Think like a software company. As vehicle designs rise through the levels of autonomous operation, software that orchestrates sensors and computing hardware becomes mission-critical. Carmakers, their suppliers and semiconductor companies will need to forge strong alliances to enable system-level compatibility and over-the-air upgrades.
• Consider in-house chip design. A growing number of automakers are designing their own chips for the central computer, digital cockpit, ADAS and other types of signal processing. Each OEM needs a clear strategy: stay with the traditional supply chain, adopt vertical integration or choose a hybrid approach that defines how much design to bring inside the company.
• Take an ecosystem approach. As autonomous vehicles become more common, carmakers, tech companies, infrastructure providers, governments and other entities can capitalise on new value opportunities by coming together to serve changing customer needs.

Published on 15 September 2025