Auto chips seen as biggest revenue producer in ‘23: KPMG survey

With a shortage of chips during the pandemic hurting the automotive sector especially hard alongside an explosion of investment in electric vehicles and self-driving cars, it might come as no surprise that chip executives are laser focused on chip revenues from the auto sector.

In fact, a new survey of 151 chip executives conducted by KPMG and the Global Semiconductor Alliance found the automotive sector will be the most important revenue driver in 2023, pushing wireless communications into second place from its previous top spot.  Wireless chips have long been seen as a top revenue driver in many of the 18 years of the survey.

Other chip categories were further down the list with metaverse ranked last out of 10 in importance for driving chip revenue in 2023. Internet of things, cloud computing and AI ranked third, fourth and firth in terms of importance. More than half of GSA’s survey respondents work at companies with more than $1 billion in annual revenue and about a third were US based.

KPMG predicts auto chip revenues will reach $200 billion by the mid-2030s and surpass $250 billion by 2040.  Revenues are now about $50 billion in the auto category, but will see 8% annual growth, according to KPMG.

“The automotive industry has been at the short end of the stick from a supply chain perspective,” said Lincoln Clark, a partner and global semiconductor practice leader at KPMG US  in an interview with Fierce Electronics. “How auto learns from that experience going forward [will be interesting] to watch as the need for chips is only going to expand with EV and cars, hybrid and electric.”

The auto industry needs a variety of chips and plenty of them. Most modern cars need more than 1,000 chips, a number expected to double as more self-driving features are introduced. Modern chips serve needs for electrical connections and power management, connectivity to wireless (including logic and memory chips) and ADAS (sensors, MCUs and GPUs). 

“Auto OEMs and tier one suppliers have changed the way they think about semiconductors,” said Irene Signorino, KPMG managing director. “Before, chips were not a priority, but with the shortage they are thinking strategically.”

Clark also noted an emerging trend in the industry with carmakers bringing chip design and development in-house.

Other  findings

Labor: Finding engineers and other talent is the number one issue of chip executives, according to the survey.

 “Demand for talent is very difficult and [chip companies} are competing with big tech,” Clark noted.

Despite the ongoing spate of high tech layoffs in late December, the survey—conducted in the fourth quarter—found 71% of respondents anticipate increasing their global workforce in 2023.

Chip shortage: 65% said the chip supply shortage will ease in 2023, while 20% think it will last into 2024 or later.  15% see supply and demand in balance for most products.

Russia-Ukraine war: 29% see the war materially impacting the supply chain in 2023, down from 39% in a shorter survey done in May 2022.