The Digital Transformation of Cars is Just Beginning

Monday 1 March 2021

You may not have heard it, but we’re living through a global semiconductor shortage. Perhaps the hardest hit industry is automotive. Demand from the auto industry spiked, just as semiconductor companies like TSMC and Texas Instruments had reallocated their capacity to other, more resilient (they thought) industries. NXP Semiconductor’s recent earnings call explained the situation in the auto industry, 

“I think at the moment from anything we can see, the supply chains through the auto world are empty. And I say that because I know that every single product we are shipping is immediately built into a car. And so there is just nothing going on the sideline. It all goes through into production immediately.”

This is great if you’re a semiconductor company shareholder. But, longer term, it also tells us something about the digital transformation of cars. As cars get smarter, there is more silicon in them than ever before. Deloitte looked at the cost of electronic systems as a percentage of total car cost: 5% in 1970, 15% in 1990, 35% in 2010 and forecast at 50% in 2030. 

This article takes a look at the digital transformation we’re living through and some of the expected outcomes. If you’re excited about the prospects of the transition from internal combustion engines to electric cars and the promise of driverless vehicles, then this article takes a look at some of the nuts and bolts and the industries driving these changes. 

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