The core concept of "deep learning" in artificial intelligence (AI) is increasingly being integrated into the automotive supply chain, alongside advancements in 5G and lithium battery charging technologies. Fubon Securities believes that the future car will follow three major trends: automation (Autonomous), connectivity (Connected), and electrification (Electrified), which are creating significant business opportunities for Taiwan's technology manufacturers.
The Consumer Electronics Show (CES) held in Las Vegas each January serves as a key indicator of technological trends. In recent years, major IT companies and automakers have focused on new energy vehicles, vehicle networking applications, and autonomous driving technologies, making these areas central to CES. In fact, CES has even acquired another informal title: "Car Electronics Show." Fubon Securities highlights that as the automobile industry shifts from traditional mechanical engineering to high-tech sectors, it opens up substantial growth potential for Taiwan’s electronics industry.
When examining the development of autonomous driving software and hardware, it's clear that technologies like deep learning, visual recognition, and high-precision mapping are still maturing. Moreover, legal and insurance frameworks need further refinement. Experts estimate that fully autonomous Level 5 vehicles capable of operating under any road or weather conditions may not hit the market until 2028. Until then, Advanced Driver Assistance Systems (ADAS) and connected cars will play a crucial role in building the sensory and communication systems needed for full autonomy.
Meanwhile, electric vehicles (EVs) are becoming an inevitable trend due to global government mandates for energy conservation and carbon reduction. Countries like the Netherlands and Norway plan to ban internal combustion engine vehicles by 2025, with Germany, the UK, and France following suit between 2030 and 2040. These policies are pushing traditional automakers to heavily invest in developing their own electric vehicle platforms. EVs not only replace fuel with electricity but also incorporate a large number of electronic components, accelerating the transformation of cars into smart, connected devices. Tesla is a prime example of this shift.
In short, the future of the automotive industry will be driven by the convergence of AI, car networking, and electrification, leading to fundamental changes in both the supply chain and the vehicles themselves. According to research institutions, the annual sales of Level 2 and above electric self-driving vehicles in the US, Europe, and China are expected to reach 81 million units by 2030, gradually replacing traditional fuel-powered vehicles.
China's technology sector has experienced rapid growth in recent years, with electric self-driving vehicles becoming a key focus. According to Fubon Securities' draft report titled "Smart Vehicle Innovation Development Strategy," the goal is to achieve 50% of new smart vehicles by 2020, and by 2035, China aims to become a global leader in smart vehicle production. A PwC report also predicts that mainland China will surpass the US and Europe to become the largest electric self-driving car market by 2030. Clearly, strong policy support and a massive domestic market are key advantages for China's development in this field.
Indeed, major Chinese tech giants are actively investing in the development of electric self-driving vehicles. Baidu has launched its Apollo 2.0 platform, attracting over 90 international tech companies. Tencent and Alibaba are also engaging in partnerships with car manufacturers and investing in electric vehicles and car networking solutions. Additionally, startups such as BYD and XPeng have drawn attention at recent CES events, signaling that China's influence in the electric self-driving market is set to grow significantly.
As car networking becomes more prevalent, the demand for related components is rising. According to the IEK report, the current global automotive electronics market is valued at around $250 billion. With the ongoing trends of automation, electrification, and connectivity, the market is projected to exceed $350 billion by 2025. This growth is particularly beneficial for Taiwan's semiconductor and electronic component industries.
Fubon Securities explains that the key components of electric self-driving vehicles can be categorized into four main systems: drive, power, sensing, and control. The first two form the core of the electric propulsion system, while the latter two are essential for achieving intelligent and even fully autonomous driving.
The drive system consists of electric motors, transmission systems, and controllers, which play a critical role in the motor industry. The power system includes batteries, power modules, power management systems, and charging devices. As automotive electronics evolve, the voltage system is shifting from 12V to 48V, prompting changes in electronic power components such as MOSFETs and IGBTs—offering long-term benefits for these suppliers.
Finally, the "sensing and control system" encompasses vehicle processors, AI computing chips, memory, sensors, and vehicle networking devices. These components must handle complex data processing, integrate sensor inputs, and perform real-time decision-making. Sensors now range from traditional mechanical ones like gyroscopes and accelerometers to advanced non-contact technologies such as ultrasonic, image lenses, radar, and LiDAR, enhancing safety and driving assistance features.
As the automotive industry evolves, it presents a new opportunity for the electronics sector. For decades, the auto industry has maintained a large and closed ecosystem. However, with the entry of tech giants like Google, NVIDIA, Intel, and Tesla, the industry is undergoing a transformation. Taiwanese electronics manufacturers, who have long focused on automotive electronics, are finally seeing tangible results. According to the Industrial Technology Research Institute, Taiwan’s automotive electronics output is expected to exceed NT$220 billion this year, outpacing the global average. Investors are advised to pay attention to companies already part of Tesla's supply chain, as well as IC, sensor, and power component firms showing strong growth potential.
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