Mid-Year Report: Semiconductor Shakeout Reshapes Auto Tech

This summer, we’re checking in on our TechArena predictions for 2025 to see how they are holding up.

For today, TechArena correspondent Deanna Oothoudt sat down with automotive industry expert Robert Bielby to discuss what he got right in his predictions and what’s taken him by surprise.

Deanna: Intel notably just announced it is winding down its automotive division, seeming to fit your prediction that in 2025, there would be “reconciliation and reassessment of semiconductor players that reconsider/exit the automotive industry.” Is Intel part of a larger trend as you expected?  

Robert: Indeed, as predicted, the automotive semiconductor industry is now entering the trough of disillusionment as defined by the Gartner Hype Cycle, where overheated expectations are met with harsh market realities. It was only just a few years ago when it was vogue for semiconductor companies to be “all in” when it came to their commitment to the automotive market — citing this market as the critical growth driver and a key component of their diversification strategy.

Beyond Intel’s highly visible departure, 2025 has already seen several smaller semiconductor companies, primarily start-ups, previously focused on edge AI automotive applications, either fail, or redirect the focus away from automotive to other markets as the reality that the headwinds inherent to participate in the market are too significant, especially so for start-ups. I expect there will be a continued shakeout where more companies will fail, or they will be acquired by larger automotive semiconductor companies where the acquisition will address a gap in their portfolio. The acquisition of Kinara by NXP in February 2025 is a good illustration of this trend.

Deanna: You mentioned we’d see “more and larger displays with 8K resolution" announced in 2025. Are we seeing those announcements come to pass, and are consumers actually demanding these high-resolution displays?  

Robert: Currently, high-end vehicles from Mercedes, BMW, and Geely contain 8K resolution displays. And while 8K is currently considered somewhat of a novelty, we can expect to see a greater presence of 8K resolution displays as the 8K infrastructure continues to build out — including cameras, displays, and display electronics. In fact, we can expect to see 8K resolution displays begin to phase out 4K displays in a manner similar to how 4K is currently phasing out 1K.

8K resolution provides a meaningfully improved immersive experience over 4K, especially at close distances. One only needs to get up close to older televisions that were based upon the cathode-ray tube (CRT) to appreciate how the picture was made up of relatively large lighted dots on the screen. The move from 1K to 4K resolutions continues to reduce the size of those dots, which are not as noticeable when viewed at a distance, but are very noticeable when viewed from up close. Several of the leading automotive semiconductor companies, including Qualcomm’s Snapdragon Ride Elite and a leading Tier 1, have announced support for 8K resolution displays — so safe to say — watch this space (in 8K!). There’s more to come.

Deanna: Chinese electric vehicle (EV) manufacturers were central to several of your predictions about faster development cycles and market penetration. How has the actual competitive landscape evolved, particularly with trade tensions and tariff policies affecting the global EV market?  

Robert: While it is going to be difficult, if not impossible, to predict how tariffs may or may not affect the Chinese automotive landscape, what is clear is that the China EV market as a whole is evolving at a pace that is significantly faster than other geographies, especially when it comes to EVs and vehicles with leading advanced driver-assistance system (ADAS) capabilities. In just shipments alone, BYD currently ships significantly more BEVs (battery-based EVs) than Tesla, the previous leader, by a factor of more than 1.5 times. In Q1 2025, BYD shipped 607,000 vehicles vs. 384,000 vehicles for Tesla for that same period.

At the Shanghai International Automotive Industry Association held this April, 163 new vehicles were debuted from both established and up-and-coming Chinese automakers. Over 70% of those vehicles were based on “new energy” (battery and hybrid) technologies. Chinese brands also dominated the “vehicle intelligence” launches, with 97 new models focused on this area. In short, China is quickly evolving into the leading automotive trendsetter and will correspondingly receive greater focus and attention on a global level.

Key factors leading to China’s overall success are the general lack of the need to support legacy architectures and a primary focus on EV versus ICE (internal combustion engine) technologies, which requires lower research and development (R&D) investments while supporting a faster time to a minimum viable product (MVP), where upgrades and fixes are readily addressed via over-the-air software updates.

Deanna: Looking back at your predictions, which one has played out most differently from what you anticipated?  

Robert: Slow growth, the slow adoption of EVs, and increasing competition from China is having a strong impact on the German automotive market — resulting in the announcement of significant layoffs and restructuring across the German original equipment manufacturers (OEMs) and Tier 1s. While it was expected that the growth of the Chinese market would come at some market share loss from other geographies, in general it was not anticipated that the German market, as a whole, would see the level of impact that it is currently undergoing.

Deanna: If you were writing predictions for 2026 right now, what would be your boldest forecast based on what you’ve observed in the first half of 2025?  

I would predict that we will see many of the custom application-specific integrated circuit (ASIC) programs that have been funded by both OEMs and Tier 1s put on the shelves in favor of adopting application-specific standard products (ASSPs) from the more traditional, long-term, committed automotive ASSP suppliers. As R&D funding dries up across OEMs and Tier 1s, the viability to develop a custom solution becomes increasingly out of reach, especially given the high silicon R&D costs, software development costs, and exorbitant costs associated with AI training. “Off the shelf,” “full stack” solutions that ultimately still support differentiation via software will become more attractive to OEMs than custom silicon alternatives.

Tier 1s, however, will feel the squeeze as the differentiated value they will be able to deliver will be reduced when compared to delivering a custom solution, relegating them mostly to a position where they are seen as automotive-compliant contract manufacturers. This could lead to further restructuring or consolidation of the automotive Tier 1s.