Top auto manufacturers could design their own chips by 2025, says Gartner

A Tesla with Autopilot

The analyst firm Gartner has said that some of the top auto manufacturers could begin designing their own chips for use in their vehicles, which would give them more control over roadmaps and supply chains. The prediction is that about five of the top ten auto makers will take this path after seeing the chip shortage that has plagued various industries over the last few years.

Explaining the motivations behind why some manufacturers will want to create their own chips, Gaurav Gupta, research vice president at Gartner, said:

“Automotive semiconductor supply chains are complex. In most cases, chip makers are traditionally Tier 3 or Tier 4 suppliers to automakers, which means it usually takes a while until they adapt to the changes affecting automotive market demand. This lack of visibility in the supply chain has increased automotive OEMs desire to have greater control over their semiconductor supply.”

Gupta then went on to state that the lessons auto makers learn from the chip shortage will accelerate their evolution into tech companies. That comment in quite interesting to ponder because traditional tech firms like Apple and Alphabet have their own ambitions in the car-space.

With the shift to designing their own chips, Gartner also predicts that auto manufacturers will hike up the prices of new vehicles by 2025 to over $50,000 in the United States and Germany. It said that this will lead to more people repairing or upfitting their older vehicles so they don’t need to get them replaced as soon.

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