Taiwan Auto Parts Power a New Era in Global Automotive Trends

Steady Growth Amid Shifting Global Markets

Taiwan’s automotive parts industry is experiencing strong growth, driven by shifts in the global economy and evolving industry dynamics. According to the Industrial Technology Research Institute (ITRI), the sector is projected to expand by 3.4% in 2024. Meanwhile, the rising adoption of electric vehicles (EVs) and advancements in autonomous driving technology are set to fuel a new wave of opportunities in the automotive electronics market.

According to the Industrial Economics and Knowledge Center (IEK) of the Industrial Technology Research Institute (ITRI), Taiwan's automotive components industry has experienced significant growth since the onset of the COVID-19 pandemic in 2020. Supply chain disruptions and high inflation have reshaped the market and altered consumer behavior, driving demand for automotive components. As a result, Taiwan's automotive components sales reached NT$243.6 billion in 2023.

Moving forward, while the growth of Taiwan’s auto parts industry is expected to slow due to a high base period, the sector is still poised for steady expansion. Structural shifts in the global automotive industry continue to create favorable conditions for Taiwan’s auto parts market, supporting sustained growth.

On the export front, the United States remains Taiwan’s largest market, accounting for more than 50% of total export value. Key export products include automotive lamps, electrical components, tires, transmission system parts, and crash-related components. Other major export destinations include Japan, Mexico, Germany, and the United Kingdom.

China, once Taiwan’s second-largest export market for automotive components, has seen a steady decline in recent years due to the ongoing U.S.-China trade war and shifting supply chain dynamics. From January to August 2024, Taiwan’s exports to China dropped to sixth place in the rankings.

Electrification Sparks an Automotive Electronics Surge

Meanwhile, advancements in smart vehicle technology and breakthroughs in electrification are driving demand for Electric Vehicles (EVs) and Hybrid Electric Vehicles (HEVs). These next-generation vehicles require sophisticated electronic systems for battery management, motor control, energy optimization, and charging infrastructure.

At the same time, safety has become a top priority in the industry, fueling demand for active vehicle safety solutions. Regulations and technological developments in Advanced Driver Assistance Systems (ADAS) are boosting the need for safety-focused components. Additionally, the rise of advanced in-vehicle infotainment systems is transforming the driving experience, creating new business models and revenue streams in the automotive entertainment sector.

These trends have led to a steady increase in the proportion of automotive electronics in overall vehicle costs, with projections suggesting it could surpass 50% in the future. According to the Semiconductor Industry Association International (SEMI), the global automotive electronics market is expected to exceed $400 billion by 2028, driven by a compound annual growth rate (CAGR) of nearly 8%.

A report by Yole Group further highlights this shift, predicting that the value of semiconductor components in each new vehicle will rise from $540 in 2022 to $912 in 2028, with a double-digit CAGR. Notably, demand for automotive electrification and ADAS technologies is expected to see particularly strong growth.

Advancements in Autonomous Systems and Sensor Technology

Taiwan plays a crucial role in the global automotive supply chain, leveraging its strengths in the semiconductor and information and communication technology (ICT) industries to establish a strong foothold in automotive electronics. In 2023, the sales value of Taiwan’s automotive electronics products exceeded NT$400 billion, driven by the growing adoption of electric vehicles, smart cockpits, and autonomous driving technologies.

These advancements continue to propel the development of key components such as automotive sensors, displays, semiconductors, and high-performance computing systems. To compete in the global market, automotive suppliers must maintain a stable supply chain and uphold stringent product quality standards. Securing international certifications and meeting industry regulations are critical steps in ensuring product reliability and safety, solidifying Taiwan’s position in the evolving automotive landscape.

Looking ahead, Level 2 driver assistance systems are expected to become standard in new vehicles, while Level 3 and higher autonomous driving capabilities will gradually gain regulatory approval across various countries, paving the way for fully autonomous mobility services.

This trend is set to drive sustained growth in the self-driving sensor market, including Light Detection and Ranging (LiDAR), automotive lenses, and millimeter-wave radar. The global market for these sensors is projected to reach $28.4 billion by 2024 and continue its upward trajectory to $72.07 billion by 2030.

Regionally, the Asia-Pacific market, fueled by the steady expansion of China’s automotive sector, has emerged as the largest, valued at $12.6 billion. North America and Europe follow, with market sizes of $8.5 billion and $6.9 billion, respectively. Beyond increasing adoption rates, sensor manufacturers are actively enhancing detection accuracy and refining their solutions to drive wider customer adoption and market penetration.

At the same time, the growing demand for AI-driven applications is fueling the need for more powerful in-vehicle computing, making automotive computing chips a key battleground for major tech companies. Industry leaders such as NVIDIA, Qualcomm, Mobileye, and Huawei are investing heavily in the development of high-performance automotive chips, each vying for a dominant position in the future of smart mobility.