The global shortage of semiconductors or chips in the aftermath of the Covid-19 led pandemic has eased as per a report by Crisil. A development that led most automakers to cut down production significantly and postpone the launch of new models or to put them to production through 2020, 2021, 2022 and a good part of 2023 has finally eased to iron out any supply chain disruptions that may be there. 

Expected to address and improve predictive demand forecast, the better availability of chips should enable better production schedules. By FY2025-26, Crisil analysts are of the opinion that demand-supply dynamics should be more balance with additional manufacturing capacities getting commissioned. 

With the chips possessing distinct electrical properties that make them the cornerstone of all electronic equipment and devices, it is the auto industry that has come to use them for a variety of functions as automobiles turn increasingly software driven. While the computer and communication equipment (C&C) segment consumes roughly 63 percent of the chips produced, the auto industry consumes roughly 13 percent of them. The other industrial segments consume about 12 percent. 

With new developments such as autonomous and EVs, the use of semiconductors in automobiles is only slated to rise. With passenger vehicles the recipient of most technological innovations ahead of other segments such as two-wheelers, three-wheelers and commercial vehicles, it should not come as a surprise that they consume about 1,500 chips on average – the highest among all automobile types. 

As more advanced electronic features are incorporated, the use for chips increases. The electric passenger vehicles, for example, use almost twice as many chips as internal combustion engine (ICE) passenger vehicles do. The improving supply and slowing demand for computers and mobile phones is therefore looked upon as a blessing in disguise for automobiles and their manufacturers. 

Anuj Sethi, Senior Director, CRISIL Ratings, mentioned, “The chip shortage faced by Indian passenger vehicle makers is easing, with current availability at 85-90 percent of total requirement. The production loss on account of the chip shortage, which had halved to about 300,000 PVs on-year in fiscal 2023, is estimated to have further declined to under 200,000 PVs by the end of September 2023.”

Most passenger vehicle manufacturers are currently operating at near optimal capacity utilisation due to stronger-than-anticipated demand. New orders to be serviced remains high at about 700,000 units at the end of September 2023. 

The easing of chip shortage should help automakers honour new orders with better prediction and faster production. Global automobile demand, severely impacted by the Covid-19 pandemic, made a strong recovery in the latter part of FY2021-22. It caught automobile manufacturers off guard as they had not placed substantial orders for chips. 

The surge in demand for personal computers, laptops and mobile phones, driven by work from home, virtual learning and remote healthcare services, led to a significant chip procurement challenge for the automakers. 

Geographically, the chip ecosystem is skewed, with western nations dominating chip architecture, design, manufacturing equipment, specialised materials and chemicals. Semiconductor fabs1 on the other hand are concentrated in eastern nations, such as Taiwan and South Korea.

Given the criticality of chips in the defense and aerospace industries, the United States and the European Union have offered incentives of about USD 100 billion for localisation of semiconductor fabs. As a result, many global players are slated to spend about USD 360 billion towards setting up new facilities, which would be operational by 2025 and 2026. 

In the Indian context, demand for chips will continue to increase over the medium term, driven by the gradual rise in EV adoption and growing demand for advanced feature-laden ICE vehicles.

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Mobility engineering and technology company BlueBinaries has signed a definitive agreement to acquire the automotive testing business of Germany-based MicroNova AG.

The carved-out entity will operate as an independent company within the BlueBinaries group under the name NovaBinaries. Following the transaction, BlueBinaries projects annual revenue of USD 50 million and aims to expand revenue to USD 100 million in the coming years.

Founded in 2017 and headquartered in Chennai, BlueBinaries provides vehicle engineering, digital engineering, testing and homologation services to original equipment manufacturers across India, Europe, North America, the Middle East and Asia.

MicroNova, based in Vierkirchen near Munich, develops testing and validation systems for the automotive sector, including hardware-in-the-loop systems, test automation platforms, virtualisation solutions and engineering services. Its test automation platform, EXAM, is used by European automotive manufacturers. NovaBinaries will focus on software test solutions, hardware-in-the-loop systems, test automation, virtual validation, and software test factories by combining MicroNova’s product portfolio with BlueBinaries’ engineering operations.

Srinivas Aravapalli, Founder and CEO, BlueBinaries, said, "The acquisition of MicroNova’s industry-leading HiL Testing and Test Automation business represents a watershed moment in BlueBinaries’ journey towards absolute technological leadership in the global mobility ecosystem. By integrating these world-class validation and test automation technologies into our existing portfolio, we are uniquely positioned to offer an unmatched, end-to-end test offerings to our customers.”

Kishore LM, Founder and COO, BlueBinaries, said, “The acquisition of the Automotive Testing business from MicroNova is a strategic leap that enhances our ability to offer right technology solutions across automotive software testing. MicroNova’s technical depth, customer centricity, and regional strength align perfectly with our strategic vision to be the first partner choice for global customers complimenting our current portfolio. Our intent is to offer these proven technologies and better solutions globally combining precision, engineering excellence, scale, and flexibility while the mobility industry moves into the SDV and AI era.”

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A study conducted by Google and Kantar titled ‘Automobile Purchase Journey in the Age of AI’ shows that 93 percent of automobile shoppers in India utilise artificial intelligence (AI) interfaces during their research process.

The research indicates that the car buying process involves multiple digital platforms, with 87 percent of buyers interacting with Google services including Search, YouTube, Maps and Gemini. Consumers utilising artificial intelligence touchpoints consult an average of 7.8 resources to research and evaluate choices, compared to 6.9 touchpoints for buyers overall. Within Google Search, 90 percent of surveyed users reported encountering AI Overviews, while 89 per cent utilised AI Mode to process technical specifications, vehicle features and financing options. Furthermore, 80 percent of buyers using AI chatbots also turn to Google Search or YouTube for active research.

The findings highlight that initial consideration sets form early, with 80 percent of buyers maintaining a predefined list of brands prior to active research. Approximately six in 10 buyers use YouTube for casual exploration, where 77 percent of users rely on professional automotive reviewers to inform their choices. Daily media consumption habits among car buyers show that 63 percent watch YouTube, 55 percent stream YouTube on television screens, 54 percent read newspapers and 43 percent watch linear television. Decision-making remains a shared process within households, with 64 percent of respondents involving family members and 53 percent consulting spouses. Vehicle safety ratings and styling were identified as primary motivators by 41 percent of buyers.

Siddharth Shekhar, Director, Google India, said, "The car buying journey in India is deliberate, non-linear, and deeply digital-particularly ahead of the festive season, when consideration peaks. Buyers move between discovery on YouTube and conversational validation on Search. Among surveyed Google Search users, 90 percent come across AI Overviews and 89 percent use AI Mode to navigate nuanced, complex queries. As AI helps buyers navigate complex choices, our ad and commerce solutions help automotive brands respond to their intent-connecting initial curiosity directly to the showroom."

Virat Khullar, Head of Marketing, Hyundai Motor India, said, "The automotive purchase journey is increasingly shaped by moments of discovery, research and intent across digital channels. Our partnership with Google helped us harness the scale of YouTube to build awareness and the intelligence of AI-powered Search ad solutions to identify and convert high-intent consumers. By unifying upper- and lower-funnel marketing, we were able to deliver a more relevant and efficient customer experience, turning consideration into action and driving strong sales momentum for Hyundai Verna."

The study was carried out by Kantar in May 2026 across metropolitan and Tier-1 cities in India, surveying 1,022 consumers who had purchased a car within the preceding six months.

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Accenture and Google Cloud have announced that Volvo Cars has signed on as the lead industry partner for Horizon, an open-source software development platform designed for car makers and automotive suppliers to build, test and deploy software on the Android Automotive Operating System.

The Horizon platform unifies cloud-native development tools, virtual testing environments and artificial intelligence workflows. Volvo Cars is migrating its global software development environment for the Android Automotive Operating System to the platform to accelerate engineering processes and virtual testing across its global development teams.

Insights gathered from Volvo Cars' deployment will be used by Accenture and Google Cloud to refine the platform and expand its generative artificial intelligence features for automotive and industrial manufacturers.

According to metrics provided by Accenture and Google Cloud, testing speeds using virtual Cuttlefish-based Android Automotive environments can improve by up to 9 times, while infotainment feature development costs can decrease by up to 40 percent. Software build times, which previously required up to two hours, can yield feedback within minutes through caching and build pipeline optimisation.

Remote access to virtual and physical device farms allows engineers to test software without requiring local physical test equipment, while virtual workbenches enable developers to set up development environments in seconds.

Gregor Zetsche, Head of Connected Experience, Volvo Cars, said, "We’re building some of the most complex products in the world, which requires a development environment built to match. As Horizon’s lead industry partner, we can directly solve our toughest engineering challenges and empower our teams to deliver new experiences faster than ever."

Juergen Reers, Global Automotive & Mobility Lead, Accenture, said, "Horizon enables a faster, more flexible and efficient way to deliver software-defined vehicle features. Its standardised, repeatable and scalable processes help deliver reliable, high-quality software products, while significantly reducing time to market. Horizon will allow Volvo Cars’ engineers to focus on what matters most: creating differentiated vehicle experiences and continuously delivering new value to drivers through software at high speed."

Henry Bzeih, Global Director for the Automotive Industry, Google Cloud, said, "Software now defines the automotive brand. Horizon on Google Cloud gives Volvo Cars the ability to move faster while releasing high-quality software and features on a cadence that matches the expectations of modern mobility. This is how next generation digital experiences reach drivers at agile speed."

Accenture and Google Cloud are working with additional automotive and industrial organisations to expand adoption of the Horizon platform across international markets.

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Emerson has announced the expansion of its test and measurement research and development (R&D) facility in Bengaluru, which it claims is an additional 50 percent.

The investment increases capacity at the site to develop software-defined and automated validation technologies for industrial customers.

The Bengaluru facility operates as Emerson's NI Software Centre of Excellence and represents the company's second-largest test and measurement R&D centre globally. Engineering teams at the site hold product responsibility for test software platforms, AI-enabled engineering capabilities, systems engineering technologies and radio frequency test software. The tools serve clients across the semiconductor, aerospace, defence, transportation, life sciences and manufacturing sectors.

Ritu Favre, President of Emerson's Test & Measurement business, said, "Bangalore plays an increasingly strategic role in Emerson’s global test innovation network. The site combines deep expertise in test software and AI-enabled engineering and validation technologies with close connections to rapidly evolving industries. This investment helps customers manage growing product complexity, streamline validation and bring new innovations to market faster."

The expansion provides capacity to advance automated validation workflows and integrated test platforms as hardware complexity increases across shortened product development timelines.

Emerson's investment aligns with domestic growth in semiconductors, electric mobility, and aerospace manufacturing driven by initiatives such as the India Semiconductor Mission and the National Electric Mobility Mission Plan.

Alongside the R&D centre, Emerson operates a second Bengaluru location dedicated to application engineering, calibration services, sales and customer support.

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