The most interesting number in the semiconductor business right now might not be a GPU order backlog. It’s the sheer volume of chips quietly destined for cars, power grids, and factory floors. A new market forecast from IndexBox projects the semiconductor components and devices market growing steadily through 2035, and it pins that growth on two forces: electrification and automation. That’s a useful counterweight to the AI-centric narrative that has dominated chip coverage for the past couple of years.
It’s easy to forget, amid the breathless coverage of data center buildouts, that a modern vehicle is a rolling computer network. Power semiconductors manage the flow of electricity between battery packs and motors. Sensors feed driver-assistance systems. Microcontrollers run everything from braking to climate control. As more of the global fleet goes electric and more vehicles ship with advanced electronics as standard, the silicon content per vehicle climbs. Multiply that across a decade of adoption and you have a demand curve that doesn’t depend on whether any particular AI startup stumbles.
Automation tells a similar story on the industrial side. Factory floors that once ran on electromechanical relays now lean on programmable logic controllers, motor drivers, and increasingly sophisticated vision systems. Warehouse robotics, agricultural equipment, and logistics infrastructure all pull from the same well of power and analog components. These are not glamorous chips. They rarely make headlines. But they are the connective tissue of a more automated economy, and they tend to be designed into systems that stay in service for years.
What makes this forecast interesting isn’t just the demand side. It’s the geography. The industry has spent the past several years diversifying where chips get made, and the ripple effects are showing up in unexpected places. Global Atlanta recently reported on a Dutch machinery maker expanding into North Georgia to support the U.S. semiconductor buildout. That’s a subtle but telling detail: the supplier ecosystem that surrounds chip fabrication, the equipment makers and precision tooling companies, is following the fabs. A fab is only as good as the ecosystem around it, and those ecosystems take time and investment to build.
There’s a temptation to read all of this as a straightforward growth story, and in broad strokes it is. But the semiconductor components market is also a reminder that not all chip demand is created equal. Leading-edge logic gets the attention because it’s where the hardest engineering problems live. Mature-node and specialty components are where the volume and the steady revenue live. Power devices, analog ICs, and microcontrollers are often made on older process nodes that don’t require the most advanced lithography. That makes them less exposed to the geopolitical flashpoints around cutting-edge manufacturing, though hardly immune to supply chain shocks.
The electrification angle deserves particular scrutiny because it cuts across several industries at once. Data centers themselves are enormous power consumers, which is driving demand for more efficient power conversion components. Renewable energy installations need inverters and power management silicon. Grid modernization efforts require sensors and control electronics. So the same trend that boosts electric vehicles also boosts the infrastructure needed to charge them and the data centers that increasingly shape energy demand. It compounds.
Automation carries its own complications. As factories automate, the semiconductor content rises, but so does the complexity of the supply chain. Industrial buyers tend to prioritize reliability and long product lifecycles over raw performance, which shapes how chipmakers design and qualify parts. A component destined for a car or a piece of factory equipment may need to withstand temperature extremes and years of continuous operation. That’s a different design discipline than shipping a consumer processor that will be obsolete in three years.
The forecast also lands against a broader conversation about where technology investment is heading. AI continues to suck up capital and attention, and there are legitimate questions about how much of that spending translates into durable returns. Meanwhile, the unglamorous work of electrifying transport and automating physical processes grinds forward, generating steady demand for the components that make it possible. It’s not a narrative that produces viral headlines, but it is the kind of demand that underpins a market for a decade.
None of this means the AI-driven chip boom is a mirage. Data center silicon is real revenue, and the companies that dominate it have the balance sheets to prove it. But the market is broader than any single segment, and forecasts like this one are a useful corrective. The chip industry’s next decade won’t be decided solely by who wins the AI accelerator race. It will also be shaped by how many electric vehicles roll off assembly lines, how many factories retool with automation, and how much power infrastructure gets built to support all of it. Those markets move slower, but they don’t stop.