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Aug 28, 2025 / 7 min read
The automotive industry is undergoing significant transformation as OEMs grapple with dramatic increases in the compute requirements for modern vehicles. With advanced driver-assistance systems (ADAS), sophisticated in-vehicle infotainment (IVI) systems, and even on-board artificial intelligence (AI), modern vehicles are quickly becoming data centers on wheels.
To deliver these advanced systems and carve out competitive differentiation, automotive companies need to accelerate software development and concern themselves more directly with selecting — or designing — the right silicon to run those workloads, resulting in tectonic shifts in the automotive value chain.
Discover how virtualization improves profit margins, accelerate time to market for vehicles, and secure a competitive edge in the software-defined vehicle era.
As vehicles take on data center characteristics, it creates a tremendous demand for advanced silicon to process massive volumes of in-car data. Leading semiconductor foundries like TSMC are working to deliver automotive standard nodes to address these challenges. At the same time, automakers themselves are diversifying and investing in custom silicon development — Tesla’s FSD and Dojo chips are well-known examples — to optimize costs, increase market differentiation, and gain competitive advantage.
Consequently, legacy OEMs increasingly prefer to work directly with silicon suppliers, ASIC design providers, and software vendors — taking more direct control over the supply chain and increasing the pace of product innovation. For many OEMs and suppliers, this is a significant departure from business as usual, leading to the big shifts we see in the automotive value chain.
An important question all OEMs must ask is, "How much silicon competence does my organization need?" The answer will determine the degree of verticalization they can achieve across the silicon-to-systems value chain. OEMs that have no verticalization today must decide whether to progress to shallow or partial verticalization, or all the way to full verticalization. Full verticalization requires the highest non-recurring engineering (NRE) cost and effort but offers the greatest differentiation.
Successful silicon-to-system verticalization will require competencies in four key areas.
As a pioneer in semiconductor design and long-time enabler of automotive innovation, Synopsys is uniquely positioned to consult OEMs and help them manage all aspects of the silicon-to-systems value chain.
Automotive OEMs traditionally designed vehicle hardware and software using a hardware-centric, siloed approach. Distinct electronic control units (ECUs) were created for specific vehicle functions, each containing dedicated hardware and embedded software. As the number of electronically-enabled functions increased over time, so too did the number of ECUs in each vehicle. Today’s vehicles now contain anywhere from dozens to more than 100 ECUs, sourced from a variety of suppliers.
This has resulted in tremendous architectural complexity as well as limited flexibility. With software tightly coupled to discrete hardware, long design cycles (2-5 years) became the norm. And because requirements had to be defined upfront, there was little room for iteration or updates between cycles.
HW/SW co-design techniques help address these limitations. With software and hardware requirements planned in parallel, OEMs can ensure the hardware better satisfies software requirements — and software maximizes the capabilities of the hardware.
Transitioning from a hardware-centric, siloed approach to HW/SW co-design is not easy. OEMs face challenges in several areas:
Over the last 30+ years, multiple industries have reached a tipping point where transforming the value chain with custom silicon has become highly desirable — if not essential. When it comes to designing next-generation E/E architectures, the automotive industry now faces a similar tipping point.
OEMs now have to decide whether to select off-the-shelf (OTS) systems-on-chip (SoCs) or design custom SoCs — or a combination of the two — to power their vehicles. Decisions must be made on a case-by-case basis, with careful consideration and evaluation of priorities, trade-offs, and numerous variables.
For OEMs that decide to design custom SoCs, safety, reliability, quality, security, and PPA — Power, Performance, and Area — all become their responsibility. PPA, in particular, is a critical consideration, especially in electric vehicle (EV) designs where power-hungry devices can impact range.
Many OEMs are also beginning to evaluate AI solutions for in-car needs. Most OEMs recognize AI as a critical part of future differentiation, and many want to understand in advance what neural processing units (NPUs) are available and how they benchmark against each other before deciding whether to buy or build a solution.
While much of the focus in HW/SW co-design is on future systems, legacy OEMs must also support multiple existing E/E architectures. This includes improving the functionality of — or even adding new features to — existing architectures with limited computing power. This can sometimes be accomplished by shifting software workloads, or parts of workloads, from one ECU to another within the vehicle, or by moving the work from a satellite unit to an ECU with more computing capacity.
The automotive industry is still dominated by "big bang" integrations, where the majority of software bugs are discovered after physical prototypes are built. This legacy approach leads to costly delays and untenable R&D expenses.
Static development models no longer work in a world of persistent and dynamic change. The future demands continuous development, integration, and validation.
From ADAS to IVI to powertrain, development teams are searching for ways to make development more efficient so they can get to the validation stage faster, validate more software variants at the same time, and deliver better software quality. There are a number of areas where OEMs are seeking to improve:
In the past, a lot of software development work was dependent on the availability of physical hardware prototypes. Virtual prototyping and verification can reduce the dependency on physical hardware, enabling critical software development work to get started earlier. With the right tools, teams can simulate electronic components and designs and begin testing software before physical hardware or test benches are available, including testing of ECU software and embedded control systems.
Traditionally, a lot of automotive software testing has been performed via hardware-in-the-loop (HiL) approaches that use real, physical components. HiL fixtures are costly and often in short supply, especially during the most critical phases of development, bottlenecking testing and validation. Replacing HiL systems with software-in-the-loop (SiL) systems has significant benefits. The biggest advantage of SiL testing is the ability to identify system bugs and errors earlier. This not only allows for faster fixes — it also reduces development time and cost.
Most OEMs maintain a large number of regional software variants to meet regulations and address requirements for specific markets. Testing these regional variants also traditionally relied on HiL systems. By moving from HiL to SiL and moving SiL testing into the cloud, regional development centers can do their development and testing work in parallel, eliminating bottlenecks and reducing costs.
As automotive OEMs move toward greater control over their silicon needs, they also need to be more concerned with the reliability of that silicon. How can they be certain that selected chips in the field are behaving the way they expect them to behave?
This is where silicon lifecycle management (SLM) comes into play. SLM provides the ability to monitor the operation of silicon in the field to ensure the chips are operating as expected. Using SLM, it’s possible to identify and correct minor problems in silicon through firmware updates, and SLM also provides an avenue for feedback into the development process, allowing for changes and refinements to be made to the next generation of silicon.
Synopsys has served the automotive industry for more than 20 years and has become a key partner for automotive OEMs and suppliers, leveraging our longstanding expertise in silicon design to address modern vehicle complexity. We can help with critical decisions related to silicon selection, design, and/or verticalization, and once those decisions have been made, we help OEMs accelerate innovation, reduce risk, and move forward with confidence.
We can help OEMs evaluate and select the best hardware and software — from off-the-shelf to custom silicon solutions as well as AI — for their E/E architecture and other specific needs. We can also help OEMs increase their silicon competency and guide them to a level of verticalization appropriate to their goals.
We offer a full suite of software development, testing, and validation tools that reduce the reliance on physical prototypes and hardware-based testing. These tools help accelerate software delivery and improve software quality.
Our integrated Silicon Lifecycle Management (SLM) solutions improve silicon health and operational metrics at every phase of the device lifecycle.
An edited version of this article originally appeared in Futurride .