The automotive industry is undergoing a fundamental transformation where vehicles are evolving from purely mechanical systems into complex, AI-driven computing platforms. This shift, as highlighted by Dipti Vachani, SVP GM Automotive at Arm, is reshaping every aspect of the sector—from product development roadmaps to procurement strategies—and driving a reevaluation of supply chain resilience in the face of recent disruptions.
The global chip shortage that began in 2021 exposed significant vulnerabilities across the automotive supply chain. Industry leaders have since grappled with how to regain control: whether to pursue vertical integration with custom chips and proprietary software or to deepen collaborative partnerships across the ecosystem. While vertical integration offers tighter control, it incurs significant expenses in capital, time, and talent acquisition. Given the accelerating pace of innovation and the complexity of AI-enabled vehicles, strategic collaboration—sometimes described as “coopetition” among competitors—has emerged as a more sustainable and resilient approach.
Modern vehicles integrate multiple workloads such as in-vehicle infotainment, advanced driver assistance systems (ADAS), and power management into centralized compute platforms. These workloads have varying real-time performance requirements and often need to operate independently of cloud connectivity. Consequently, automotive systems must meet rigorous safety, power, and thermal constraints. Technologies like chiplets, which enable modular and scalable architectures, are gaining traction. These modular designs allow OEMs and suppliers to reuse common foundational components while focusing innovation efforts on areas that create differentiation, such as enhanced AI capabilities or improved functional safety. However, the success of chiplets and other modular solutions depends heavily on industry-wide adoption of open standards and cooperative design frameworks to avoid fragmentation.
Custom silicon development remains attractive for optimising performance and reducing third-party dependencies, yet it demands long-term investment and tight coordination across hardware and software layers. Many automotive and technology companies recognize the need to blend standard IP blocks with custom elements through chiplet architectures, promoting flexibility while managing cost and complexity. This hybrid approach supports a collaborative ecosystem where companies can jointly develop shared standards and platforms.
Crucially, collaboration extends beyond shared technologies to include deeper joint ventures and partnerships among typically competing OEMs, suppliers, and partners. These cooperative models facilitate earlier supplier involvement, smoother integration, aligned safety validation processes, and coordinated software update mechanisms—collectively accelerating time-to-market and enhancing system reliability. Such collaboration also underpins robust cybersecurity frameworks. As vehicles become increasingly connected and intelligent, the Arm AI Readiness Index reports that nearly half of automotive industry leaders view data privacy breaches as the largest AI-related risk. Strong security demands built-in protections such as secure boot, trusted execution environments, encrypted over-the-air updates, and real-time threat detection that are consistently implemented across the supply chain in collaboration.
Beyond cooperation on design and security, the definition of resilience itself is evolving. Traditionally focused on maintaining part availability amid disruptions, resilience must now encompass adaptability to rapid technological change, shifting regulations, and evolving customer demands. The automotive supply chain needs systems that support continuous software upgrades, enable flexible reuse of architecture, and accommodate the increasing complexity of AI workloads running on shared silicon.
Broader industry analysis supports this collaborative paradigm. Reports from BCG emphasize the importance of dual sourcing from multiple geographies to reinforce supply chain resilience, a lesson underscored by the 12% drop in global automotive output during the pandemic and semiconductor scarcity. Further, Altium highlights diversification of suppliers, enhanced communication, and novel technologies such as digital twins and blockchain as vital to strengthening supply chain robustness. Collaboration extends to the semiconductor market itself, where carmakers and chip suppliers are co-developing standardized semiconductors, reducing dependency on legacy parts, and fostering joint ventures to smooth supply disruptions.
The shift towards software-defined vehicles accentuates these trends, necessitating geographic diversification and AI-powered planning to anticipate and mitigate risks. Vertical integration remains a strategic choice for some but increasingly occurs alongside broad ecosystem partnerships. According to Deloitte, the future mobility landscape demands advanced collaboration, multi-tier supply chain visibility, and predictive threat response to rebuild and future-proof the automotive supply network.
In essence, the evolving automotive compute ecosystem illustrates a broader industrial truth: resilience in the era of AI and software-defined vehicles is not achievable through isolation. Instead, it emerges from knowing where to compete and where to collaborate, fostering open standards, joint innovation, and mutual trust across the entire value chain. As Dipti Vachani concludes, collaboration—even among competitors—is shaping up as the most resilient strategy for the automotive industry’s future.
Source: Noah Wire Services
