Editor's note: An earlier version of this story incorrectly described a type of part in the average vehicle compared to a luxury flagship vehicle. The part is a microcontroller, not a semiconductor.
Spurred by fast-growing markets for infotainment and collision avoidance, semiconductor suppliers are bulking up with a wave of mergers.
Infineon Technologies AG of Germany -- the world's No. 2 producer of automotive semiconductors -- said in August that it would purchase International Rectifier Corp. of El Segundo, Calif.
Two other semiconductor suppliers -- Qualcomm Inc. of San Diego and ON Semiconductor Corp. of Phoenix -- also recently announced acquisitions.
Infineon's deal brings it within striking distance of Japan's Renesas Electronics Corp., which enjoys bragging rights as the world's top supplier of automotive semiconductors. Infineon used to hold that title.
Last year, Infineon and International Rectifier generated combined semiconductor sales to automotive customers of $2.63 billion, while Renesas reported such revenues of $2.92 billion.
The acquisition gives Infineon "a stronger market entry in the U.S.," said Ahad Buksh, an industry analyst in Munich for IHS Automotive.
Infineon's acquisition of International Rectifier, Buksh says, will make it the top global producer of discrete integrated circuits -- boosting component sales for electric vehicles and hybrids, for which such circuits are a key technology.
The acquisition will give Infineon a more diverse product portfolio and also "will make it a bigger threat to Renesas," Buksh wrote in an Oct. 22 research report.
The mergers come at a time when automakers' demand for semiconductors is climbing. IHS Automotive forecasts global sales of semiconductors will total $36 billion in 2018, up from $26 billion last year.
In fact, the luxury segment has developed an insatiable appetite for semiconductors. While the average vehicle might have 15 microcontrollers, Buksh says, a luxury flagship might boast 100 or more.
But Buksh and other analysts are bullish on semiconductors because automakers are designing infotainment and collision-avoidance gadgetry for mass-market vehicles.
Likewise, automakers are rolling out new EVs and plug-in hybrids. Those vehicles need particularly sophisticated electronics.
Buksh predicts semiconductor sales for EVs and hybrids will rise 20 percent annually through 2018. Annual sales of semiconductors for infotainment are expected to rise 18 percent and those for collision avoidance, 16 percent.