It may be a long time before you can own a truly self-driving car. But chipmakers are placing bets that you will.

On Tuesday, the Japanese chipmaker Renesas, the second-largest provider of semiconductors for the automotive industry, said it will acquire San Jose-based chipmaker Integrated Device Technology (IDT) for $6.7 billion, in part to prepare for autonomous vehicles.

IDT has not historically provided chips for cars, but it does have sensor and wireless technologies that could help Renesas compete in the market for chips for autonomous vehicles. "Renesas and IDT have complementary technologies," says Objective Analysis analyst Jim Handy. "Renesas will be able to help IDT bring up automotive products, while IDT helps Renesas deal with very high frequency, low-latency digital electronics. While it may not be 'plug and play,' it’s certainly a good match."

The move comes as chip giants like Intel, Nvidia, and Qualcomm maneuver for bigger shares of the automotive market. As smartphone and laptop sales level off, semiconductor companies are looking to the "Internet of Things" as the next big growth market, and cars could be one of the most lucrative of those things. Last year, Intel spent $15.3 billion to buy Mobileye, which makes cameras and chips for cars. In 2016, Qualcomm made a $44 billion bid for NXP, the world’s largest maker of automotive chips, but the deal collapsed due to regulatory issues in China.

"The automotive market is becoming the new battleground for the semiconductor industry," Handy says. "This is driving mergers and acquisitions as companies work to align themselves with tomorrow’s growth."

Analysts say the number of chips going into cars is steadily increasing and could explode with the advent of 5G, the next-generation wireless standard that could dramatically increase mobile data speeds, and the arrival of self-driving cars. Analyst firm IHS estimates that the automotive semiconductor industry totaled $37.5 billion last year and will top $58 billion in 2024.

LEARN MORE The WIRED Guide to Self-Driving Cars

Although truly autonomous cars like those envisioned by Google sibling Waymo won't arrive for years, there are many cars with "semi-autonomous" features already available, ranging from common crash-protection features to the Autopilot feature of Tesla. Combined with the growing number of internet-connected features on offer, these trends are already driving demand for more chips in cars. But no one company sells all the different chips required to power this new breed of car says industry analyst Linley Gwennap, founder of the Linley Group.

Gwennap splits the automotive semiconductor market into four categories. The first is microcontrollers for traditional automotive features like emissions control and antilock brakes, an arena dominated by NXP and Renesas. Second are the wireless modem chips connecting cars to the internet, with Intel and Qualcomm as the big players. Then there are two categories for autonomous features: chips for the cameras and sensors that give a self-driving car "eyes," and the processing chips that serve as the artificial "brains." Mobileye is a big player on the sensor side, while Intel and Nvidia power AI features for companies like Waymo and Tesla.

Meanwhile, AI chip startups like Mythic are emerging, seeking their own piece of the self-driving car market. "It's been very difficult for new companies to get into the automotive industry in the past, because carmakers have strong relationships with companies like NXP and Renesas," Gwennap says. "Autonomous vehicles create an opportunity for new companies to get into the mix." Others, such as Tesla, are hoping to build their own chips.

Renesas' acquisition of IDT shows that the traditional automotive chipmakers aren't going to be content to simply hold onto their existing markets and let others fill the demand for new chips. Gwennap expects to see NXP and Renesas snap up more companies in the coming years, especially AI-related startups.

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