KPMG has accelerated its predictions on the growth of the automotive semiconductor chip market.

By the end of this week the U.S. House and Senate are expected to vote on a measure providing billions in incentives including tax breaks to the semiconductor chip industry. The goal is to lure chip manufacturers to develop and manufacture the vital components in hopes of avoiding the crippling shortage stunting production in the automotive, and other industries.

The urgency of such legislation comes as a new technical paper released today by global financial services company KPMG accelerates the company's earlier predictions on the expected speed of growth in worldwide automotive semiconductor sales over the next two decades.

KPMG now expects global sales of automotive semiconductors to grow so quickly they will reach $200 billion by the mid-2030's, several years ahead of its original prediction of 2040 when it now expects global sales will exceed $250 billion.

KPMG chart showing expected acceleration of global automotive semiconductor sales.

The company's predictions of accelerated growth can be attributed, generally to the simple fact vehicles have become basically rolling computers requiring hundreds to thousands of semiconductor chips to manage its various systems, according Gary Silberg, KPMG automotive sector leader.

Indeed, where the acronym ICE has always stood for internal combustion engine vehicles, Silberg has switched it up to denote “internal computing engine.”

In an interview with Forbes.com, Silberg cited three specific factors: electronics, safety and transition to electrified power trains.

Electronics: Silberg points to what he calls the “sexy electronics” that provide many of the conveniences consumers demand and expect. “It's the connected part of the car, the consumer end of touching, calling, voice recognition. All those amazing things are totally accelerating. In some cases its hundreds of thousands of chip sets,” Silberg explained. “Consumers are demanding more of it. All the new vehicles are putting it in line.”

intelligent vehicle cockpit and wireless communication network concept

Safety: Advanced driver assistance systems or ADAS are becoming more capable adding new features that enhance occupant safety to the point of so-called level three autonomy. However, “the amount of chips sets that go into ADAS is only expanding and the consumer is demanding it especially when you see the accidents, the texting,” said Silberg.

Operator recharging Ford F-150 Lightning XLT electric pickup truck

Transition to electrified power trains: The overall industry transition from internal combustion engines to battery-electric powertrains brings with it a sharp increase in the amount computing power needed to manage the vehicles' sophisticated power systems.

“Advances in technology and societal shifts to environmentally friendly practices are continuing to transform industries, and automotive is no outlier, said Mark Gibson, KPMG U.S. National Sector Leader for Technology, Media, and Telecommunications in remarks emailed to Forbes.com. “The spike in oil prices coupled with increasing support for reduced carbon emissions is driving demand for, and thus innovation in, semiconductors for more advanced vehicles.”

Indeed, a study released late last week by financial services company TransUnion TRU predicted the share of the market for new electric vehicles would grow from about 5% this year to approximately 40% by 2031.

The study was based on a consumer survey along with automotive credit information.

“It's a perfect storm,” said Silberg when taking the trio of factors into account. “All three areas are going to rise just because of demand from consumers and technology.”

Ironically, despite the global shortage, 2021 was a record year for worldwide sales of semiconductors exceeding $550 billion, a 25.6% increase over 2020, according to the KPMG paper, which “double-digit growth” this year.

KPMG: Gary Silberg, KPMG automotive sector leader. Photo by Andrew Collings.

While demand is high and growing, Silberg expects the semiconductor industry continue to struggle to meet it, at least in the short-term, declaring, “There's (the equivalent to) a hundred phones in a car or more and that number is going up. Demand will be met in some point in time but not now because they can't get the chips.”

Automakers have shifted allocation of their semiconductor supplies to support production of their most profitable vehicles and are striking deals and investing in manufacturers to help ensure supply.

But that's not enough to allay the current shortage or prevent insurance against production interruptions in the event of future deficiencies.

For that reason, the KPMG paper suggests automakers become more involved in the “semiconductor value chain.”

FILE - Tesla 2021 Model 3 sedan AP Photo/David Zalubowski, File)

Silberg uses EV leader Tesla TSLA as an example of such involvement, calling the automaker's vertical integration by hiring in-house software engineers solve chip issues it's “secret sauce.”

Other automakers have caught on but Silberg wonders why, aside from Tesla, car companies would depend so highly on outside sources for such critical components musing, “Other automakers never ceded the internal combustion engine to anyone for 100 years. Why would they cede their software and driveability of chips to other people?”

That point circles back to the pending federal legislation aimed at providing enough financial incentives to convince U.S. chip companies to expand current facilities or build new plants stateside, reducing dependence on foreign manufacturers.

According to a Reuters report, the legislation calls for $54 billion in subsidies to U.S. semiconductor companies along with a four-year tax credit worth around $24 billion.

Several companies that include Intel INTC , Samsung and TSMC are already building or expanding in this country and Silberg believes “with legislation I think you'll see much more investment over time.”