Slight slide for ASICs
Staff -- Purchasing, 12/9/2004 2:00:00 AM
The application specific integrated circuit (ASICs) market will decline in 2005, and its growth rate over the next four years will be less than the growth rate of the total integrated circuit market.
ASICs revenue increased 23%, from $12.9 billion in 2003, to $16 billion in 2004. However, the market is expected to decline 8% to $14.6 billion in 2005, before it bounces back with three years of positive growth that will enable it to post revenues of $20.8 billion in 2008.
Buyers can expect prices to remain flat, but the functionality of ASICs will continue to increase as suppliers boost the number of usable gates and transistors per chip.
However, ASICs growth will not keep pace with the overall integrated circuits industry. In 1998, ASICs represented about 12.3 % of the total market. That percentage fell to 9.2% in 2003 and will drop to 7.9% in 2008, says market researcher IC Insights. (The ASIC market is comprised of seven types of products, but programmable logic devices, full custom products and standard cell devices make up about 91% of the ASIC market.)
Standard cell devices—which consist of user-specified arrangements of predefined sub-circuits of functions such as analog, memory or logic—are the single largest ASIC segment. Standard cell revenue grew from $6.9 billion in 2003 to $8.7 billion in 2004, a 26% growth rate. However, revenue will decline to $8 billion in 2005 before bouncing back in 2006. By 2008, the standard cell market will reach $11.9 billion.
The market is still recovering from the telecommunications industry collapse in 2001 that that causes standard cell revenue to drop from $9.5 billion in 2000 to $6 billion in 2001.
But standard cell chips are beginning to find uses in other types of equipment because their small die sizes give them lower per-die costs than other ASICs. However, the drawback is that they also carry high non-recurring engineering (NRE) charges due to expensive photo mask and design costs, says Brian Matas, an IC Insights analyst.
He says that standard cell chips are most cost effective in high-volume applications because OEMs can amortize the mask and NRE charges over a large number of units—which is why consumer electronics equipment accounted for about 25% of the standard cell market in 2003.
Revenue growth for PLDS—logic circuits consisting of one or more switch matrices—increased 30% from $2.7 billion to $3.5 billion in 2004. However the market will fall 7% in 2005 to $3.2 billion. Like standard cell, the PLD market was adversely affected by the telecommunications industry downfall. In 2000, 70% of PLDs were used in communications systems. In 2003, that percentage dropped to 46%.
Within the PLD segment there is growing demand for field programmable gate arrays (FPGAs). In fact, FPGAs account for 78% of PLD revenue and that percentage is likely to grow.
Overall buyers can expect prices for ASICS to be flat or to rise slightly. However, because the number of usable gates per chip and the number of transistors per chip will rise, buyers will get more bang for the same buck, says Matas.
For instance, the average PLD price was $9.30 in 2003. By 2008, the average price will increase to $9.57. However, the average number of usable gates for a PLD—66,429 in 2003—will increase more than fourfold by 2008—to 290,000. That will reduce the average price per gate for a PLD from $0.014 in 2003 to $0.0033, says IC Insights.
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