ASIC average prices to rise as gate densities increase
Staff -- Purchasing, 12/11/2003 2:00:00 AM
The market for application specific integrated circuits (ASICs) will slowly recover, growing from $11.3 billion in 2002 to $18.8 billion in 2004. However, the market will decline in 2005 as demand weakens.
Buyers can expect prices to be slightly mixed over the next several years. Some asic device tags will rise slightly while others will decline, but functionality will increase as the number of usable gates per device increases and the cost per usable gate declines.
The ASIC market consists primarily of three major products: standard cell, gate array, and programmable logic devices (PLDs).
Standard cell devices will post the most growth as the market rises from about $6 billion in 2002 to $9.4 billion in 2007, according to market researcher IC Insights. Standard cell asics are circuits consisting of user-specified arrangements of predefined subcircuits of any function such as analog, memory or logic. Like many semiconductors, standard cell devices registered a steep drop in demand when the telecommunications industry collapsed in 2001. The standard cell market dropped from $9.5 billion in 2000 to about $6 billion in 2001. As the telecommunications industry comes back and consumer electronics equipment demand builds, more standard cell devices will ship. The chips typically offer lower per die costs because of their small die sizes. But they carry high nonrecurring engineering (NRE) charges due to expensive photo mask and design costs. As a result, standard cell chips are cost effective in high-volume applications because OEMs can amortize the mask and NRE charges over a large number of units, says Brian Matas, an analyst with IC insights.
Demand for standard cell will also grow because the majority of system-on-a-chip devices will use standard cell. IBM Microelectronics, LSI Logic and NEC are the three leading suppliers of standard cell ASICs.
Revenue growth for PLDs fell 67% to about $2 billion in 2001 from 2000 and its future growth will be slower than standard cell devices. The market will grow to about $2.5 billion by 2007, about half the growth of the 2000 PLD market. PLDs are logic circuits consisting of one or more switch matrixes. Some devices may be programmed one time while others may use software and hardware and can be reprogrammed. Leading suppliers include Xilinx, Altera and Lattice.
The drop of the PLD market was blamed on the collapse of the telecommunications and networking equipment end markets. The decline in those segments resulted in a huge inventory buildup of PLDs by Cisco Systems, Lucent and Nortel, according to IC Insights. That depressed prices and resulted in huge revenue declines.
A decline in demand also led to fewer PLDs being designed into telecommunications and networking equipment. In 2000, about 70% of PLDs were used in those segments, and by 2002 that percentage dropped to 54%. PLDs will be used in more consumer electronics equipment and computers. An increase in telecommunications and networking equipment purchasing will help revive the PLD market as well.
The same can't be said of gate arrays. A gate array consists of logic circuits in fixed arrangements of transistor cells, forming a matrix of logic gates and memory. The gate array market peaked in 1997 when it reached nearly $4 billion. In 2002 the market shrunk to about $1 billion and by 2007 will have declined to $673 million. Toshiba, Fujitsu and Hitachi are gate array market leaders.
OEMs are using more standard cell asics for higher-end applications and PLDs for lower-end equipment rather than gate arrays. ASIC manufacturers are not investing in advanced technology for gate arrays, rather, technology development is being devoted to standard cell devices.
Buyers can expect prices for asics to be relatively flat, except for gate arrays. Average prices for standard cell base chips will decline slightly from $9.32 in 2002 to $9.22 by 2007. PLD tags will increase from $9.41 in 2002 to $9.86 by 2007. Gate arrays will have the biggest price decline as demand dwindles, with average prices falling from $3.47 to $2.88, according to IC insights.
However, average price does not tell the whole story because the number of usable gates will increase and the actual price per usable gate will decline. For instance the price per usable gate for PLDs will drop from $0.02 in 2002 to $0.0047 in 2007. The price per gate for standard cell devices will fall from $0.0027 in 2002 to $0.00088 in 2007.
The average standard cell device had 250,000 usable gates in 2001 and will reach one million gates by 2007. For PLDs, the gate count will increase from 32,000 in 2001 to 209,000 in 2007, according to IC Insights.
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