Expect standard cell chips to lead asic market growth

Staff -- Purchasing, 12/8/2005

The application specific integrated circuit (ASIC) market will grow from $15 billion in 2004 to about $18 billion in 2009 as demand remains strong from consumer electronics equipment, computers and communications equipment.

While overall ASIC growth will be healthy, most of the growth will be in the standard cell segment. Standard cell revenue growth will rise from $8.2 billion in 2004 to $10.6 billion in 2009. That growth will partially come at the expense of gate arrays as that segment of the ASIC market drops from about $1 billion in 2004 to $462 billion in 2009. With a gate array, logic circuits of fixed and regular transistor cells form a matrix of logic gates and memory of various standard densities.

"Gate arrays are becoming obsolete," says Bill McClean, president of market researcher IC Insights. "They are not flexible enough at higher densities to handle mixed signals or embedded processors. Standard cell is replacing gate array." Standard cell or cell-based ICs consist of user specified arrangement of predefined subcircuits of any function such as memory, analog or logic.

Growth will be strong for standard cell devices because they are used in a lot of high-volume equipment, including consumer electronics. Manufacturers of high-volume equipment use standard cell ASICs because the manufacturer can "amortize the nonrecurring engineering (NRE) charges better. It makes the overall price per unit more reasonable," says McClean. NRE charges include the cost of design help from ASIC suppliers and the cost of photomask set for the chip which costs about $1.5 million for leading-edge devices.

The programmable logic device (PLD) segment will post more modest growth than standard cell. PLD revenue will increase from $3 billion in 2004 to $3.9 billion in 2009.

"PLD is a cyclical market. A lot of PLDs have inventory burns and builds and take some pretty wild swings," says McClean.

About five years ago, 65% of all PLDs were used in communications equipment such as base stations for cell phones. Today, about half go into communications equipment while the rest are used in computers and some consumer equipment.

PLDs are logic circuits consisting of one or more switch matrices that can be configured into higher level logic patterns. They can be programmed via built-in fusable links or by software.

The pricing scenario for ASICs is not clear. The price per gate for ASICs typically falls by about 30% per year. "But this year we have had some price swings," says McClean. "Unit shipments will be down 30%, but the average price will be up 44%."

One reason prices are up is more higher-density, higher-functionality parts are shipping. Such parts may replace two or three standard cell devices, and carry higher price tags.

Besides prices, another trend buyers should watch is the movement to configurable ASICs (CASICs). LSI Logic is shipping CASIC chips.

With CASICs, half of the chip is designed, laid out and tested. The rest of the chip is later customized with memory, random gates and other circuits depending on the customer application. "It is a cross between a standard part and an ASIC," says McClean. He says CASICs save design time and cost because large volumes of the chips are made in advance.

"We are seeing more of those designs coming into the market," says McClean. "LSI has standardized one section of the chip that appeals to multiple customers and customizes the rest."