PM chip market rises; tags steady

Staff -- Purchasing, 3/16/2006

Demand for power management (pm) semiconductors will rise, but prices overall will be steady in 2006 as the market grows about 9.3% to $22.4 billion.

The market is rising because of growing use of power management chips in portable handheld electronic equipment and consumer electronics.

"Handsets are more than just standard cell phones," says Jim Mack, product marketing manager for semiconductor manufacturer Microchip in Chandler, Ariz. This market includes MP3 players, iPODs and handheld computers. In addition, portable gaming equipment, DVD players, digital still cameras, video cameras, portable medical equipment and power tools are driving power management semiconductor demand.

One emerging use is high-powered light emitting diodes (LEDs). LED manufacturers are producing 1-, 3-, and 5-watt LEDs. "You need power management semiconductors to control the current to drive LEDs," Mack says. That can be done using pulse width modulation controllers or linear regulators.

In many portable applications, PM chips help increase the run time of the equipment by controlling the use of power to increase battery run time.

For instance, if a microprocessor in a laptop computer is running at full throttle, the PM chip scales back power to the processor reducing power consumption.

Use of PM chips is also growing because power management requirements in equipment are changing. For instance, a board in a computer five years ago had one requirement for five volts. "Today a board in a laptop will have up to 11 voltages in them" says Barry Papermaster, senior marketing manager for power management for Texas Instruments, based in Dallas. "More power conversion has to be done." That means greater demand for power management chips in computers.

In fact, the cost of power management chips in a computer as a percentage of the total cost of a computer has been rising for several years. That's one reason why the growth of power management chips has outpaced the growth of the overall semiconductor market, says Papermaster.

The PM chip market includes linear regulators, switching regulators, interface chips as well as application specific integrated circuits (ASICS) and application specific standard products (ASSPs) for power management, PM thyristors, PM transistors including metal oxide semiconductor field effect transistors (MOSFETs), insulated gate bipolar transistor (IGBTs) and power bipolar chips.

PM power transistors are the single largest segment of the market with 2005 revenue of $7 billion. MOSFET in the segment amounts to about $4.4 billion.

The growth for MOSFETS will remain strong as the compound annual growth rate (CAGR) will be about 9.3% through 2009 when the market will reach $7.2 billion.

However, regulators, including linear and switching chips, will have the most growth through 2009 as that segment posts a 16.1% CAGR, growing from $6.1 billion in 2005 to $11.5 billion in 2009.

PM ASICS and ASSPs combined are the third largest category with 2005 revenue of $5.5 billion. That segment will grow to $7.5 billion in 2009.

While demand will rise in 2006, buyers can expect PM chip capacity to be ample. Leadtimes stretched for some products in late 2005 and early this year, but more capacity is coming online and chip availability will not be a problem, according to suppliers. Factory utilization rates will rise from about 80% to 85% later in the year says iSuppli.

Although there should be adequate chip capacity, leadtimes could still stretch because of a tight supply of certain chip packages.

Prasad Parachuri, product marketing manager for STMicroelectronics, in Geneva, Switzerland, says PM chips use a greater variety of packages than in the past. That could pose a problem if demand for a chip in a specific packages spikes.

"In the past, SO4, L14 and RS48 packages were standard for PM chips," he says. With the handheld market, there is greater demand for smaller packages such as thin shrink small outline (TSSOP), quad flat no-lead (QFN) and even flip-chip," Parachuri says. Such packages are used for many other semiconductors.

With adequate chip capacity, prices will be flat overall. The average price of a PM chip was $0.231 in 2005. It will be $0.233 in 2006, says iSuppli. However, prices for some PM chips will rise and others will fall. For example, the average price of a linear regulator price will decline from $0.171 in 2005 to $0.16 in 2006. However, a PM thyristor chip will increase from $0.20 to $0.21, says iSuppli.