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Analog Ic Market and Opportunity

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Brief overview of analog IC market and opportunity for start-ups.

Brief overview of analog IC market and opportunity for start-ups.

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  • 1. Analog IC Market A Strategic Overview and Opportunity AssessmentMay 5, 2011 Khanh Le
  • 2. Introduction  This is a brief strategic overview of the analog IC market and preliminary assessment for potential entry.  Market data and technical information were collected from various sources, mostly researches, announcements, company reports, etc. available fron the Internet.  Full reports from market research companies and detailed information on strategies, strengths and weaknesses, products and market positions will help improve the completeness and accuracy of the data and conclusions drawn. September 27, 2011 Khanh Le 2
  • 3. Content  Analog IC market  Characteristics of analog companies  Strategic considerations  Opportunity in analog IC market  Summary September 27, 2011 Khanh Le 3
  • 4. Analog IC Market Drivers  Market Drivers  Automotive electronics  Consumer electronics  Energy  Mobility  Security  Healthcare Sources: IC Insights, Aug 2010, Maxim Feb 2011 September 27, 2011 Khanh Le 4
  • 5. Analog IC Market Characteristics Market Characteristics Analog Market 2008-2012 ($B)  Closely correlated with semiconductor market 50 cycles 45 40  Double digit growth – 35 10% average CAGR 30 2010-2016 25 20  $42B in 2010 (30% 15 growth from 2009) 10 5  $45.2B in 2011 growing to 0 $74.9B in 2016 2008 2009 2010 2011 2012 (Databeans, March 2011) September 27, 2011 Khanh Le 5
  • 6. Analog IC Market Ranking  Mostly consolidated  Top 5 companies hold 43% market share and top 10 companies over 60% market share (IHS iSuppli)  Disruptive change: TXI’s acquisition of NSC 2010 2010 Company 2010 $M Rank Share Texas Instruments 1 6,190 14.6% STMicroelectronics 2 4,291 10.1% Infineon Technologies 3 3,328 7.9% Analog Devices 4 2,482 5.9% Maxim Integrated Products 5 1,936 4.6% Other 24,058 56.9% Total 42,285 September 27, 2011 Khanh Le 6
  • 7. Analog IC Market Segments Application Specific Analog Market Main Segments - 2011  Analog ICs that perform specific General Purpose Application- Specific ($B), functions - timing control, RF ($B), 18.8 26.3 transceivers, touch sensors, display drivers, LED drivers, SerDes, etc.  $26.3B in 2011, $40.5B in 2016, CAGR 9% Analog Market Main Segments - 2016 General Purpose General Application- Purpose Specific ($B),  Analog ICs that fit into multiple ($B), 32.9 40.5 applications such as amplifiers, comparators, data converters, etc.  $18.8B in 2011, $32.9B by 2016, CAGR 12% September 27, 2011 Khanh Le 7
  • 8. Analog IC Market Environment  Merchant analog IC companies compete through  Special product design skills  Breadth of products  Extensive worldwide distribution and support network  Competitive price  Smaller companies focus on specific products  Asia - Leadtrend (power management), Richtek (power management, LED drivers, etc.), Niko, Power Analog Micro (high voltage), GMT (audio, switches, power management), Taiwan Semiconductor (discretes, voltage regulators, opamps), Sitronix (LCD drivers), Silicon Mitus (power management) September 27, 2011 Khanh Le 8
  • 9. Analog IC Applications Areas  Audio and Video  Clock and Timing  Data Conversion - $3.8B in 2010 (iSuppli)  Energy Measurement and Metering  Interface  LED Lighting  Power Management - $9.1B in 2010 (iSuppli)  Signal Conditioning  Thermal Management and Sensors  Wireless and RF September 27, 2011 Khanh Le 9
  • 10. Analog IC Applications byIndustries  Applications by industry segments  Automotive  Communications  Computing and Storage  Consumer Electronics  Industrial  Medical  Very diverse products  TI: 30,000 products Linear: 7,500 products  NSC: 12,000 products Maxim: 6,500 products September 27, 2011 Khanh Le 10
  • 11. Analog IC Process Technologies  Very diverse process technologies, optimized for analog and frequently specific products  Bipolar (amplifiers, RF, regulators, power management, discrete)  BiCMOS, BiMOS (RF, amplifiers, power management)  DMOS, VMOS, etc. (High voltage)  CMOS (amplifiers, data converters, power management)  SiGe (RF)  GaAs (RF), etc. September 27, 2011 Khanh Le 11
  • 12. Analog IC’s Specific IP Required  Each industry segment requires specific analog or mixed-signal technologies  Consumer electronics: touchscreen, LED drivers, display drivers, NFC, video, audio codec, etc.  Industrial: LED lighting, energy monitoring, RF, ADC, line drivers, etc.  Automobile: sensors, ADC, line drivers, audio codec, etc.  Computer and Storage: HDMI, SATA, Thunderbolt, etc.  Communications: GbE, 10GE, 40GE, timing control, etc. September 27, 2011 Khanh Le 12
  • 13. Analog IC Market Trend • Major trend: higher integration • Multiple analog functions onto one chip • Leaders are Broadcom and Maxim September 27, 2011 Khanh Le 13
  • 14. Characteristics of Analog ICCompanies  Very profitable  High operating margins (Linear: 52.4%, ADI: 30%, Maxim: 26.4%) and gross margins (TI: 53.6%, NSC: 68.3%, Linear: 77.6%)  High P/E ratios (Linear: 15.3, ADI: 14.7, Maxim: 31)  Resource-intensive  Large companies have thousands of application engineers (e.g. TXI, NSC, Maxim, etc.)  Extensive network of direct sales, distributors and sales reps September 27, 2011 Khanh Le 14
  • 15. Characteristics of Analog ICCompanies  Diverse set of products and customers  Tens of thousand of products and hundred of package types  Tens of thousand of customers at all volume levels  Hundreds of distinct applications in each market segments  Longer product life cycles than many other IC types  Very low ASP ($0.48) but very high volumes (88 Bu)  Most large companies own fabs – esp. TI, NXP, LLTC, MXIM, etc.  Own recipes and optimized processes  Leverage process R&D across products  Depreciated fabs keep cost low September 27, 2011 Khanh Le 15
  • 16. Strategies of Analog IC Companies • Maxim • Strategy: integration, innovation, and balance • Market focus: automobile, HD infrastructure, energy, mobile, security, and healthcare • Linear Technology • Strategy: broad-based supplier, quality • Market focus: communications, industrial and automobile • Zarlink • Strategy: grow with network evolution and healthcare • Market focus: timing and line driver for networking, wireless for healthcare • National • Strategy: broad base supplier of high performance, energy-efficient analog and mixed signal products • Market focus: growth areas – LED lighting, portable medical, renewable energy, communications infrastructure and personal mobile devices September 27, 2011 Khanh Le 16
  • 17. Strategic Considerations  Opportunities  Growing appetite for analog chips in major industry segments  Consolidation re-started with TI’s acquisition of NSC in April 2011  Several potential acquisition targets exist in US and elsewhere  Threats  Current partners of TI, STMicro, ADI, etc. will block entry or limit playing field September 27, 2011 Khanh Le 17
  • 18. Application-Specific Analog:Opportunity Application-specific iSuppli: Apple iPad Estimated BOM Core Components No 3G 3G analog sees increasing Display & Touchscreen Electromechanical and Mechanical $80.00 $35.00 $80.00 $35.00 share in the IC content Battery (Li-Ion Polymer 25W) $17.50 $17.50 MPU A4 processor $17.00 $17.00 of DVD, mobile devices, DRAM 4Gb $11.90 $11.90 WLAN + Bt + FM Chip $8.05 $8.05 DTV/STB, etc. User Interface Components (Accelerometer, Compass,  Example: analog- Audio Codec, etc.) $10.20 $10.20 Other Power Management $2.40 $2.40 related components Configuration Dependent Components are worth $55 in NAND Flash - 16GB $29.50 $29.50 Apple’s iPad 3G Wireless Components (baseband, RF, PA, etc.) $24.50 GPS $2.60 Opportunity for Other Costs Box Contents $7.50 $7.50 innovative start-ups and Totals smaller analog IC Total Material Costs Total Manufacturing Costs $219.05 $10.00 $246.15 $11.20 companies Grand Total Materials and Manufacturing Costs $229.05 $257.35 September 27, 2011 Khanh Le 18
  • 19. Viable Market Strategy  Differentiate with – innovative designs, – analog performance, – System-friendliness, and – custom packages to meet requirements of applications  Focus on growing segments  Cellular wireless RF – transceivers, power amplifiers  Power management – chargers, supply control, LEDs, etc.  Wi-Fi, GPS, Bluetooth, NFC, etc. transceivers and controllers September 27, 2011 Khanh Le 19
  • 20. Potential Growth: Power Management • Power management semiconductor market (ICs and discretes) • $31.4B in 2010, $36.2B in 2011 • 13% growth rate next 4 years • Driven by • Portable consumer Source: iSuppli, Aug 2010 devices • Alternative energy systems September 27, 2011 Khanh Le 20
  • 21. Potential Growth: Wireless • 5 billion units by 2014 September 27, 2011 Khanh Le 21
  • 22. Potential Growth: Wi-Fi • 3.8 billion units, $10B revenue September 27, 2011 Khanh Le 22
  • 23. Summary  Large and consolidated analog IC market (US$42B)  It’s a horizontal market with large number of application segments and customers, low ASP (US$0.48) and huge unit volumes (88Bu)  Application-specific analog is an attractive segment for entry by innovative start-ups September 27, 2011 Khanh Le 23