Updated from the September 23, 2011 version.
Addresses fundamental shifts significantly altering the landscape and opportunities of the Analog IC Market:
Explosive growth of mobile devices and their ecosystems
Emerging smart consumer products
Connected automobiles
The Internet of Things
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Analog IC Market - Updated Strategic Overview
1. July 30, 2014 Analog IC Market
Khanh Le, Summit Technology Consulting Inc.
1
Analog IC Market
UPDATED STRATEGIC OVERVIEW
By
KHANH LE, Founder
SUMMIT TECHNOLOGY CONSULTING, INC. July 30, 2014
2. July 30, 2014 Analog IC Market
Khanh Le, Summit Technology Consulting Inc.
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Introduction
Updated from the September 23, 2011 version.
Addresses fundamental shifts significantly altering the landscape
and opportunities of the Analog IC Market:
Explosive growth of mobile devices and their ecosystems
Emerging smart consumer products
Connected automobiles
The Internet of Things
Market data and technical information are from research and
proprietary models by Summit Technology Consulting Inc.
3. July 30, 2014 Analog IC Market
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Content
Analog IC Market
Characteristics of analog companies
Strategic considerations
NEW Opportunities in analog IC market
Summary
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Analog IC Market Drivers
Internet of Things
Automotive Electronics
Consumer Electronics
Energy
Mobility
Security
Healthcare
Sources: IC Insights, Databeans, Technovio
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Analog IC Market Characteristics
Closely correlated with semiconductor
market cycles
Single digit market growth in next few
years – 3.7% CAGR 2013-2018 (IC
Insights, May 2014) despite strong
unit growth
Price erosion hampers revenue
growth: 11% decline in 2012 and 3%
in 2013
Forecast: $43.2B in 2013 (3% growth
from 2013)
Forecast: $45B in 2015 growing to
$49.5B in 2017 (IC Insights, May 2014)
42
43.2
45
47
49.5
38
40
42
44
46
48
50
52
2013 2014 2015 2016 2017
Analog IC Market ($B)
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Analog IC Market Ranking
Mostly consolidated
Top 5 companies hold 43% market share (Source: Databeans, April 18, 2013)
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Analog ICs By Category
Application-Specific
Analog ICs that perform functions in
specific market applications
E.g. a computer application may
include power management,
SERDES, timing control, RF, etc.
General Purpose
Analog ICs that fit into multiple
applications such as amplifiers,
comparators, data converters, etc.
General Purpose
Analog ICs
2014 Forecast
($M)
% of Market
Amps & Comparators 2,729 16%
Interface 1,940 11%
Voltage Regulators &
References
9,831 58%
Data Converters 2,447 14%
Total 16,947 100%
Application-Specific
Analog ICs
2014
Forecast
($M)
% of Market
Consumer 1,696 6%
Computer 2,145 8%
Communications 13,002 50%
Automotive 6,703 26%
Industrial / Other 2,715 10%
Total 26,261 94%
Source: IC Insights, May 2014
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Analog IC by Vertical Markets
Automotive and Industrial
make up 41.3% of total analog
market
Highest growth segments
driven by power management
and sensor networks
12.8% CAGR 2010-2012 for
industrial
22.6% for automobile
Consumer
18.5%
Computers
16.5%
Communications
22.4%
Automotive
21.3%
Industrial
20.0%
Government
1.3%
Source: WSTS and Linear
Technology 2013 Annual Profile
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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)
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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
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Analog IC Applications by Industries
Applications by industry segments
Automotive
Communications
Computing and Storage
Consumer Electronics
Industrial
Medical
Very diverse products
TI: 40,000 products Linear: 7,500 products
Maxim: 6,500 products
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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.
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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.
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Analog IC Market Trend
• Major trend: higher
integration
• Multiple analog functions
onto one chip
• Application-specific
functions onto modules
(BLE, power management,
etc.)
• Leaders are Broadcom,
Qualcomm,Linear and
Maxim
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Characteristics of Analog IC Companies
Very profitable
High operating margins (Linear: 52.4%, ADI: 30%,
Maxim: 26.4%) and gross margins (TI: 53.6%,
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, Linear, Maxim, etc.)
Extensive network of direct sales, distributors and
sales reps
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Characteristics of Analog IC Companies
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 ($0.45) but very high volumes (97 Bu in 2013)
Price erosion due to migration to larger wafer sizes in 2010-2013
Most large companies own fabs – esp. TI, LLTC, MXIM, etc.
Own recipes and optimized processes
Leverage process R&D across products
Migration to larger wafer sizes to reduce die cost
Depreciated fabs keep cost low
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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: industrial and automobile (source: 2013 Annual Profile)
• TXN
• Strategy: broad base supplier of high performance, energy-efficient
analog and mixed signal products
• Market focus: growth areas – LED lighting, portable medical, renewable
energy, IoT, communications infrastructure and personal mobile devices
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Strategic Considerations
Opportunities
Growing appetite for analog chips in major industry
segments, esp. IoT
Several potential acquisition targets exist in US and
elsewhere
Threats
Current partners of TI, ST Micro, ADI, etc. will block
entry or limit playing field
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Application-Specific Analog: Opportunity
Application-specific
analog sees increasing
share in the IC content
of DVD, mobile devices,
DTV/STB, etc.
Example: analog-
related components
are worth $54.5 in
Apple’s iPad Air
Opportunity for
innovative start-ups and
smaller analog IC
companies
Source: IHS, November 2013
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Viable Market Strategy
Differentiate with
Innovative designs
Analog performance
System-friendliness
Innovative packages – 3D ICs and modules to reduce footprint
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
IoT sensor interface, power management and communication
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Growth Market: Power Management
• Power management
semiconductor market
• $31.4B in 2010, $8.7B in 2016
• 1.7% growth rate next 4 years
• Driven by
• Portable consumer devices
• Alternative energy systems
• LED lighting
• IoT
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Source: IHS February 2014
Growth Market: Sensors
• Every sensor has an analog interface for power,
amplification and communication
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Growth MEGA Market: Internet of Things
IoT is the “Killer App” for
Analog
Wireless & RF – 3G/4G
transceivers, power amplifiers
Power management – chargers,
supply control, LEDs, etc.
Wi-Fi, GPS, Bluetooth, NFC, etc.
transceivers and controllers
Sensor interface
Data converters, amplifiers, etc.
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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$0.45) and huge unit volumes (97 Bu)
Application-specific analog is an attractive segment for
entry by innovative start-ups
IoT is the “Killer App” for Analog
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For More Information
Contact:
KHANH LE, Founder
SUMMIT TECHNOLOGY CONSULTING INC.
Email: kl@summit-technology.com