Analog IC Market - Updated Strategic Overview

April 11, 2023 Analog IC MarketKhanh Le, Summit Technology Consulting Inc.

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Analog IC MarketUPDATED STRATEGIC OVERVIEWBy

KHANH LE, Founder

SUMMIT TECHNOLOGY CONSULTING, INC. Ju ly 30, 2014


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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.


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Content

Analog IC MarketCharacteristics of analog companiesStrategic considerationsNEW Opportunities in analog IC marketSummary


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Analog IC Market Drivers

Internet of ThingsAutomotive ElectronicsConsumer ElectronicsEnergyMobilitySecurityHealthcare

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)

2013 2014 2015 2016 201738

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49.5

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 CategoryApplication-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 PurposeAnalog 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

Consumer18.5%

Computers16.5%

Communications22.4%

Automotive21.3%

Industrial20.0%

Government1.3%

Source: WSTS and Linear Technology 2013 Annual Profile


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Analog IC Market EnvironmentMerchant 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 productsAsia - 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 productsTI: 40,000 products Linear: 7,500 productsMaxim: 6,500 products


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Analog IC Process Technologies

Very diverse process technologies, optimized for analog and frequently specific productsBipolar (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 technologiesConsumer 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 profitableHigh 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-intensiveLarge 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

OpportunitiesGrowing appetite for analog chips in major industry

segments, esp. IoTSeveral potential acquisition targets exist in US and

elsewhere

ThreatsCurrent 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: [email protected]