IC Insights predicts that the IC market driving force will increase to 24%, and analog chip prices will rise for the first time in 17 years

On June 16, the market research organization IC Insights released the latest forecast report. According to the report, the current price per bit of DRAM and NAND flash memory markets continues to rise, and the prospects of many logic IC and analog IC product categories are better than expected. Therefore, IC Insights adjusted the current market expectations from 19% in the past to 24%. Even excluding memory, the IC market is expected to grow by 21% this year.

It is worth noting that the analog IC market dropped by 8% in 2019 and achieved a small growth of 3% in 2020. By 2021, the analog IC market is expected to achieve a substantial growth of 25%, with unit shipments Will grow by 20%. At the same time, the analog IC market is expected to be tight. Based on this year, the average selling price of analog ICs will rarely increase by 4%. The last increase in the average selling price of analog ICs dates back to 2004, which is 17 years old. Specific to the average price, the average price of analog IC in 2004 was 0.6 US dollars, and by 2020 it was only 0.32 US dollars, and the 16-year compound growth rate was -4%.

It is well understood that the average price of analog ICs has risen. The impact of the new crown epidemic has driven the development of the global housing economy and home office. According to statistics from Taiwan Semiconductor Manufacturing Co., Ltd., 250 million students worldwide have been dedicated to online learning. On the other hand, while the demand is soaring, many factories are still being disrupted by the epidemic and unable to produce normally, resulting in insufficient supply. Therefore, there has been a phenomenon of shortage of goods and price increases in the market. Coupled with the stock speculation by some middlemen, and the rising cost of upstream raw materials, these are the main reasons for the current shortage of stocks and price increases in the semiconductor component market.

Then another question comes, why the price of analog ICs has not risen but fallen for a long time in the past? This does not seem to be in line with the natural law of economic development. There is inflation in the economic market, and those purchased in the past 20 years It is obviously difficult to buy products at the same price nowadays.

If you want to understand analog chips, you can first see why the price of digital chips is usually higher. There are three main reasons. One is that in order to pursue production efficiency and chip performance for digital chips, fabs need to improve process technology. Taking the data in SMICs prospectus as an example, the cost of investing in the 5nm process is as high as tens of billions. U.S. dollars and the new process often reaches dozens of times analog chips at a time. The production cost is high, and the price is naturally high.

The second is that digital chips are upgraded faster. Digital chips are usually upgraded with electronic products. However, the elimination cycle of electronic products is very short. Therefore, the time for companies to pay back is relatively short, and the price will naturally be set higher. The third is capacity restrictions. For example, the recent fab capacity is fully loaded with insufficient supply, supply and demand are tight, and prices will naturally rise.

For digital chips, the price of analog chips will be much lower, mainly due to the low cost of the production end and the longer lifespan of the user end. Analog chips do not rely on process processes. At present, 0.18μm/0.13μm is still widely used in the industry, and some processes use 28nm. Although the production process of analog chips is relatively special, they are all mature. The cost of an MPW tape-out is relatively Low, even if the batch is small, it will not pay the too high cost. In terms of the life cycle, analog chips are generally more than 5 years, while digital chips are generally about 1-2 years.

The characteristics of diverse demand for analog chips, longer cycles, more innovation, and high experience requirements determine the difficulty of analog chips. Therefore, the current market concentration of analog chips is relatively high, and the market is basically controlled by international manufacturers such as TI, ADI, and MPS. Hands.

New players can only compete in the low-end analog chip market. Due to the low technical threshold of the low-end market, many companies have flooded into them. Low-end products can only survive by relying on price wars and extensive sales. If you want to go to the high-end, take TI as an example, the IDM model adopted requires a huge investment. At the same time, in terms of talent training, the threshold for learning analog chip design is high, and the average learning takes 10-15 years. It is difficult for many companies to wait for this. Long time.

This has resulted in high-end analog chips still gaining large profits in the market, but low-end analog chips are competing in price, lowering the average price of the entire analog chip. Now that the market has begun to expand on a large scale, and the average price has also risen, it will also attract more companies to enter the market and move toward high-end analog chips.