The original system-on-chip (SoC) product category—microcontrollers—appears to be on the verge of another substantial growth cycle after losing momentum in the last three years due to economic uncertainty, a falloff in the smartcard MCU market, and price erosion following the IC market’s strong recovery in 2010 from the last recession. With the global economy stabilizing and promising modest growth in the next few years, microcontroller sales are now expected to increase 6% in 2014 to a new record high of $16.1 billion after being flat in 2013 and dropping 3% in 2012, according to IC Insights’ new Mid-Year Update to the 2014 McClean Report.
IC Insights is raising its growth forecast for microcontroller sales in 2014 from 3% previously due to steady improvements in overall MCU demand and a strong recovery in the smartcard market segment. Smartcard MCU sales fell 12% in 2013 but are now on track to grow 19% in 2014, based on the forecast in the new 250-page Mid-Year Update report. Overall MCU sales are forecast to strengthen in 2015 and 2016 with 7% and 9% increases, respectively, due to improvements in the global economy and the emergence of new applications, such as wearable systems and the build-out of the Internet of Things (IoT).
The 2014 Mid-Year Update shows worldwide MCU sales rising by a compound annual growth rate (CAGR) of 4.6% in the next five years, reaching nearly $19.1 billion in 2018 (Figure 1). The microcontroller market is projected to reach new record-high sales each year in the forecast period, with the exception of 2017, when the market is expected to dip by 1% due to the next anticipated economic slowdown.
After declining 7% in 2013, worldwide microcontroller shipments are now forecast to climb 12% in 2014 and reach a new record-high 18.1 billion units this year, thanks to a strong rebound in 8- and 32-bit smartcard microcontrollers for electronic banking, automatic teller machines (ATMs), secure credit and debit cards, mass-transit fares, government IDs, and security applications. A market correction and intense pricing competition in smartcard MCUs undercut total microcontroller unit and sales volumes in 2013.
Smartcard MCUs represent nearly half of all microcontrollers shipped worldwide but generate less than 20% of the total dollar sales volume due to their ultra-low average selling price. IC Insights’ Mid-Year Update shows smartcard MCU shipments rising 20% in 2014 to 8.7 billion units after a 23% drop in 2013. The rest of MCU units—serving a wide range of embedded functions in systems—are forecast to increase 6% to 9.4 billion devices in 2014 after rising 12% in 2013.
Overall, an explosion of 32-bit microcontroller shipments is reshaping the market as suppliers aggressively promote more powerful MCU designs that are cost competitive with 8-bit and 16-bit devices. In some cases new 32-bit MCUs are being priced well under $1, in high-unit volumes, and below the cost of 8-bit microcontrollers. Between 2013 and 2018, total 32-bit MCU sales are expected to grow by a CAGR of 9.5%, reaching $11.0 billion in 2018. IC Insights’ Mid-Year Update shows 4/8-bit MCU sales falling by a CAGR of 1.3% to $3.7 billion in 2018 while 16-bit revenues will barely grow at an annual rate of 0.3%, remaining at $4.2 billion in five years.
The Mid-Year Update to the 2014 McClean Report
Additional details on sales, unit shipment, and pricing trends for microcontrollers as well as 32 other IC product types, are provided in IC Insights’ Mid-Year Update to its 2014 McClean Report—A Complete Analysis and Forecast of the Integrated Circuit Industry. The Mid-Year Update provides extensive IC Insights forecasts for the IC industry for the rest of 2014 and through 2018, including fresh looks at regional and global GDP growth, semiconductor capital spending trends, updates to R&D spending by company, challenges with 3D manufacturing, and updates on the prospect of the industry moving to 450mm wafers. The 250-page Mid-Year Update features more than 200 charts and graphs that give a thorough overview, analysis, and forecast of IC industry trends.
The Mid-Year Update is one of several monthly updates that are provided free with a paid annual subscription to The McClean Report. However, new for 2014, IC Insights is offering the Mid-Year Update for sale as a single-purchase report priced at $1,990.