Analog IC Market - Updated Strategic Overview

July 30, 2014 Analog IC Market
Khanh Le, Summit Technology Consulting Inc.
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Analog IC Market
UPDATED STRATEGIC OVERVIEW
By
KHANH LE, Founder
SUMMIT TECHNOLOGY CONSULTING, INC. July 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 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)

10
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

Analog IC Market - Updated Strategic Overview

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