Components | April 04, 2011

SoC market to reach USD 39.4<em>bn</em> by 2015

Although the prolonged severity of the recent economic slowdown, and depressed key-end use segments have elicited decline in value sales for System-On-a-Chip (SoC), the market is nevertheless expected to recover poise in the medium-to-long term period and register USD 39.4 billion in sales by the year 2015.
Primary factors fingered to drive growth in the market include, expansion of Microcontroller based SoCs business, increase in demand for advanced SoC designs, recovery in key end-use markets post recession and technology innovations. Encouraging demand from developing nations, particularly Asia-Pacific also augur well for the market, writes Publications.

The chip making industry, which has become an indispensable part of modern electronics with almost every man-made electronic device being integrated with an embedded microchip or integrated circuit (IC), has however suffered the worst in 2008 and 2009 due to the economic recession. SoC, an important part of the IC design ecosystem, is extremely sensitive to both economic and technology pressures.

Fortunes in the SoC market are closely tied to computer, consumer electronics, wireless communications, wired communications and automotive electronics segments, all of which have witnessed significant disruptions in business activity/prospects due to the economic slowdown. Therefore, the deceleration in growth comes as no surprise. The recession has resulted in receding corporate and consumer demand for semiconductor integrated electronics.

Demand for PCs, optical disk drives, scanners, printers, storage devices, PC connectivity products and gaming consoles especially plummeted to hurting levels in the consumer market, which is not surprising given the volatility of this market in comparison to the corporate/enterprise sector.

New construction and installation of metro-level communications networks dipped impacting demand for semiconductor chips like Ethernet chips. Communication infrastructure spending, with the exception of select developing countries like China, and India, has witnessed steep falls thus impacting SoC demand in this end-use sector.

However, the impact of recession on SoC market has been largely short-lived, and less severe in comparison to the impact on other chip technologies. This is largely because the underlying economics of packaging greater functionalities into smaller and yet more power-efficient devices, continue to drive the need for greater integration within a semiconductor device, which in turn accelerates the demand for SoCs.

Post recession, renewed emphasis on tapping into growth opportunities in the chip industry will elicit a shift in focus away from cost reduction towards technology innovation, with ensuing benefits echoing downstream into the SoC segment. As a result, SoCs are expected to emerge into a pivotal technology, which will find increased adoption for advanced computers, smartphones, and other mobile devices and handsets, new-age consumer electronic devices and automotive electronics among others.

As end-use sectors begin replenishing depleted inventories, the semiconductor industry is expected to get a new lease of life with opportunities trickling down into the SoC market segment. Resurgence and recovery in enterprise spending will unleash pent-up demand for SoC’s in the computing end-use sector, as companies restore postponed investments, and hitherto deferred purchase decisions, to provide commercial opportunities.

The consumer electronic devices end-use market is expected to witness a relatively quicker recovery with demand for LCD TVs, netbooks, Blu-ray players and smartphones, among others expected to rebound. Continued strong government spending on weaponry, and intelligence systems as part of policy commitments, bode well for SoCs in the military and defense market.

The scope of the market will become bigger and richer over the next few years, driven by expansion of microcontroller based SoCs business into four unique segments i.e., commodity controllers, basic SoCs, advanced multicore SoCs, and value multicore SoCs.

As stated by the new market research report, the US continues to remain the largest regional market for SoCs. Asia-Pacific represents the fastest growing regional market, displaying a CAGR of about 8.02% over the analysis period. Increasing infrastructure spends, particularly in communication infrastructure in key developing markets such as China and India are expected to drive demand SoCs in the region. By product type, market for SoCs Based on Embedded IP represents the largest segment, holding a lion’s share of the market.
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