Chart: Industrial chip revenues overtake automotive

According to analysis by Semicast Research, revenues for semiconductors in the industrial sector exceeded those in the automotive sector for the first time in 2008. Semicast estimates that industrial semiconductor revenues grew to $22.1 billion in 2008, a rise of almost 11% from $20.0 billion in 2007. Semiconductor revenues in the industrial (including medical) sector have been broadly similar to those in automotive for several years. However auto sales have gone into reverse recently as consumers have chosen to defer new car purchases, with Chrysler and GM receiving government funding and even Toyota making a loss. The worldwide automotive semiconductor market is estimated to have fallen by around 5% in 2008 and with car manufacturing plants on extended shutdown and consumer confidence still low, a further fall in 2009 looks certain. Although industrial does not benefit from the hype and glamour of other sectors, neither does it exhibit the “boom-and-bust” cycle so typical of the semiconductor industry as a whole. Further its broad applications base (encompassing areas as diverse as medical imaging, lighting control and farm machinery) and correspondingly fragmented customer base, help to ensure a spread of risk and uncertainty during these unprecedented times. Colin Barnden, Principal Analyst at Semicast Research, commented “In the current economic climate, industrial is one sector which semiconductor vendors can look to as a safe haven for more dependable revenues”. The industrial semiconductor market continues to have no clear number one supplier and Infineon Technologies and STMicroelectronics again competed for the position of largest supplier in 2008. With less than one percentage point of market share between them, Semicast judges Infineon to have recorded fractionally higher sales than ST in the industrial sector in 2008, although with such a fine margin that the Euro-to-Dollar exchange rate plays a decisive role. The analysis clearly shows that in 2008, as in 2007, these two suppliers were the market leaders, ahead of Texas Instruments and Renesas, who themselves compete for third place. The largest suppliers are typically leaders in either standard linear, power discretes or microcontrollers, with Intel the only major exception to this rule among the top ten. Although the industrial sector is by no means immune to the effects of the global recession, the diversity of its application and customer bases offers a strong foundation to support demand over the short term. In addition, economic stimulus plans to raise government spending during the downturn are certain to be concentrated in areas of high political importance, such as energy conservation, medical electronics and security, all of which will benefit semiconductor demand in the industrial sector. Semicast predicts another fierce battle between Infineon and ST in 2009, although as recent events have clearly shown, be ready to expect the unexpected. Market Share Estimates for Semiconductor Suppliers to the Industrial Sector in 2008 1 Infineon Technologies 8% 2 STMicroelectronics 7% 3 Texas Instruments 6% 4 Renesas Technology 6% 5 Analog Devices 4% 6 Intel 3% 7 Vishay 3% 8 Toshiba 3% 9 National Semiconductor 2% 10 Freescale 2% Others 56% Notes: Margin of error +/- 0.5%. All percentages are rounded. Rate of Exchange: US$ 1 = EUR 0.683. Source: Semicast Research (May 2009)