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Microcontrollers set to drive ARM shipments in IoT

Findings from the Semicast study “Opportunities for ARM in Embedded Processing” suggest shipments for ARM in IoT applications are set to grow to about twelve billion units in 2018, from fewer than three billion in 2010 and under one billion in 2006.
Units for ARM-based microcontrollers in IoT applications are forecast to grow at a CAGR of 32% from 2010 to 2018, compared with 11% for ARM-based SoCs.

Semicast broadly defines IoT to cover all applications except PCs, phones and tablets, thus encompassing the automotive, digital home, industrial and medical sectors. ARM is perhaps best known as the architecture for apps processors in smartphones and tablets, but strip that business out and its lesser known success in markets as diverse as automotive entertainment systems, digital cameras, HDDs, MP3 players, printers, set-top boxes and TVs becomes clear.

As recently as 2009, ARM’s IoT unit shipments were made up almost exclusively of SoCs, with MCUs accounting for only around five percent of the total. Fast-forward to 2014 and Semicast estimates shipments of ARM-based SoCs and MCUs in IoT applications to be pretty evenly matched, at about 3 billion units each; going on to 2018, Semicast sees the humble MCU moving firmly into the lead. So if it is apps processors for smartphones and tablets that make all the headlines, what has been going on in microcontrollers?

ARM-based MCUs have been available since the mid-1990s, but the earliest offerings from companies such as Atmel, Cirrus and Oki were based on the standard ARM7 architecture and had little success. At that time ARM was perceived as the architecture for the cellphone, with limited suitability to the microcontroller market and companies such as Motorola (now Freescale) and Hitachi, Mitsubishi and NEC (together now Renesas) ruled the 32-bit MCU market, with proprietary architectures such as 68K/Coldfire, SuperH and V850.

However perceptions started to change in 2006, when ARM announced the Cortex-M processor family, with first silicon introduced by a start-up, Luminary Micro. Few may now recall the introduction of Luminary’s first Stellaris Cortex-M3 MCUs, or indeed the original headline “From a Dollar to a Gigahertz”, but Luminary’s vision was clearly to blur the traditional “8/16/32-bit” boundaries and to challenge the perception that ARM could not succeed in cost sensitive MCU applications. Luminary was bought by TI in 2009 and its early success paved the way for other MCU suppliers to form an ARM MCU Army.

Today the leading suppliers of ARM-based MCUs include Atmel, Freescale, NXP, STMicroelectronics, TI and Toshiba; Freescale has all but ceased development of Coldfire to focus its MCU efforts squarely on ARM. ARM has broadened the Cortex-M family to cover performance all the way from the M0 to the M7 cores, taking its microcontroller portfolio into territory ranging from 8-bit MCUs to low-end microprocessors.

As the ARM portfolio of Cortex-M cores has expanded to include M0 and M0+, so ARM MCU suppliers have driven the architecture into lower performance and ever more cost sensitive applications, many of which were historically associated with 8–bit and 16-bit devices. Today M0-based MCUs are available priced at less than thirty cents and Semicast’s research suggests the ASP of ARM MCUs has fallen from around seven dollars in 2006, to under a dollar in 2014, equating to an average annual price decline of twenty percent over this period.

Such aggressive price erosion is of course also a result of a change to the product mix; M0 and M0+ devices driving the ASP lower, but with the ASP supported in the medium term by the recently introduced M7 core at the high end, as well as Cortex-R4 and R5 based devices for safety critical applications in the automotive and industrial markets, from suppliers such as Spansion and TI.

Alongside the adoption of ARM-based MCUs in IoT, there has also been a parallel trend towards ARM-based MPUs, with the introduction of products based on the Cortex-A family of cores. However, unit shipments of ARM MPUs are currently small in comparison with MCUs, but are now accelerating as both the number of suppliers and product families increases. Atmel, Freescale, Renesas and TI have all developed families of MPUs based on the A5, A8 or A9 cores, typically for graphically intensive applications such as digital signage in the industrial market, HMIs in medical electronics, or navigation systems and hybrid instrument clusters in automotive.

ARM MPUs based on the Cortex-A cores tend to be priced in the range of $5-$10, setting a clear distinction in the market with Cortex-M MCUs, which tend to be priced up to around $5. At the top end of the MPU market, suppliers such as AMD and Freescale are using the 64-bit A53 and A57 cores to produce high performance MPUs for networking infrastructure, although such devices will make only a small contribution to unit shipments, owing to their specialized nature.

As ARM casts its net ever wider to cover applications from sensors to servers and everything in between, that raises the question “What about Intel?” ARM’s share price often fluctuates wildly as analysts on Wall Street digest the announcement of the latest applications processor from Intel for smartphones and tablets and the threat that poses to ARM. However this misses the point that ARM’s business is already highly diversified beyond the visible world of smartphones and tablets and is well established in the world of invisible tech that makes up IoT.

Colin Barnden, Principal Analyst at Semicast Research and study author, commented “Intel’s move beyond the PC to the mainstream embedded market can be traced back to 2008, with the release of the Atom family. Intel then launched a full scale assault on the IoT market towards the end of 2013 with the introduction of Quark.” However a look at pricing for both the Atom and Quark families shows Intel has a long way to go to compete head-to-head with the ARM architecture in IoT. Based on Intel’s recommended customer prices, Atom goes down to about $20, with Quark down to around $10.

Thus measured on price alone, in IoT applications Intel is competing with Quark mostly against ARM Cortex-A8/A9/A15 microprocessors, but leaving Atom and the remainder of the IA portfolio at a different price point altogether. Considering that Intel bought Basis Science earlier this year for about $150 million, Intel seems interested in developing processors for wearables, but it seemingly has little to compete with ARM Cortex-M microcontrollers, particularly in the highly competitive, high volume world of sub-$1 catalog MCUs for IoT. Thus if Intel is serious about competing in IoT at all performance points, it will surely have to re-enter the MCU market soon.

Barnden summed up “From 2006 to 2018, Semicast’s research estimates shipments of ARM-based MCUs in IoT totaling about thirty billion units. For the time being at least, ARM looks set to be the clear architectural winner in the battle of volumes in IoT, courtesy of the humble microcontroller.”
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