The analog IC industry is one with a long history of development and product adoption across various applications. Annual analog IC revenue reached US$53.9 billion in 2020. As the spread of the COVID-19 pandemic is gradually brought under control in China and the US this year, their domestic demand for telecom, automotive, industrial, and consumer electronics products has also kept growing, in turn generating strong demand for analog ICs. TrendForce therefore expects IC revenue for 2021 to reach US67.9 billion, a 22.1% YoY increase.

More specifically, analog IC demand from the automotive market is expected to undergo remarkable growth this year, primarily due to the recovery of the global automotive market and the continued trend towards automotive electrification as commercial opportunities from ADAS, EV, and automotive electronics enter a period of rapid growth. In response to demand from automakers and the auto market, various major IDMs have been placing a heavy emphasis on automotive analog IC development. Led by Infineon, NXP, Renesas, TI, and STM, the automotive IC market is expected to experience a 24.6% growth in 2021.

What is an analog IC?

The analog IC is an indispensable component in electronic devices. These chips can be divided into two categories according to their functions: general purpose analog IC and application specific analog IC. The former category encompasses amplifiers/comparators (signal conditioning), signal conversion, interface, and power management (general purpose). In sum, general purpose analog ICs are characterized by their low costs, single purpose, and universal compatibility.

Application specific analog ICs, on the other hand, encompass such use cases as consumer, computer, communications, automotive, and industrial/others. This product category refers to analog ICs that are designed and manufactured in accordance with electrical systems specified by the client. Compared to digital ICs, analog ICs are much more diverse in terms of product type, less costly, and more stable, while also having longer lifecycles.

The current state of the top three analog IC manufacturers

Almost all major analog IC suppliers are IDMs with long histories. In particular, longtime market leader Texas Instruments once against took pole position in the ranking of analog IC suppliers by revenue last year. With a range of analog ICs that includes more than 80,000 products, Texas Instruments possessed a 19% market share. The company is expected to maintain its dominance in 2021 thanks to its diverse product lines, high market acceptance, and high volume of client orders.

Infineon, which took second place on the ranking, registered a 19% YoY revenue growth on the back of its expansion into automotive and power management markets. Third-ranked STMicroelectronics benefitted from rising sales of its analog, MEMS, and sensor product portfolios. TrendForce expects Infineon and STMicroelectronics to continue their upward trajectories throughout 2021.

Whereas China is the largest market for analog ICs, the analog IC industry will see the highest growth in the US

China is expected to account for 42% of analog IC sales, the highest among all regions in 2021, with the consumer electronics segment comprising most of these transactions. However, the US is expected to undergo the highest growth in terms of analog IC sales with a US$10.6 billion revenue in 2021, a 25% YoY growth. This performance can mostly be attributed to the fact that the US economy has been recovering in the post-pandemic era owing to increasing purchases in the consumer electronics, telecom, and automotive markets.

Furthermore, the US government has been pushing for infrastructure developments with a focus on transportation, networking, and electricity generation, leading to expanded procurement of analog ICs used in these applications. As the markets welcomes the arrival of the traditional peak season for analog IC procurement in 2H21, growth in the US market will likely persist as well.

（Cover image source: Pixabay）

Not only did automotive market take a downward turn starting in 2018, but the severe impact of the COVID-19 pandemic in 2020 also led to noticeably insufficient procurement activities from major automotive module suppliers, according to TrendForce’s latest investigations. However, as the automotive market is currently set to make a recovery, TrendForce expects yearly vehicle sales to increase from 77 million units in 2020 to 84 million units in 2021.

At the same time, the rising popularity of autonomous, connected, and electric vehicles is likely to lead to a massive consumption of various semiconductor components. Even so, since most manufacturers in the automotive supply chain currently possess a relatively low inventory, due to their sluggish procurement activities last year in light of weak demand, the discrepancies in the inventory levels of various automotive components, along with the resultant manufacturing bottleneck, have substantially impaired automakers’ capacity utilization rates and, subsequently, vehicle shipments.

The recent shortage situation in the IC supply chain has gradually extended from consumer electronics and ICT products to the industrial and automotive markets. In the past, manufacturers in the automotive semiconductor industry were primarily based on IDM or fab-lite business models, such as NXP, Infineon, STMicroelectronics, Renesas, ON Semiconductor, Broadcom, TI, etc. As automotive ICs generally operate in wide temperature and high voltage circumstances, have relatively long product lifecycle, and place a heavy demand on reliability as well as longevity support, it is more difficult for the industry to alternatively transition its production lines and supply chains elsewhere.

Automotive semiconductor remains in shortage as production capacities remain fully loaded across the global foundry industry

Nevertheless, given the current shortage of production capacities across the foundry industry, wafer capacities allocated to automotive semiconductor components have been noticeably crowded out by other products. Some of these examples include automotive MCU and CIS manufactured in 12-inch fabs, as well as MEMS, Discrete, PMIC, and DDI products manufactured in 8-inch fabs. TrendForce indicates that automotive semiconductor products manufactured at the 28nm, 45nm, and 65nm nodes in 12-inch fabs are suffering the most severe shortage at the moment, while production capacities at 0.18µm and above nodes in 8-inch fabs have also been in long queue by other products.

As in-house IDM fabrications have relatively high CAPEX, R&D expense, and operating overhead, automotive IC vendors have in recent years outsourced some of their products to TSMC, GlobalFoundries, UMC, Samsung, VIS, Win Semiconductor and so on. In particular, TSMC specifically indicated during its 4Q20 earnings conference that wafer starts for automotive semiconductors reached rock bottom in 3Q20, while additional orders began arriving in 4Q20. As such, the company is currently considering allocating some of its production capacities from logic ICs to specialty foundry, in order to meet sudden demand from its long-term customer relationship.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com