October 26, 2012 - Communications applications are far and away the leading growth market for ICs over the next five years, and PCs and consumer applications have fallen far back in the pack.
IC Insights projects a 7.4% compound annual growth rate for total IC sales from 2011-2016. That’s largely because of good growth in the communications end market (14.1% CAGR) which will nearly double the entire IC market over the period — and nearly double in size to $160B by 2016. The Asia-Pacific region will see the lion’s share (61%) of this year’s comm IC sales, up from 59% in 2011.
Also ahead of the curve is the automotive IC market (9.0% CAGR), pegged to surge to $28B in 2016, 53% bigger than where it was in 2011. Europe has been the big market in that sector, accounting for 37% of sales in 2012 — but by 2016 the Asia-Pacific market will be nearly equal in size, IC Insights projects.
Another emerging sector is medical/industrial applications, within which is an aging global population requiring home healthcare as well as other industrial applications. Analog ICs will continue to dominate here (45% of total in 2012, and still the largest in 2016). The government/military IC market will reach $2.46B by 2016 but still be a tiny slice of the total market (<1%).
IC market growth forecast by application, 2011-2016 CAGR. (Source: IC Insights)
The two slowest sectors are the ones which have fallen the farthest from grace. Computer IC sales will drop to 34% of the total market in 2012 vs. nearly 42% in 2011. This year’s -9% drop in computer IC sales is due to a -12% decline in memory sales. And consumer ICs will register just 1.9% CAGR from 2011-2016. Japan was "once the stronghold of the consumer electronics business," points out the analyst firm, but in 2012 it will hold less than half the share of the consumer IC market vs. the Asia Pacific region (22% to 50%).
IC Insights had already been predicting that communications will usurp computers as the biggest application for leading-edge ICs. Comm will be the biggest end-use IC app in every major geographic region starting in 2014. Communications accounted for 31% of worldwide IC sales, vs. 41.7% for computers; the analyst firm sees them swapping to 42.2% and 34.0% by 2016.
(Source: IC Insights)
In fact, telecom apps are already the biggest growth areas for ICs, notes IC Insights. In 2012 the top three growth areas are all telecom, and thanks to application-specific processors used in smartphones and tablet computers. Also note that NAND flash continues to grow, though at much slower rates due to a surge in capacity (and vendors) and subsequently lower pricing pressures. Auto is a top market in 2012 as ell, thanks to needed functions such as self-parking systems, stability control, and collision avoidance.
Top growing IC markets (in revenue growth), 2010-2012F. (Source: IC Insights)
Note that the lines are blurring with every new generation of technology — what counts as a consumer device, or a business application, or communications usage. "It is getting more difficult to keep nice matter-of-fact demarcations between the products," acknowledges IC Insights president Bill McClean. "We are classifying by type of product and not really who is the end user." That puts smartphones in the "communications" category because it’s a type of cellphone, whatever else they are capable of doing and are used for. Consumer gear, then, means systems including TVs, stereo equipment, iPods, etc., he explains. Tablets are a form of PCs so they are included as computers, though some market watchers (particularly for early versions) ranked them as personal media devices.