Microcontrollers are in the middle of an incredible wave of unit growth, but unprecedented price erosion is keeping a lid on the increase of revenues, according to IC Insights’ Mid-Year Update to its 2015 McClean Report on the integrated circuit industry. The mid-year forecast shows microcontroller shipments rising 33 percent in 2015 to 25.4 billion MCUs worldwide as a result of a tremendous upsurge in units for smartcards and 32-bit applications—many of which are aimed at the Internet of Things (IoT) market.
Despite the blistering pace of unit growth, dollar-volume sales of MCUs are now expected to rise by just 4 percent in 2015, reaching a new record high of $16.6 billion from about $15.9 billion in 2014, when total MCU revenues also increased 4 percent. As seen in Figure 1, average selling prices for microcontrollers are expected to continue plunging with ASPs nose-diving 21 percent in 2015 to $0.65 compared to $0.83 in 2014, when the ASP for MCUs fell 12 percent. IC Insights’ Mid-Year Update forecasts a 14 percent drop in MCU ASPs in 2016 with microcontroller revenue growing 7 percent to $17.7 billion and unit shipments climbing 25 percent to 31.6 billion worldwide.
Starting in 2014, microcontroller unit growth accelerated, driven by rocketing shipments of low-cost MCUs used in smartcards for protection in electronic banking and credit-card transactions, mass-transit fares, government IDs (such as electronic passports), medical records, and security applications. After a 26 percent increase in 2014, smartcard MCU shipments are now expected to surge by 41 percent in 2015 to 12.9 billion units worldwide, followed by 25 percent growth in 2016 to 16.1 billion.
The mid-year forecast significantly raises the projection for smartcard MCU shipments through 2019 as U.S. credit card companies, banks, retailers, government agencies, and other industry sectors begin to broadly adopt secure “chip-card” technology, much like Europe and other country markets have done since the 1990s. In the U.S., massive data breaches in credit card transactions at retail stores and growing concerns about identity theft have finally resulted a major move to smartcards for higher levels of security, anti-fraud encryption, and greater protection of lost or stolen debit and credit cards.
While price erosion weighs on total MCU sales growth, total microcontroller shipments are also accelerating because of strong demand for 32-bit designs and other single-chip solutions that can serve the explosion of sensors in wireless systems and connection to the Internet of Things. IoT-related MCU sales are forecast to grow 16 percent in 2015 to $405 million with unit shipments climbing 40 percent to 431 million.