Brief overview of analog IC market and opportunity for start-ups.

1. Analog IC Market
A Strategic Overview and
Opportunity Assessment
May 5, 2011 Khanh Le

2. Introduction
 This is a brief strategic overview of the analog IC market and
preliminary assessment for potential entry.
 Market data and technical information were collected from
various sources, mostly researches, announcements, company
reports, etc. available fron the Internet.
 Full reports from market research companies and detailed
information on strategies, strengths and weaknesses, products
and market positions will help improve the completeness and
accuracy of the data and conclusions drawn.
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3. Content
 Analog IC market
 Characteristics of analog companies
 Strategic considerations
 Opportunity in analog IC market
 Summary
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4. Analog IC Market Drivers
 Market Drivers
 Automotive electronics
 Consumer electronics
 Energy
 Mobility
 Security
 Healthcare
Sources: IC Insights, Aug 2010, Maxim Feb 2011
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5. Analog IC Market Characteristics
 Market Characteristics
Analog Market 2008-2012 ($B)
 Closely correlated with
semiconductor market 50
cycles 45
40
 Double digit growth – 35
10% average CAGR 30
2010-2016 25
20
 $42B in 2010 (30% 15
growth from 2009) 10
5
 $45.2B in 2011 growing to 0
$74.9B in 2016 2008 2009 2010 2011 2012
(Databeans, March 2011)
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6. Analog IC Market Ranking
 Mostly consolidated
 Top 5 companies hold 43% market share and top
10 companies over 60% market share (IHS iSuppli)
 Disruptive change: TXI’s acquisition of NSC
2010 2010
Company 2010 $M
Rank Share
Texas Instruments 1 6,190 14.6%
STMicroelectronics 2 4,291 10.1%
Infineon Technologies 3 3,328 7.9%
Analog Devices 4 2,482 5.9%
Maxim Integrated Products 5 1,936 4.6%
Other 24,058 56.9%
Total 42,285
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7. Analog IC Market Segments
 Application Specific Analog Market Main Segments - 2011
 Analog ICs that perform specific General
Purpose
Application-
Specific ($B),
functions - timing control, RF ($B), 18.8 26.3
transceivers, touch sensors,
display drivers, LED drivers,
SerDes, etc.
 $26.3B in 2011, $40.5B in 2016,
CAGR 9%
Analog Market Main Segments - 2016
 General Purpose General Application-
Purpose Specific ($B),
 Analog ICs that fit into multiple ($B), 32.9 40.5
applications such as amplifiers,
comparators, data converters, etc.
 $18.8B in 2011, $32.9B by 2016,
CAGR 12%
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8. Analog IC Market Environment
 Merchant analog IC companies compete through
 Special product design skills
 Breadth of products
 Extensive worldwide distribution and support network
 Competitive price
 Smaller companies focus on specific products
 Asia - Leadtrend (power management), Richtek (power
management, LED drivers, etc.), Niko, Power Analog
Micro (high voltage), GMT (audio, switches, power
management), Taiwan Semiconductor (discretes,
voltage regulators, opamps), Sitronix (LCD drivers),
Silicon Mitus (power management)
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9. Analog IC Applications Areas
 Audio and Video
 Clock and Timing
 Data Conversion - $3.8B in 2010 (iSuppli)
 Energy Measurement and Metering
 Interface
 LED Lighting
 Power Management - $9.1B in 2010 (iSuppli)
 Signal Conditioning
 Thermal Management and Sensors
 Wireless and RF
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10. Analog IC Applications by
Industries
 Applications by industry segments
 Automotive
 Communications
 Computing and Storage
 Consumer Electronics
 Industrial
 Medical
 Very diverse products
 TI: 30,000 products Linear: 7,500 products
 NSC: 12,000 products Maxim: 6,500 products
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11. Analog IC Process Technologies
 Very diverse process technologies, optimized for
analog and frequently specific products
 Bipolar (amplifiers, RF, regulators, power management,
discrete)
 BiCMOS, BiMOS (RF, amplifiers, power management)
 DMOS, VMOS, etc. (High voltage)
 CMOS (amplifiers, data converters, power management)
 SiGe (RF)
 GaAs (RF), etc.
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12. Analog IC’s Specific IP Required
 Each industry segment requires specific analog or
mixed-signal technologies
 Consumer electronics: touchscreen, LED drivers, display
drivers, NFC, video, audio codec, etc.
 Industrial: LED lighting, energy monitoring, RF, ADC, line
drivers, etc.
 Automobile: sensors, ADC, line drivers, audio codec, etc.
 Computer and Storage: HDMI, SATA, Thunderbolt, etc.
 Communications: GbE, 10GE, 40GE, timing control, etc.
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13. Analog IC Market Trend
• Major trend: higher integration
• Multiple analog functions onto one chip
• Leaders are Broadcom and Maxim
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14. Characteristics of Analog IC
Companies
 Very profitable
 High operating margins (Linear: 52.4%, ADI: 30%,
Maxim: 26.4%) and gross margins (TI: 53.6%,
NSC: 68.3%, Linear: 77.6%)
 High P/E ratios (Linear: 15.3, ADI: 14.7, Maxim: 31)
 Resource-intensive
 Large companies have thousands of application
engineers (e.g. TXI, NSC, Maxim, etc.)
 Extensive network of direct sales, distributors and
sales reps
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15. Characteristics of Analog IC
Companies
 Diverse set of products and customers
 Tens of thousand of products and hundred of package types
 Tens of thousand of customers at all volume levels
 Hundreds of distinct applications in each market segments
 Longer product life cycles than many other IC types
 Very low ASP ($0.48) but very high volumes (88 Bu)
 Most large companies own fabs – esp. TI, NXP, LLTC,
MXIM, etc.
 Own recipes and optimized processes
 Leverage process R&D across products
 Depreciated fabs keep cost low
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16. Strategies of Analog IC Companies
• Maxim
• Strategy: integration, innovation, and balance
• Market focus: automobile, HD infrastructure, energy, mobile, security, and
healthcare
• Linear Technology
• Strategy: broad-based supplier, quality
• Market focus: communications, industrial and automobile
• Zarlink
• Strategy: grow with network evolution and healthcare
• Market focus: timing and line driver for networking, wireless for healthcare
• National
• Strategy: broad base supplier of high performance, energy-efficient analog
and mixed signal products
• Market focus: growth areas – LED lighting, portable medical, renewable
energy, communications infrastructure and personal mobile devices
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17. Strategic Considerations
 Opportunities
 Growing appetite for analog chips in major industry
segments
 Consolidation re-started with TI’s acquisition of
NSC in April 2011
 Several potential acquisition targets exist in US and
elsewhere
 Threats
 Current partners of TI, STMicro, ADI, etc. will block
entry or limit playing field
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18. Application-Specific Analog:
Opportunity
 Application-specific iSuppli: Apple iPad Estimated BOM
Core Components No 3G 3G
analog sees increasing Display & Touchscreen
Electromechanical and Mechanical
$80.00
$35.00
$80.00
$35.00
share in the IC content Battery (Li-Ion Polymer 25W) $17.50 $17.50
MPU A4 processor $17.00 $17.00
of DVD, mobile devices, DRAM 4Gb $11.90 $11.90
WLAN + Bt + FM Chip $8.05 $8.05
DTV/STB, etc.
User Interface Components (Accelerometer, Compass,
 Example: analog- Audio Codec, etc.) $10.20 $10.20
Other Power Management $2.40 $2.40
related components Configuration Dependent Components
are worth $55 in NAND Flash - 16GB $29.50 $29.50
Apple’s iPad 3G Wireless Components (baseband, RF, PA, etc.) $24.50
GPS $2.60
 Opportunity for Other Costs
Box Contents $7.50 $7.50
innovative start-ups and Totals
smaller analog IC Total Material Costs
Total Manufacturing Costs
$219.05
$10.00
$246.15
$11.20
companies Grand Total Materials and Manufacturing Costs $229.05 $257.35
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19. Viable Market Strategy
 Differentiate with
– innovative designs,
– analog performance,
– System-friendliness, and
– custom packages to meet requirements of
applications
 Focus on growing segments
 Cellular wireless RF – transceivers, power amplifiers
 Power management – chargers, supply control, LEDs, etc.
 Wi-Fi, GPS, Bluetooth, NFC, etc. transceivers and controllers
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20. Potential Growth: Power Management
• Power management
semiconductor
market (ICs and
discretes)
• $31.4B in 2010,
$36.2B in 2011
• 13% growth rate next
4 years
• Driven by
• Portable consumer Source: iSuppli, Aug 2010
devices
• Alternative energy
systems
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21. Potential Growth: Wireless
• 5 billion units by 2014
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22. Potential Growth: Wi-Fi
• 3.8 billion units, $10B revenue
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23. Summary
 Large and consolidated analog IC market (US$42B)
 It’s a horizontal market with large number of
application segments and customers, low ASP
(US$0.48) and huge unit volumes (88Bu)
 Application-specific analog is an attractive segment for
entry by innovative start-ups
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