Will Digital Power Impact Analog IC Markets?

Following an extremely tough time during the global recession, 2010 was an outstanding year for semiconductor manufacturers, with many reporting the highest growth they have seen for a decade. The global semiconductor industry grew by over 30% and recovery occurred in all major market sectors. Now into the first quarter of 2011, most of the capacity shortages seen in 2010 seem to have been resolved and inventories are being replenished. The key question now is whether market growth can be sustained and how it will differ by semiconductor product type. One area which seems destined for high growth for the foreseeable future is digital power. What is unclear, however, is how much of an impact this will have on existing analog markets. Recent analysis from IMS Research showed that the global power management and driver IC market grew by more than 35% in 2010, leaving manufacturers of analog and digital power ICs in high spirits. The digital control and conversion IC market however, grew faster in 2010 (around a 50% increase). This followed low single-digit growth in 2009, when the total power IC market declined by over 14%. Our longer-term growth projections for the digital control and conversion IC market are on average 20% higher than those for the analog power IC market. With a total market in 2010 of over $4.5 billion for switching regulators and controllers, digital controllers and converters still only accounted for less than 5% of this, despite their recent growth. Existing opportunities are still largely limited to infrastructure and datacom equipment such as high-end servers, routers and base stations, all at the OEM or board level, though the penetration of digital controllers into merchant power supplies is growing. Whilst strong growth is projected over the next 5 years as penetration into more applications occurs, driving a digital power IC market of close to $600 million, the digital control and conversion market is still forecast to account for less than 10% of the total switching regulation and control market in 2015. Having said this, the full impact on other markets is not always clearly visible. For example, we also recently performed a detailed analysis of the components market within merchant power supplies. Strong growth is projected for power supplies with digital control and/or management, driving an associated total component market of close to $1 billion in 2015. One of the benefits of digital solutions in power supply design is the ability to reduce the component count, often by replacing existing functions by using a DSP or microprocessor. In most cases this simply reduces the number of passive components required. However, increasingly, designs are using the processor for functions such as power factor correction (PFC), replacing a dedicated PFC controller IC, or for driving other components which would typically use a dedicated driver IC. Of all the power supplies shipped with PFC in 2010, solutions using a processor in place of a dedicated PFC controller IC accounted for just 1% but this is projected to grow strongly over the next five years. The picture therefore seems clear. There is a substantial future threat to analog power IC technology. There is already strong competition from non-mainstream analog competitors such as Volterra, Microchip and Chil Semiconductor. As the transition to digital solutions gains momentum, IMS Research believes that more of the analog industry powerhouses will need to develop products in the digital market space, or accept that they will start to lose overall power IC market share. www.imsresearch.com