System on a Chip: Technology, Markets

Report Highlights

• The world market for SOC will grow from about $10.4 billion in 2003 to $43.2 billion by 2009, at an average annual growth rate (AAGR) of 24.6%.
• Unit growth will be at the aggregate rate of 18.4% to reach 2.2 billion in 2009, while average unit prices will increase to $19.60.
• SOC average selling prices (ASPs) are higher than stand-alone chips, as is to be expected due to integrated functionality.
• SOC unit sales are cannibalizing the consumption volume of other ICs.
• The growth of SOC components has led to the birth and popularity of new end-use devices, such as ultrasmall mobile gadgets, ultrawideband Internet, and certain automobile gadgetry.

INTRODUCTION

The development of the system-on-chip (SOC) industry within the semiconductor industry is one of the most interesting subplots of rapid innovation in the high-tech industry. As pressure continues to achieve higher levels of device integration while reducing cost, size and complexity, the issue of process innovation has become very significant. In addition, economic and market forces are fueling the market. This environment calls for an assessment of current market and technology trends as well as potential breakthroughs in the near- and long-term future.

To accommodate exponential growth demands for larger and faster transistors, chip designers and manufacturers have constantly pushed the envelope of technological, physical, and design constraints. Various innovations and paradigm-defining ideas have taken shape as a result. The SOC concept is one significant trend in this context. SOC can deliver the headroom necessary to continue pushing the envelope for at least the next five years.

This BCC report provides an up-to-date analysis of recent developments and current trends in the global SOC industry marketplace. It examines the SOC market, its fundamental basis, key technology drivers, primary uses, critical applications, and component segments. The study identifies significant drivers of revenue growth in specific product categories. The objective of this kind of systematic research is to quantify the projected impact of the forces, from within and from outside, at work on this industry today.

SCOPE OF STUDY

The report contains:

• Coverage of SOC segments in terms of market size and revenue trends
• Revenue forecasts through 2009 for the most important product applications
• Technology discussion, concentrating on trends that will develop during the forecast period
• Analysis of compatibility, limitations and materials for each technology
• Discussion of the competitive aspects of each segment, along with several successful suppliers’ strategies in the market
• A current industry directory, a survey of U.S. SOC-related patents from 2000 to 2004 (partial), and profiles of leading SOC vendors.

METHODOLOGY

Research for this report was conducted via a number of data channels. The primary sources of information were Internet searches, industry association data, and interviews conducted with chip component suppliers, custom engineering companies, and manufacturers of representative applications. In addition, other secondary sources were consulted for the report, including reviews of industry journals and publications, product literature, white papers and technical journals, and financial reports for industry suppliers. Internal sources included earlier reports from BCC on advanced electronic materials technologies.

The approach used to deduce growth projections for the SOC market should be elucidated at this point, especially considered is its relationship to the overall high-tech electronics and semiconductor industry. The methodology is described below:

First, we tabulated annual revenue numbers for the overall high-technology industry, the semiconductor , and for chip-categories for the past 15 years (1988 through 2003). The goal was to determine trend lines, potential drift cycles, and, most importantly, relationship formulae between the industries. Using the historical data, we were able to decipher a relationship equation between chip component segment revenues and the high-tech industry revenues.

Next we assessed extraneous factors, such as the following:

• Economy (for example the slowdown over the past few years).
• Vacillation in market demand-downturn in telecom and rise in auto, for example.
• New technology innovation in end-use markets (signifying greater feature demands on the chip features arena). A popular example was the pervading Internet phenomenon.
• Geographical trends-the rise of Asia-Pacific region as a major consumer, for example.

These key points were factored into the original relationship equation to get a more realistic and customized growth rate trend, especially catering to the varying demand and growth projected for different end-use applications within the SOC landscape.

Finally, the end results were compared to the initial relationship matrix to ensure that the SOC numbers are aligned to a reasonable extent with estimated projections that have been stated for the semiconductor and overall technology industry..

From an applications perspective, the SOC market forecast is based on the estimated demand in six major applications-computing, communications, consumer electronics, automotive, medical and office equipment, and industrial and military electronics. Application demand was aligned with corresponding demand for chip component categories.

ABOUT THE AUTHOR

Ravi Krishnan has over 11 years of extensive professional and research experience in high technology with a special focus on the semiconductor industry. His work experience in this regard includes research analyst and subject-matter expert roles at market research firms, Cahners In-Stat Group and Integrated Circuit Engineering Corp. in Scottsdale AZ, and as a high-tech strategy consultant for PricewaterhouseCoopers Consulting. Currently, Ravi is with Cognizant Technology Solutions in a technology strategy capacity.

Ravi has an MBA and a graduate degree in Mass Communications, both from the Arizona State University, and an undergraduate degree in technology from the Birla Institute of Technology and Science, India.