The Market for Electronics Thermal Management Technologies

Report Highlights

• The world market for thermal management products will rise from about $3.3 billion in 2003 to $5.9 billion by 2008, at an average annual growth rate (AAGR) of 12.1%.
• Revenue growth slowed in 1990s with the downturn in the computer industry, and with suppliers experiencing severe commodity pricing pressures.
• The current thermal management market has been rekindled with new design starts, and the emergence of new applications that require completely new cooling solutions.
• The 2+ GHz desktop computer, prolific growth of handheld devices and integrated Internet connectivity, the demand for wireless base stations and large Internet infrastructure equipment all present new challenges.

INTRODUCTION

The past decade has witnessed a tremendous level of progress, technologically and demand-wise, in electronic devices and systems. This spurt has come on two main fronts: increased functionality on a single-device unit and miniaturization of each unit. A critical impact of the path to electronic innovation is the increased necessity for thermal management.

Management of the thermal properties of a system, and designing an optimal solution to cater to modern power dissipation are the cornerstones of thermal management today. This BCC study covers the market for components of electronic devices and systems that aid in the dissipation of excess thermal energy. Thermal management denotes this array of problem-solving design tools and material technologies that systems manufacturers apply to regulate the unwanted heat caused by the normal functioning of an electronic system.

The trend line of the thermal management industry aligns with the development of technology in the semiconductor, microprocessor and computer industries. For every advance in performance of these systems, there is a corresponding increase in the operating heat generated by the system. To simply say, however, that demand for thermal management products increases as the requirements of applications increase does not do justice to the unique character of this industry. It probably would suffice better to state that development of thermal management as an industry is the result of a synergy of solutions constantly engineered to manage excess heat in today’s electronic systems.

Development of the industry is one of the most interesting subplots of rapid innovation in the high-tech arena. As pressure continues to achieve higher levels of integration while reducing cost, size and complexity, the issue of heat and power dissipation has become very significant. This timely report analyzes current trends as well as assessing potential breakthroughs in the near- and long-term.

SCOPE OF STUDY

The report provides coverage of:

• Product segments, including hardware, software, interfaces and substrates

• Market size and revenue trends for each segment, with forecasts through 2008

• Applications by product

• Technology trends

• Competitive aspects of each product segment

• Successful supplier strategies

• U.S. thermal management patents from 2000 to 2003

• A selection of the leading thermal management suppliers.

METHODOLOGY

Research for this report was conducted via a number of data channels. The primary sources of information were Internet searches and industry association data, and interviews conducted with thermal management 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 an earlier report from BCC on thermal management technologies.

Noteworthy here is to elucidate the approach used to deduce growth projections for the thermal management industry, especially considering its relationship to the overall high-tech electronics and semiconductor industry. The methodology was as follows:

• First, we tabulated annual revenue numbers for the overall high-technology industry, the semiconductor business, and for thermal management products for the past 15 years (1998-2002). 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 the thermal component segment revenues and the high-tech industry revenues.
• Next we assessed extraneous factors, such as:
  • 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 the end-use markets (signifying greater feature demands on the thermal management arena). The most popular example here was the pervading Internet phenomenon.
  • Geographical trend changes. For example, the rise of Asia-Pac as a major consumer of electronics.
• These key pointers 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 thermal management landscape.
• Finally, the end results were compared to the initial relationship matrix to ensure that the predicted thermal industry numbers are aligned with estimated projections that have been stated for the semiconductor and overall technology industry to a reasonable extent.

The stated approach can be best elaborated with a practical sample. To take an example, the revenues for semiconductor shipments over the last 15 years (starting 1988) showed an aggregate annual growth rate (AAGR%) of 8.4%. Correspondingly, the aggregate growth of thermal management revenues over the same period came in at 5.5%. The key parameter for our purposes, the coefficient of relation, between total thermal management and total semiconductor was, therefore analyzed as being equal to 0.66.

As a next step, BCC researched the semiconductor revenue forecasts as projected by the Semiconductor Industry Association (SIA). The association projects semiconductor growth at 10.8% over the 20-year period from 1988 till 2008. Using the same coefficient of relation that we deduced before, BCC estimated the 20-year AAGR for thermal management to be around 7.1%. The aggregate growth for 20 years resulted in the AAGR for 2003-2008, and annual growth rates from 2003 through 2008, based on annual variances in internal and extraneous-to-industry factors, such as demand, innovation, system consolidation, etc.

To validate the methodology and the numbers, BCC computed the same exercise by drawing a comparison between thermal management revenues and another closely related market, microprocessors. Typically, BCC saw a coefficient of relation between thermal management and microprocessors in regards to aggregate growth from 1988 of 2003. By plotting the same ratio across the forecast period, we validated our projected numbers. The ratio of aggregate growth for thermal management from 1988-2008 to that of microprocessors for the same timeframe came out at exactly the same number, i.e., at 0.91.

ABOUT THE AUTHOR

Ravi Krishnan has over eleven 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, Including BCC, and as a High-tech Strategy Consultant for PricewaterhouseCoopers Consulting. Currently, Krishnan is with the General Electric Corporation in a technology strategy capacity. He 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 & Science, India.