More stable prices and continued strong demand from automotive, Internet of Things and industrial segments will drive MCU sales growth for the next five years
Semiconductor purchasers can expect continued downward price pressure on microcontroller prices for the rest of the year, but price declines won’t be as steep as in 2017.
For instance, last year the average price of a 32-bit MCU declined 14.1 per cent to $.71. In 2018, the average price will decline about 2.9 per cent to $.69, according to Semico Research. Prices for MCUs have been falling steadily and sharply since 2011 when the average price for a 32-bit device was $2.65, according to the researcher.
“If you look at 32-bit microcontrollers, that market grew 19.5 per cent revenue, but average selling prices declined 14.1 per cent, said Jim Feldhan, president of Semico Research.
The good news for MCU manufacturers is price erosion will ease after 2018, but bounce up and down through 2022. The average price for a 32-bit MCU will increase to $.70 in 2019, decline to $0.67 in 2020 and increase to $0.71 in 2022, Semico said.
Despite price erosion in 2017, the MCU market, including 4-, 8-, 16-, 32- and 64-bit devices, grew 12.2 per cent to $16.3 billion in 2017. In 2018, sales will grow 5.1 per cent to $17.2 billion, said Semico. Mostly stable prices and strong demand from various customer segments, including automotive, Internet of Things and industrial, will help drive sales growth through 2022 when MCU revenue will total $19.9 billion, according to the researcher.
“Less torrid” growth
Ganesh Moorthy, chief operating officer for microcontroller manufacturer Microchip Technology, based in Phoenix, agrees that sales growth will be slower in 2018 than 2017.
“We believe that growth will be at a less torrid pace than what we saw in 2017,” said Moorthy. However, business “will continue to have many growth drivers. The industrial, automotive and IoT markets are likely to be the stronger end markets in 2018, and we are extremely well positioned to capitalize on the growth opportunities from these and other markets,” he said. Microchip derives about 62 per cent of its total revenue from microcontroller sales.
Feldhan said one reason for slower growth in 2018 is there will be less demand for MCUs from the smart card market. “Smart card MCUs comprised over 50 per cent of the total MCU units in 2017. Last year there was a boom in smart cards,” which helped drive MCU sales, said Feldhan. However, smartcard demand is cyclical. Last year there was a big increase in demand by smartcard manufacturers and inventories grew.
This year smartcard manufacturers are “consuming that inventory but they’re not really buying” more MCUs, so there will be less demand for MCUs, he said.
While demand from smart cards may ease in 2018, there will be strong MCU demand growth from automotive and industrial segments, according to Feldhan. He noted that automotive has always been a big driver for microcontrollers. Automotive systems use 8-bit, 16-bit and 32-bit MCUs. “More than 30 per cent of MCUs go to automotive. It’s a huge part of the market,” said Feldhan.
Automotive will be an even bigger driver for MCUs as more cars are equipped with sophisticated electronics systems such as advanced driver assistance systems (ADAS).
Feldhan said hybrids and electric vehicles (EVs) are also helping drive MCU demand. Hybrids and some traditional internal combustion engine vehicles are using start/stop systems which require MCUs, said Feldhan. A start-stop system automatically shuts down and restarts a vehicle’s engine to reduce fuel consumption and car emissions. Such systems will be designed into more cars in the future and are controlled by microcontrollers, said Feldhan.
IoT to drive MCUs
While automotive has driven MCU demand, IoT will help drive future demand for MCUs. We continue to see IoT expand in wearables, household appliances and things like that,” said Feldhan. “Industrial IoT is having strong design start growth,” said Feldhan.
Kris Ardis, executive director Micros, security and software business unit for Maxim Integrated, said Maxim is getting “a lot of design activity from wearable and IoT type applications including industrial IoT to some extent, especially anything that is battery powered, low-power and wireless.”
Maxim positions its microcontrollers with power regulation solutions and “we have some battery charging battery monitoring solutions. We also have a a wide range of security solutions, which is becoming increasingly important,” said Ardis. Security is not just about the ability to decrypt data. It also involves the ability to ensure “your code can only be updated from a trusted source. We see that more and more,” according to Ardis.
“We get a lot of design activity from wearable and IoT type applications including industrial IoT to some extent especially anything that is battery powered, low-power and wireless,” said Ardis.
Demand grows for 32-bit MCUs
While the overall microcontroller (MCU) market is expected to grow about 22 percent over the next five years, 32-bit MCUs have the strongest growth rate and highest market share.
Thirty-two MCUs account for 40.4 per cent of MCU unit shipments, and 59 per cent of MCU revenue, according to Semico Research. Sixteen-bit microcontrollers represent about 26 per cent of MCU shipments and 24 per cent of revenue, while 8-bit accounts for about 31 per cent of unit shipments and 17 per cent of revenue, the researcher said.
MCU manufacturers say they see strong demand for 32-bit MCUs. Kris Ardis, executive director Micros, security and software business unit for Maxim Integrated, says his company makes 16-bit, 32-bit nd some 8-bit MCUs. “But we see more interest in 32-bit at this point. The 800-pound gorilla in the 32-bit space is ARM. From an engineering standpoint ARM-based MCUs are easy to work with because there are tools and infrastructure,” said Ardis.
“Thirty-two-bit microcontrollers have become dominate because they offer higher performance and the cost for a 32-bit core has come down,” said Jim Feldhan, president of Semico Research. In addition, IP companies like ARM offer a “variety of performance levels for their 32-bit cores, from a very low end 32-bit M0 for IoT to the high-performance Cortex line,” he said.
Tom Hackenberg, principal analyst, embedded processors, technology, media and telecom for researcher IHS Markit, said 32-bit microcontrollers are consistently growing market share and it is “very possible they could comprise half of all MCUs shipped in 2018. “
He said 32-bit MCUs are used when more processing performance or speed is needed to handle faster real-time applications such as graphical displays, complex connectivity stacks, complex motor controls, large amounts of input data, and encryption on top of running an application.
Hackenberg noted over the years the difference in performance among MCUs has expanded. At the same time, the “price delta between a high-end 8-bit or 16-bit MCU are very close to an entry level 32-bit MCU that may have as many if not more features,” he said.
In addition, code compatibility between MCUs and larger system-on-chip applications processors can lead to demand for 32-bit MCUs, according to Hackenberg. “Whether it’s to make a single software solution more easily portable between an MCU or a system on chip (SoC) or compatible communication between core processor and coprocessor, having the same 32-bit architecture can speed platform development or reduce bottlenecks,” he said.
Hackenberg said “ecosystem support for 32-bit applications is vastly larger for 32-bit processing versus smaller bus architectures.” Developers can employ a variety of embedded operating system features, find many more libraries of support for common functions such as connectivity stacks and security standards, sensor data acquisition and control, display and human machine interfaces and more, he said.
While 32-bit market share is growing, it does not mean that 8-bit or 16-bit MCUs will disappear or are declining.
“The only declining category has been 4-bit which has become highly commoditized,” said Hackenberg. New systems that require ultra-low cost, low-power 8-bit and 16-bit solutions continue to be designed.
“Not every application needs high performance,” he said. The main purpose for MCUs has always been for embedded simple applications. “While they may not be capturing the highest growth, these 8-bit and 16-bit solutions are still highly competitive when energy-efficiency, price and area are still the primary considerations,” said Hackenberg.