The fabless IC design industry during the first half of this year has not performed well due to lower-than-expected shipments of end products such as smartphones, PCs and notebooks. However, the market is hoping that the situation will improve with the coming peak season in this year’s second half. Topology Research Institute (TRI), a division of TrendForce, projects the global fabless IC design industry to reach US$91.3 billion in 2015 with an annual revenue increase of around 3.8%. This estimation excludes the revenue loss caused by Intel’s acquisition of Altera.
TrendForce expects the annual revenue of the Chinese fabless IC design industry to grow above 15% in 2015 as it benefits from state support, technological advances and domestic market expansion. Among the Chinese IC companies, Spreadtrum’s financial and technological strength has risen considerably after its takeover by Tsinghua Unigroup and investment by Intel. Huawei’s IC design subsidiary HiSilicon will also be rolling out highly competitive products, including Kirin 950 that is made on the 16nm process.
Government policy has played a vital role in the rapid growth of China’s fabless IC design industry. Besides the National Integration Circuitry Investment Fund established at the central government level, there are also locally based funds that are very active in building the industry. These IC development funds have made a series of acquisitions since the start of this year, such as the takeover of the major CIS chip maker OmniVision at the price around US$1.9 billion. The development of China semiconductor sector will accelerate with these acquisitions.
Rapid developments in Cloud and IoT will generate new demands for IC design
During this year’s first half, the mobile application processor market, which makes up over a quarter of the fabless IC design industry’s revenue, remains fiercely contested. Moreover, many fabless companies have launched 4G products for this market. “Though the price war in the application processor market is very intense, the enormous market permits companies to slash prices while continuing their technology migrations and developing more efficient platforms,” said Chen.
Among the competitors in the application processor market, MediaTek covered all the market segments with products such as MT6735, MT6753 and the advanced line of processors known as Helio. Qualcomm sets its sights on the mid-range and high-end markets with its Snapdragon processors (i.e. Snapdragon 415, 425, 618 and 620). Intel and Spreadtrum alternatively launched products for the low-end market. Samsung has built processors for its smartphone products. Its latest flagship smartphones Galaxy S6 and S6 Edge use Exynos 7420, an in-house chip manufactured on the 14nm process.
Furthermore, the first wave of wearable devices in the IoT era has hit the market in 2015. Basic chip components for IoT products such as MCUs, communication chipsets and sensors have seen rapid growth. The system-on-chip design that integrates different chip functions into one special chip component will become a trend in the development of communication chipsets. As a result, more combined chipsets will be available on the market in the future (i.e. chipsets that combine a Wi-Fi module with a MCU or Bluetooth module).
“With the Cloud and IoT taking off, new application products are expected to appear,” said Chen. “The contribution of these products to the growth of the fabless IC design industry will become more noticeable by 2016 or 2017.”