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Fabless firms play crucial role in overall IC market

Posted: 03 May 2013 ?? ?Print Version ?Bookmark and Share

Keywords:fabless? IDM? DRAM? NAND flash memory?

According to IC Insights, fabless company IC sales have increased more than three times the rate of the total IC market from 1999-2012. Unlike the relatively close annual market growth relationship between fabless IC suppliers and foundries, fabless IC company sales growth versus integrated device manufacturer (IDM) IC supplier growth has typically been very different. Except for 2010, fabless company IC sales growth has always outpaced IDM IC sales growth (or the decline was less severe). In 2010, for the first and only time on record, IDM IC sales growth (35 per cent) outpaced fabless IC company sales growth (29 per cent), detailed the market research firm.

Since very few fabless IC suppliers participate in the memory market, they did not receive a boost from the surging DRAM and NAND flash memory markets in 2010, which grew 75 per cent and 44 per cent, respectively. Another reason for the relatively poor showing by the fabless IC segment in 2010 was that some of the large fabless IC suppliers like MediaTek and ST-Ericsson registered growth that was less than half the total 2010 IC industry average.

However, the fabless IC suppliers once again grew faster than the total IC market in 2011 by registering a five per cent increase as compared to a one per cent decline in sales for the IDM companies. In 2012, the fabless IC suppliers grew by six per cent, 14 points better than the eight per cent decline registered by the IDMs and 10 points better than the four per cent decline shown by the total IC market.

Comparing fabless-company IC sales to IDM-company IC sales, the 1999-2012 worldwide IC market displayed a modest five per cent average annual growth rate. In contrast, total IC sales from the fabless IC companies during this same timeframe registered a very strong 16 per cent CAGR, more than three times the total IC market rate. As a result of this trend, fabless IC company sales increased more than seven times from 1999-2012 whereas the total IDM IC market was up less than 50 per cent over this same timeperiod. Moreover, the IDM companies' IC sales in 2012 were only seven per cent greater than they were 12 years earlier in 2000 and less than they were five years ago in 2007.

Given the big disparity in the 1999-2012 CAGRs between the fabless IC suppliers and the IDMs, it comes as little surprise that, except in 2010, fabless IC companies have been increasing their share of the total IC market. As shown, in 1999, fabless IC company sales accounted for just over seven per cent of the total IC market. However, in 2012, fabless IC suppliers represented 27.8 per cent of worldwide IC sales, a new record high, stated the market analytics company.

IC Insights forecasted that, in 2017, fabless IC companies will command at least one-third (33 per cent) of the total IC market, especially if more large companies such as IDT, LSI, Agere and AMD become fabless over the next five years. Over the long-term, IC Insights said fabless IC suppliers, and the IC foundries that serve them, will continue to become a stronger force in the total IC industry.

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