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Price erosion afflicts MCU market

Posted: 21 Aug 2015 ?? ?Print Version ?Bookmark and Share

Keywords:IC Insights? MCU? IoT?

According to the latest data from IC Insights, microcontroller (MCU) shipments are increasingly rising as electronics companies unleash new products for the Internet of Things (IoT). However, unprecedented price erosion means MCU vendors are seeing only a slight increase in sales, noted the market research firm.

According to the latest update to IC Insights' McClean report, MCU shipments are on pace to increase by a whopping $25.4 billion in 2015, thanks to a huge upsurge in units for smartcards and 32bit applications, many of which are aimed at the IoT. But total revenue from MCUs is expected to grow by just four per cent to a record $16.6 billion, according to the report.

Rob Lineback, a senior market research analyst at IC Insights, said in an email exchange that MCU average selling prices (ASPs) are being driven down the most in the 32bit segment, as suppliers battle each other and attempt to hit low price points needed for emerging IoT applications.

"The pressure is on suppliers to dramatically lower ASPs on 32bit for IoT applications that need $3 to $4 total semiconductor cost for IoT connectivity functions and handling web-attached sensors," Lineback said. "Wearables, wireless sensor nodes and other embedded IoT functions are pushing down ASPs."

MCU market history and forecast

IC Insights expects MCU ASPs to continue to fall. The firm projects ASPs to decline by 21 per cent this year to 65 cents per unit. The firm also projects that MCU ASPs will further decline by about 14 per cent next year. MCU ASPs declined by about 12 per cent last year to 83 cents per unit, according to the firm.

Despite the projection of further ASP erosion, IC Insights expects overall MCU revenue to grow by seven per cent next year to $17.7 billion, with unit shipments forecast to rise 25 per cent to 31.6 billion worldwide.

MCU unit shipments began accelerating in 2014, driven largely by shipments of low-cost MCUs used in smartcards, IC Insights said. After growing by 26 per cent in 2014, smartcard MCU shipments are now expected to grow by another 41 per cent this year, reaching 12.9 billion, according to IC Insights.

The mid-year update to IC Insights' McClean Report raises the projection for smartcard MCU shipments through 2019 due to anticipated adoption of secure "chip-card" technology by U.S. credit card companies, banks, retailers, government agencies and others, IC Insights said. The firm stated that massive data breaches in the U.S. in credit card transactions at retail stores and growing concerns about identity theft have resulted a major move to smartcards for higher levels of security.

IC Insights also noted that total MCU shipments are also accelerating because of strong demand for 32bit designs and other single-chip solutions that can serve the explosion of sensors in wireless systems and connection to the IoT. The firm forecasts that IoT-related MCU sales will grow 16 per cent in 2015 to $405 million with unit shipments climbing 40 per cent to 431 million.

- Dylan McGrath
??EE Times

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