ASIC market takes a turn for the better in 2002

8 May 2002 News

After a gut-wrenching sales slide in 2001, the ASIC (Application Specific Integrated Circuit) market in 2002 is beginning to turn the corner, setting the stage for long-term growth, according to a leader in parts flow management, iSuppli Corporation.

Its report, titled 'Whither gate arrays, or will gate arrays wither?', reveals that worldwide ASIC sales fell by 28% in 2001. According to the group, the sales slide was prompted by the downturn in the electronics industry in general, and particularly, in communications equipment, which depressed demand for semi-custom chips, including gate-array and cell-based ASICs. It expects a return to growth for 2002, although that growth will be marginal at best, with sales rising a scant 5%.

"Compared to the market disaster that was 2001, almost any scenario in 2002 represents an improvement," said Jordan Selburn, principal analyst with iSuppli. "iSuppli expects the resumption of very modest growth in the coming months, driven by a second-half upturn in communications and continued strength in consumer applications."

Despite the return to growth, iSuppli says that ASIC suppliers face new challenges that could diminish their sales growth rates over the next few years. The greatest challenge may arise from the emerging fabless ASIC companies, which are expected to mount increasing competition to the established players, and increasing use of standard product solutions also may become an obstacle to growth for the entrenched ASIC vendors.

While ASICs overall will enjoy sales growth, revenues for gate arrays are projected to continue their decline. Gate array sales will decline from about 10% of total ASIC revenues, or $1,34 bn, in 2001, to less than four percent of ASIC revenues, or less than $1,2 bn, by 2006. This will occur despite efforts by some gate array vendors to provide easy migration paths from more costly FPGA devices.

www.isuppli.com

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