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Texas Instruments' 12-inch factory plan delays Analog ICs are weaker?

Release on : Jul 31, 2019

Recently, it was reported that Texas Instruments' planned 12-inch wafer fab, which was originally planned to be built in 2019 in Richardson, Texas, will be postponed due to poor market conditions. This move has drawn the attention of the industry. After the global semiconductor market was affected by the fall in memory prices into the "winter", analog ICs have long been considered a market stabilizer. Now TI is also delaying the construction of the plant, does it mean that the future market trend of analog IC will also be bearish?

 

Market downside expectations:

 

According to the form of processing signals, integrated circuits can be divided into two major categories: analog ICs and digital ICs. Among them, analog ICs are generally used to process continuous signals such as sound, light, electricity, electromagnetic waves, speed and temperature, or to perform power management. Since electroacoustic signals are ubiquitous, electronic and electrical equipment does not need to manage battery power, so analog ICs are also widely used in various types of electronic and electrical equipment. In addition, "simulated ICs are widely used, products are more dispersed, and the size of a single market is relatively small." Shi Ying, manager of automotive electronics technology in Texas Instruments, introduced another feature of analog ICs to reporters in an interview.

 

However, due to such industry characteristics, analog ICs are less affected by fluctuations in a single downstream market, and the overall operation of the industry is relatively stable. Analog ICs are considered to be a relatively stable haven in the context of various analysts having a bearish view of the semiconductor market throughout the year. According to a report released by the research institute, it is estimated that in the next five years, the revenue of analog circuits will increase from 54.5 billion US dollars in 2017 to 74.8 billion US dollars in 2022, with an average annual growth rate of 6.6%.

 

However, Texas Instruments delayed the construction of the plant but passed a new signal. Industry analyst Anand Srinivasan said that since the mid-2018, sales of analog ICs have been underperforming due to declining vehicle sales, lower industrial growth rates and lower demand in the Chinese market. He said that the delayed construction plan may indicate that Texas Instruments believes that the semiconductor down cycle will continue, exceeding expectations.

 

Long-term optimistic about AI and automotive applications

 

So, from the long-term trend, how will the analog IC market develop? Jerry Fan, president of Analog Devices China, is optimistic about the analog IC market under the tide of artificial intelligence. Jerry Fan said that many new technologies based on artificial intelligence, including software algorithms, big data, cloud computing, smart devices, etc., can be combined to drive faster transformation of many market applications. For analog circuits, there are also a lot of market opportunities.

 

With the advent of the era of big data, the amount of data generated every day is increasing, and it is generated and accumulated in an exponential manner. Currently, the amount of data we generate every day reaches 2.5 Quintillion Bytes (1018 bytes). Data collection is closely related to simulation technology. Around the perception, acquisition and transmission of data, the entire digital world and the physical world are ultimately connected. From the analog world to the digital world, or from the real world to the virtual world of the Internet, all these aspects use analog IC technology, including measuring, interpreting, and interconnecting the entire signal chain to ultimately obtain effective AI processing. , calculated data.

 

Automotive electronics is also one of the most optimistic markets. Zhang Lei, general manager of Texas Instruments' automotive business unit in China, said that the trend of electricization, networking and intelligence of automobiles is becoming more and more obvious. The role of in-vehicle analog chips in different systems in vehicles is becoming more and more obvious. The current automotive electronic systems can be broadly classified into five aspects, including advanced driver assistance systems, passive safety systems, body electronics and lighting systems, infotainment systems and cluster systems, and hybrid/electric management systems. Analog chips will be used in each system. McKinsey predicts that analog IC products will account for about 29% of automotive semiconductors in 2020, with a market size of approximately $11.43 billion. According to the World Semiconductor Trade Statistics Association (WSTS), in 2018, the automotive application simulation market grew by 15%, the fastest growing analog IC.

 

Power management, automotive applications, communications and consumer applications remain the dominant application markets for analog ICs, and parties are still optimistic about the long-term market development of analog ICs.

 

China's analog IC needs long-term accumulation:

 

China has always been the most important market for analog ICs. The demand for analog ICs is huge. In particular, China has vigorously promoted the development of new energy vehicles in recent years, and the number of related companies has gradually increased, further driving the development of the domestic automotive semiconductor industry. However, in general, in the field of analog ICs, the competitiveness of Chinese companies is still insufficient. The vast market is mostly occupied by internationally renowned analog IC manufacturers, such as Texas Instruments, STMicroelectronics, Infineon, NXP, and ADI. Chinese analog IC manufacturers started late and have a big gap with international giants.

 

Wei Shaojun, chairman of the IC Design Association of China Semiconductor Industry Association, pointed out in the report released by ICCAD last year that the sales of analog ICs in China in 2018 was only 14.161 billion yuan. Compared with the global analog IC market of more than 50 billion US dollars, the gap is very different. . In the field of digital ICs, China has also entered the top ten global IC design companies such as Huawei Hisilicon and Ziguang Zhanrui, but there is no analog IC.

 

In this regard, some experts believe that there is an essential difference between analog IC and digital IC. The simulation relies on experience, and the number depends on the quick response. We often see that in the digital field, less than ten years is the leader, or five years is the pillar; but in the field of simulation, the decade is likely to be just beginning. Chinese analog IC manufacturers need to take some time to catch up, and the entire system takes a long time to build. Choosing the products, markets and technologies that are suitable for the scale of the company, and using time and experience to perfect the analog IC solutions will be the key to the rise of local analog IC manufacturers; it is necessary to rely on innovation to win and form their own unique technology accumulation.

 

The GF Securities report also pointed out that it is necessary to promote integrated mergers and acquisitions in the domestic analog IC industry. Although there are great differences in analog IC products, the integration of M&A can improve the company's product cost and reliability in large-scale production, thus gradually narrowing the gap with analog IC giants such as Europe and the United States. Chinese analog IC manufacturers need to cooperate with each other to form a whole, rather than occupying each other as the king.