The analog chip industry has always been known for its stability. When the performance of many digital chip companies has fallen sharply due to sluggish consumer market demand, analog chip manufacturers can still remain relatively stable. However, stability does not mean "sticking to the rules", with the advent of emerging technologies and applications such as artificial intelligence, automotive electronics, and wide bandgap semiconductors, analog chip manufacturers also need to "keep pace with the times" and actively embrace the new direction of the industry.
Performance remained solid
Affected by the global economic environment, especially the sluggish demand in the consumer terminal market, the semiconductor industry has cooled sharply, and the high inventory level and continued weak consumer demand have made the chip industry that has just experienced the "core shortage tide" quickly turn into a downward cycle. In this depression, analog chip manufacturers are the few "bright colors" that remain.
Texas Instruments has long been the leader in analog chips, with revenue up 13% to $5.24 billion in the third quarter of 2022, six consecutive quarters of double-digit growth, and fourth-quarter revenue is expected to be $4.4 billion to $4.8 billion. ADI reported revenue of $3.248 billion in the fourth quarter of fiscal 2022, up 39% year-over-year, and revenue for the first quarter of fiscal 2023 of $3.15 billion, above analysts' expectations. Skyworks' revenue for the third quarter of 2022 was $1.407 billion, up 7.33% year-over-year and 14.15% sequentially.
The "stability" of the analog factory is mainly due to its extensive product line, such as Texas Instruments' rich product line of operational amplifiers, comparators, analog switches, analog-to-digital converters, etc., more than 80,000 products, which are used in a wide range of markets. In 2022, in the case of a "cold wave" in the consumer electronics market, new energy vehicles will become the fulcrum of the market, ensuring the stable performance of simulation manufacturers. However, experts also pointed out that this makes analog chip manufacturers need to constantly pay attention to the demand characteristics of emerging markets, and the corresponding products can be converted between different businesses, "the west is not bright, the east is bright", which is the key to ensuring the stable performance of analog chip manufacturers.
A new direction for the edge AI market
In recent years, artificial intelligence has continued to develop deeply, and more and more market segments and corresponding products have been developed. Edge artificial intelligence has begun to gain attention as a subdivision of cloud computing and Internet of Things. According to Yi Xin, Senior Applications Engineer at ADI, edge AI refers to AI computing implemented on edge devices. Historically, most cutting-edge AI processes were performed in the cloud because they required a lot of computing power. But as the rate of data growth makes the need for local data computing and local data storage more urgent, a large number of data operations are gradually moving locally, making the case for widespread adoption of AI at the edge.
Compared with digital chip companies focusing on cloud AI processing, analog chip manufacturers mostly focus on the edge side. Edge AI has become the focus of the layout of analog chip manufacturers. Jerry Fan, president of ADI China, previously pointed out in an interview with reporters that a very important prerequisite for artificial intelligence is data. Computing power, algorithm software and big data are the three elements of artificial intelligence development, big data is the foundation, and all algorithms and computing power are based on data. It should be pointed out that the collection and real-time processing of data are closely related to simulation technology.
From the perspective of product layout, ADI has designed a special architecture for the next-generation microcontroller MAX78000, which uses two microcontroller cores (ARM Cortex M4F and RISC-V) and a convolutional neural network (CNN) accelerator. This architecture is highly optimized for the edge, with the microcontroller core taking care of the loading and launching of data, and AI inference being handled exclusively by convolutional neural network accelerators. In this way, AI inference can be completed with the help of a convolutional neural network accelerator integrated inside the chip, which does not need to be uploaded through the Internet, reducing power consumption, which is very suitable for edge AI applications.
Texas Instruments also attaches great importance to edge artificial intelligence. In 2022, Texas Instruments and British startup Plumerai collaborated in the field of embedded AI by porting human detection neural network algorithms to microcontrollers and sensors.
NXP is working on cloud-network-edge-end converged computing for automotive intelligence, and its new AI-powered electric vehicle cloud-connected battery management system can be connected to the cloud to form a digital twin of battery management. Andreas Schlapka, director and division manager of battery management systems at NXP semiconductors, said that "cloud-network-edge-device" converged computing will be the main direction in the development of automotive intelligence and autonomous driving technology.
Actively layout automotive chips
The popularity of new energy vehicles has made automotive electronics one of the key application markets for analog chip manufacturers. Oppenheimer statistics show that analog chips account for 29% of automotive chips. IDC data also pointed out that the compound annual growth rate of the automotive analog chip market is expected to reach 13.2% from 2021 to 2025.
The 2002 financial reports of several analog chip manufacturers also show this. In ADI's financial report, although automotive chips do not account for the highest proportion of revenue, sales increased by nearly 50% year-on-year to $672 million, and the proportion of revenue directly increased by 2%; NXP's automotive business also had the highest revenue growth compared to industrial and IoT, mobile devices, communications infrastructure and other businesses, up 24% year-over-year;
It is worth noting that Skyworks, which has always focused on the RF front-end of the communications market, has also actively deployed its automotive chip business in recent years. In 2021, Skyworks announced the acquisition of Silicon Labs' infrastructure and automotive businesses for $2.75 billion. Skyworks' acquisition is also known for its "stability", and the automotive business of Silicon Labs is the largest acquisition in the company's history, greatly promoting Skyworks' involvement in automotive electronics, including electric and hybrid vehicles.
In recent years, although the construction performance of 5G is good for RF front-end manufacturers such as Skyworks, the marginal effect brought by 5G is decreasing, and the tide of smartphone replacement from 4G to 5G is crossing the peak period. Skyworks is working to boost revenue from its non-mobile business, and automotive is the focus of risk diversification. Skyworks said that by 2024, 73% of new cars sold worldwide will have cellular connectivity and communication capabilities, and about half of the RF modules will have automotive applications.
Wide bandgap semiconductors are becoming a trend
The application of wide bandgap semiconductors in new power systems, high-speed rail, new energy vehicles, 5G communications, semiconductor lighting, industrial motors and consumer electronics is gradually expanding, and more and more manufacturers are attracting investment. Among analog chip manufacturers, STMicroelectronics, Infineon, and ON Semiconductor have all entered a deep involvement in wide bandgap semiconductors, of which ON Semiconductor is the most radical.
In August 2022, ON Semiconductor's silicon carbide plant in Hudson, New Hampshire, USA, was completed and put into operation; In September, the expanded silicon carbide plant in Roznov, Czech Republic, was inaugurated, and production capacity will be gradually increased in the next two years. ON Semiconductor also plans to invest $1 billion in Bucheon, Gyeonggi-do, South Korea, to build a new research center and wafer fab that is expected to start production in 2025. ON Semiconductor President and CEO Hassane El-Khoury said that ON Semiconductor's biggest growth in 2023 will come from the growth of silicon carbide in the electric vehicle market.
It is worth noting that NXP is also actively developing the wide bandgap semiconductor market, and the latest S32K39 series MCUs for electric vehicle motor control support silicon carbide and gallium nitride. Brain Carlson, global marketing director of vehicle control and networking solutions at NXP semiconductors, said: "NXP has done a lot of experiments related to gallium nitride applications in its Arizona facility and has invested heavily in gallium nitride products. As for silicon carbide, although it does not have its own products, NXP has extensive cooperation with Wolfspeed and Hitachi and can support them. ”
Analog chips require a high degree of combination of manufacturing technology, device technology and design technology, wide bandgap semiconductors also need to integrate materials and back-end packaging technology, analog chip manufacturers into the field of wide bandgap semiconductors have their own unique advantages.
Analog chip prices or unilateral downside
Analog chips regain their "upward trend"
Author丨Chen Bingxin
Editor丨Zhu Lingzhen
American editor丨Maria
Executive producer丨Lian Xiaodong