IC Growth Begins Recovery, Report Says

The road to recovery has been rocky for linear ICs, but it's beginning to smooth out.

Last year secured a return to growth for linear ICs with a revenue increase of 1.3 percent, despite a 34 percent unit growth, according to an iSuppli Corp. report released this week.

"The

best thing that can be said about 2002 is that it has been a transitional year – a year in which the downturn of 2001 ended, but in which the anticipated 'upturn' did not appear (at least not in the expected manner)," said Gary Grandbois, an iSuppli principal analyst, in a statement. "Very strong unit growth was accompanied by very strong ASP erosion. Despite the downturn, standard linear ICs have actually done very well."

That slight increase will push three consecutive years of an estimated 11 percent to 12 percent growth through 2005 for double-digit growth through 2006 at a compound annual growth rate (CAGR) of 8.3 percent, as the equipment market revises.

"The end-equipment market growth came to a halt in 2001, with a revenue decline of 11 percent," Grandbois noted. "Rather than recover, the equipment market sank further with a 3.4 percent decline in 2002. Only the consumer and automotive electronics markets showed positive growth. But the 7 percent rebound forecast for 2003 will set the stage for double-digit standard linear IC growth. Beyond 2003, the equipment markets will settle into a more typical 5 percent growth trend."

Of the IC types reported on -- which include amplifiers, voltage regulators, data converters and interface ICs -- voltage regulators led with a 13 percent share of 2002's $28 billion market. Voltage regulators showed a 22 percent growth in the year, keeping the combined products out of revenue decline. This groups individual five-year CAGR is also the highest at 15.5 percent.

Amplifier IC revenues decreased by 8 percent last year, even though units grew by 20 percent, giving it a 17 percent share of the market. But positive growth in 2003 will help the amplifier segment reach a CAGR of 4.7 percent for the 2001 to 2006 period.

Data converters fell 14 percent, matching its 2001 fall, as communications and industrial markets continue to decline. The group captured 7 percent of the market, however, and is expected to have a CAGR of 4.4 percent.

Interface ICs had mixed results, as power management segments supported the decline in non-power management products. Overall, its revenue slipped more than 5 percent, but iSuppli estimated that interface will see a 12 percent growth rate in 2003 with an 8.2 CAGR over the period.

"Beyond 2003, the standard linear IC revenue growth will stay in double digits," Grandbois said. "Although below historic trends, this growth was substantially crippled by the two-year revenue decline. The large 56 percent revenue growth of the standard linear IC and end-equipment markets both struggle out of the chasm of 2001."