Market Trends of Analog Integrated Circuit (IC) Industry
The Cell Phone Sub-segment is Expected to Hold a Major Share
- In the dynamic world of technology, application-specific analog ICs have become essential for cellular phones and multifunctional handheld devices, where voice communication remains a primary function. These devices, developed for extensive cellular networks like 2G, 3G, and Wimax, utilize transmission formats such as CDMA, GSM, and their enhanced versions.
- Rising smartphone adoption, particularly in developing countries, is driven by population growth and urbanization. For instance, by the end of 2023, GSMA reported that 5.6 billion people, or 69% of the global population, had subscribed to mobile benefits, marking a proliferation of 1.6 billion since 2015.
- The emergence of 5G technology has led to the adoption of 5G smartphones. According to Ericsson Mobility Report, 5 billion 5G mobile subscriptions are expected to be recorded by the end of 2028. These 5G networks are anticipated to cover 85% of the population and operate about 70% of mobile traffic.
- All these factors can be attributed to the continuously increasing share of the cell phone sub-segment of the market as there is an increasing need for advanced features in smartphones, such as great camera quality, AR, and VR, all of which are made possible by analog ICs. The importance of analog ICs lies in their ability to process analog signals with high precision and accuracy. This makes them critical for signal processing, power management, and data conversion applications. Additionally, combining multiple analog circuits on a single chip permits for smaller, more efficient, and cost-effective devices.
- GSMA projects that North America will see smartphone subscribers rise to 328 million by 2025, with mobile penetration at 86% and internet users at 80%. According to Ericsson Mobility Report, Middle East and Africa (MEA) is expected to have 60 million 5G subscribers by 2024, accounting for roughly 3% of total mobile subscriptions. GSMA estimates that there will be about 50 million 5G connections in MENA by 2025, with 20 million in the Arab states alone. These figures highlight the rapid adoption of cell phones, propelling the sub-segment forward.
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China is Expected to be the Fastest-growing Market in Asia-Pacific
- China is set to solidify its position as a critical player in the analog IC market, driven by major semiconductor manufacturers, swift industrialization, and a sprawling consumer electronics landscape. The region is celebrated for its high-volume semiconductor production and the widespread adoption of analog ICs across various industries, including automotive, consumer electronics, and telecommunications. These dynamics are poised to propel the growth of the analog IC market in China, offering enticing prospects for market players.
- China's burgeoning IT and data center industry directly responds to the ever-increasing annual data generation. This growth is further underscored by China's rising stature in the global tech arena, primarily fueled by its vibrant data center ecosystem. China's internet data center industry is among the world's most technologically advanced, with many organizations leveraging digital platforms.
- With the increase in investments in data centers and internet penetration, the demand for sensor-enabled devices is also rising. These sensors, which interact with the physical space, necessitate analog processing to convert analog signals to digital ones. Merging these functionalities with digital technology yields a solution that is not only cost-effective and low-power but also reliable. Consequently, these elements are anticipated to bolster the market's growth in the coming years.
- The expanding 5G networking capabilities are set to drive significant demand for analog IC modules. Having made substantial strides in the 5G domain, China boasts a vast network of 5G base stations. Data from MIIT indicates that by the close of February 2024, China had established over 3.5 million 5G base stations. Owing to its hefty infrastructure investments and ambitious rollout strategies, the nation achieved widespread 5G coverage. Projections suggest that by the end of 2024, the number of 5G base stations in China might exceed six million.
- According to a report from South China Morning Post, China's smartphone industry showed signs of rejuvenation in 2023, witnessing a 6.5% uptick in shipments from the prior year. This rebound came as the world's largest handset market grappled with a tentative economic recovery and heightened domestic competition, especially with Huawei Technologies making notable strides in the 5G domain.
- According to ITA, China continues to dominate the global automotive landscape, leading in annual sales and manufacturing output. Projections indicate domestic vehicle production could reach 35 million by 2025. Furthermore, bolstered by a robust manufacturing base, China's automotive industry amplified its global presence, with exports soaring 81% year-on-year, totaling 1.76 million vehicles in the initial five months of 2023, as reported by the China Association of Automobile Manufacturers (CAAM). Given this development prowess, the demand for analog ICs in modern Chinese industries is anticipated to be substantial.
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