Core Silicon Semiconductor Market Set for Record Growth in 2010

Revenue increase to $103 billion is biggest rise since 2004.

Annual revenue for core silicon, the largest segment in the semiconductor industry, is set for unprecedented growth in 2010, wiping out the decline of the last year, according to market research firm iSuppli Corp.

At no time in the past decade has the core silicon industry enjoyed anything like the growth forecasted for 2010, with global revenue expected to hit $102.7 billion, up an outsized 21.2 percent from $84.8 billion in 2009. Revenue will continue to increase until the end of the forecast period in 2014, when the industry will be worth $127.2 billion, but growth rates will not exceed 8 percent after 2010.

Core silicon refers to the semiconductors that implement specific, individual functionality in an electronic system—for instance, the integrated circuit that makes a DVD player what it is and not some other type of system, such as a washing machine.

Growth projected this year for core silicon eclipses the previous high of 17.9 percent in 2004, and it also more than erases the contraction in 2009, iSuppli’s semiconductor market research shows. Moreover, revenue this year will exceed the $100 billion mark—previously thought to be unattainable until 2013 or 2014.

The strength of the industry was apparent right from the start of the year. While the first quarter of each year is usually the slowest period for the core silicon market, the first quarter of 2010 proved to be an exception to the usual semiconductor trend. And even though the first quarter grew by only the thinnest of margins—at 0.1 percent—when compared to the fourth quarter of 2009, the expansion, in bucking the historical pattern, was a telling indicator of the market’s surprising vigor.

PLD, ASSP and ASIC: Weighing Core Silicon’s Three Major Segments
Among the three major core silicon segments, Programmable Logic devices (PLD) will grow the fastest, finishing the year at $4.7 billion, up 43.0 percent from 2009 levels. Wired communications and industrial market applications will drive PLD sales, iSuppli’s semiconductor forecasts indicate.

Manufactured for no specific customer or application, and with users able to directly configure the generic part of the device for applications, PLDs are less vulnerable to the ups and downs of any single semiconductor market. By the same token, however, PLDs are unable to cash in on the tidal wave of growth that accompanies a blockbuster, next-big-thing type of application.

Unlike PLDs, Application-Specific Standard Products (ASSP) and Application-Specific Integrated Circuits (ASICs)—the two other core silicon segments—are designed for specific applications in mind, as their names suggest. ASICs are sold to individual customers, however, while ASSPs are intended for sale to multiple customers.

ASSPs will not share the booming growth of PLDs. Just the same, projected ASSP revenue for 2010, at $79.7 billion, is still 23.1 percent greater than 2009 levels and substantially higher than any year in history. ASSPs will be powered in the market by chips going to desktop and notebook PCs, mobile handsets, flat-panel TVs and set-top boxes.

ASICs will continue to lag behind the other devices, as they have done so for most of the past decade. Although the devices will grow 9.8 percent to $17.0 billion in 2010, anything less than a 20 percent increase must be considered sub-par growth, according to iSuppli’s semiconductor industry analysis. ASICs will be the only core silicon segment not to stage a full recovery from the economic slump, and an upturn is not expected until 2013 or 2014