August 24, 2007 – After nearly a year and a half of price competition that undercut ASPs, the microprocessor market should cover “modestly” in 2007 as PC demand now picks up, according to a report from IC Insights.

The firm pegs MPU sales at $34.5 billion in 2007, about 4% growth vs. 2006, when the dollar volume fell about 5% (see figure 1). In 2008 — which the firm has been projecting as the next cyclical peak growth year — microprocessor sales are projected to surge 17% to $40.3 billion (see figure 2), with new record sales for microcontrollers (>$14.0B, +13%) and 21% growth in MCU unit volume shipments, coupled with a 13% rise in MCU sales to $15.8B.

Late to the recovery party is the digital signal processor (DSP) segment, which “remain[s] bogged down in another difficult year,” the firm notes, with 5% lower sales vs. 2006 (to $7.9B) due to inventory corrections in the cell phone equipment markets, and “relatively weak” unit volume growth cut in half (9%) from the average annual rate over the past six years. Still, next year being an anticipated peak year for semis, DSPs too should capture some upswing, posting a 13% increase in sales to $8.9 billion, the firm notes.

Combined, the microcomponents sector — microprocessors, microcontrollers, and DSPs — makes up about 25% of worldwide IC sales, and is seen growing at a 9% CAGR from 2006-2011 to combined sales of $84.5B, vs. $56.4B in 2007.