Research information that will be posted in the March Update to the 20th anniversary 2017 edition of IC Insights’ McClean Report shows that fabless IC suppliers represented 30% of the world’s IC sales in 2016 (up from only 18% ten years earlier in 2006).  As the name implies, fabless IC companies do not have an IC fabrication facility of their own.

Figure 1 depicts the 2016 fabless company share of IC sales by company headquarters location.  As shown, at 53%, the U.S. companies held the dominant share of fabless IC sales last year, although this share was down from 69% in 2010 (due in part to the acquisition of U.S.-based Broadcom by Singapore-based Avago).  Although Avago, now called Broadcom Limited after its merger with fabless IC supplier Broadcom became official on February 1, 2016, has fabrication facilities that produce III-V discrete devices, it does not possess its own IC fabrication facilities and is considered by IC Insights to be a fabless IC supplier.

Figure 1

Figure 2 shows that in 2009, there was only one Chinese company in the top-50 fabless IC supplier ranking as compared to 11 in 2016.  Moreover, since 2010, the largest fabless IC marketshare increase has come from the Chinese suppliers, which held a 10% share last year as compared to only 5% in 2010. However, when excluding the internal transfers of HiSilicon (over 90% of its sales go to its parent company Huawei), ZTE, and Datang, the Chinese share of the fabless market drops to about 6%.

Figure 2

European companies held only 1% of the fabless IC company marketshare in 2016 as compared to 4% in 2010.  The reason for this loss of share was the acquisition of U.K.-based CSR, the second largest European fabless IC supplier, by U.S.-based Qualcomm in 1Q15 and the purchase of Germany-based Lantiq, the third largest European fabless IC supplier, by U.S.-based Intel in 2Q15.  These acquisitions left U.K.-based Dialog ($1.2 billion in sales in 2016) as the only Europe-headquartered fabless IC supplier in the fabless top 50-company ranking last year (Norway-based Nordic Semiconductor just missed making the top 50 ranking with 2016 sales of $198 million).

There is also only one major fabless Japanese firm—Megachips, which saw its sales increase by 20% in 2016 (8% using a constant 2015 exchange rate), one major South Korean fabless IC company (Silicon Works), and one major Singapore-based (Broadcom Ltd.) fabless supplier.

Annual total semiconductor unit shipments (integrated circuits and opto-sensor-discrete, or O-S-D, devices) are forecast to continue their upward march in the next five years and are now expected to top one trillion units for the first time in 2018, according to data presented in IC Insights’ soon to be released March Update to the 2017 edition of The McClean Report—A Complete Analysis and Forecast of the Integrated Circuit Industry, and the 2017 O-S-D Report—A Market Analysis and Forecast for the Optoelectronics, Sensors/Actuators, and Discretes.

Semiconductor shipments totaled 868.8 billion in 2016 and are forecast to top one trillion units in 2018. Figure 1 shows that semiconductor unit shipments are forecast to climb to 1,002.6 billion devices in 2018 from 32.6 billion in 1978, which amounts to average annual growth of 8.9% over the 40 year period and demonstrates how dependent on semiconductors the world has become.

Figure 1

The largest annual increase in semiconductor unit growth during the timespan shown was 34% in 1984, and the biggest decline was 19% in 2001 following the dot-com bust.  The global financial meltdown and ensuing recession caused semiconductor shipments to fall in both 2008 and 2009; the only time that the industry experienced consecutive years in which unit shipments declined. Semiconductor unit growth then surged 25% in 2010, the second-highest growth rate across the time span.

Despite advances in integrated circuit technology and the blending of functions to reduce chip count within systems, the percentage split of IC and O-S-D shipments within total semiconductor units remains heavily weighted toward O-S-D devices.  In 2016, O-S-D devices accounted for 72% of total semiconductor units compared to 28% for ICs. Thirty-six years ago in 1980, O-S-D devices accounted for 78% of semiconductor units and ICs represented 22% (Figure 2).

Figure 2

Surprisingly, shipments of commodity-filled discretes devices category (transistor products, diodes, rectifiers, and thyristors) accounted for 44% of all semiconductor unit shipments in 2016. The long-term resiliency of discretes is primarily due to their broad use in all types of electronic system applications. Consumer and communications applications remain the largest end-use segments for discretes, but increasing levels of electronics being packed into vehicles for greater safety and fuel efficiency have boosted shipments of discretes to the automotive market as well. Discretes are used for circuit protection, signal conditioning, power management, high current switching, and RF amplification. Small signal transistors are still used in and around ICs on board designs to fix bugs and tweak system performance.

Among ICs, analog products accounted for the largest number of shipments in 2016. Analog ICs represented 52% of IC unit shipments in 2016, but only 15% of total semiconductor units. Figure 3 shows the split of semiconductor unit shipments by product type in 2016.

For 2017, semiconductor products showing the strongest unit growth rates are those that are essential building-block components in smartphones, new automotive electronics systems, and within systems that are helping to build out of Internet of Things.  Some of the fast-growing IC unit categories for 2017 include Consumer—Special Purpose Logic, Signal Conversion (Analog), Auto—Application-Specific Analog, and flash memory.  Among O-S-D devices, CCDs and CMOS image sensors, laser transmitters, and every type of sensor product (magnetic, acceleration and yaw, pressure, and other sensors) are expected to enjoy strong double-digit unit growth this year. More coverage about these semiconductor products and end-use applications are included in the 2017 editions of IC Insights’ McClean Report and O-S-D Report.