This market research report was originally published at Yole Développement’s website. It is reprinted here with the permission of Yole Développement.
In the microcontroller market (like many semiconductors), prices drop and new products with more features replace the old products to bolster the average selling price, but typically the highly competitive landscape has favored decreasing prices over the long term. This cycle has described a relatively stable market where prices have very slowly decreased over decades.
The market research and strategy consulting company, Yole Développement (Yole), has followed the microcontroller industry for some time. Yole’s analysts combine their technical expertise and knowledge to deliver a comprehensive overview of MCU technologies and markets in a dedicated quarterly market monitor, Microcontroller Quarterly Market Monitor, Q4 2021 edition. The aim of Yole’s MCU Monitor is to provide in-depth coverage of the rapidly changing market dynamics and the leading players’ status and strategy.
Yole invites you to discover today a snapshot of this industry, with a special focus on the prices and their evolution by market segments, including automotive, consumer…
With the supply chain disruption and the generally increasing cost of manufacturing, that trend is currently reversing…
As Yole predicted prices rose in 2021, but even more than we anticipated for MCUs causing a very strong revenue rebound in the end of 2021 despite supply chain disruptions creating an inability to meet demand in several markets. MCU prices have risen sharply in 2021 and are expected to rise over the next five years. We are predicting continued hikes in 2022 and an artificially high price that is unlikely to come down much before 2026.
There is a risk of fab overbuilding driving down prices in 2024 and beyond, but this is unlikely to impact the microcontroller market directly given that the new fabs will not be targeting traditional MCU mature manufacturing technologies, but cutting edge MPUs, GPUs and accelerators. It is more likely integrated design manufacturers and foundry services will be incentivized to temporarily keep prices high to recuperate some of the investments in renovations, new fabs and other measures to provide new capacity for high demand cutting edge technologies.
For prices to drop dramatically, it will take one or more manufacturers strategizing that they can grow share by undercutting the competition. This could be a short-term win for some smaller suppliers to gain share, but in the end, keeping the ASP higher and reinvesting will reap more long-term dividends, so this eventuality is less likely than a more gradual decrease in ASP that is likely to benefit most suppliers regardless of market share.
Even with price hikes, demand outstripped supply as disruptions continued
Despite the increased pricing from manufacturers to push back on the demand that is keeping them at full capacity, demand for semiconductors, including MCUs seems to be still outstripping the supply as the supply chain remains disrupted and lead times for fulfilling orders continues to increase. Current estimates are already at half a year or more in some markets.
Current measures by both manufacturers and their respective government backing is expected to improve the supply as early as late 2023 and early 2024 as new fabs begin to alleviate the pressure, but this fix is not likely to bring about a shipment correction to pre-disruption levels as many consumers and industries simply picked alternative solutions (like used cars) or lost the purchasing power altogether.
Tom Hackenberg
Principal Analyst for Computing and Software, Semiconductor, Memory and Computing Division, Yole Développement (Yole)
