EL SEGUNDO, Calif. -- The standard logic market was hit hard by the 2001 downturn, with worldwide revenues in the chip segment plunging 46% to $1.6 billion last year from a record high $3 billion in 2000, according to a new report released today by iSuppli Corp.
The research firm said the recovery in standard logic will lag the rest of the chip industry. Sales are expected to only reach $2.3 billion by 2005, said the new report. While consisting of simple gates and functions, standard logic is still widely used in system designs as interfaces and "glue logic" between ASICs, programmable ICs, and other highly integrated devices.
"Prices for standard logic are now stabilizing at their lows and are expected to remain static through the end of the year," said analyst Kelli McNatt, manager of supplier development at iSuppli and the author of the report.
"Suppliers have done a good job in cost reduction and are making some money at these current levels. They have also invested in bringing newer devices and packages with higher ASPs average selling prices to market and that will help them through these tough times," McNatt said. "It would be prudent for buyers to negotiate long term pricing agreements during the next few quarters to take advantage of the current situation," he added.
The iSuppli analyst warned chip users that some suppliers will not pursue development of new standard logic families. He also cautioned against using TTL logic devices in new system designs because of the potential for product lines to be phased out in the next several years.
"They should encourage engineering teams to switch to CMOS equivalents to avoid end-of-life problems that might impact continuity of supply," McNatt said.