The following column was provided by Susie Inouye, a senior analyst with Databeans Inc., a Reno, Nevada-based market research firm.
Functional standard analog blocks are required in every application--from I/O to signal conversion. As a result, Databeans estimates that worldwide standard linear revenue will increase over 20% this year over last year. Application specific analog revenue is also expected to recover this year, but not to the same extent as standard linear Click on image to view forecasts.
Further, unit shipments for standard linear will outpace analog ASIC unit shipments by two to one. Databeans expects this trend to continue longer term, and estimates that standard linear shipments will reach a volume of two and a half times the application specific market by 2008.
There are some major issues in the linear market beyond the forecasts. The notion that specialization will continually eat away at the commodity market, as suppliers innovate and integrate everything onto "one chip," is widely held by many industry pundits. However, in the analog market, there are several factors that are contradictive to this assumption and alternatively indicate strong business for commodity analog and high performance linear.
Applications are increasingly requiring high performance products at lower price points, end equipment design cycles have contracted substantially, and high volume electronics continue to evolve into standardized products that cross over into multiple segments (so-called "convergence" devices). Standardization is not only occurring on an industry level, but also internally within each organization's product lines.
The communications market has historically been application specific intensive, but as end equipment manufactures struggle to meet an increasingly standardized market dynamic, demand is shifting to modular solutions which are enabled by lower cost standard products. Further, ASIC design starts are shrinking due to the high cost of development, and due to the increasing technological complexity of integrating functionality onto a single device (without sacrificing performance and power efficiency within the allotted time frames of rapid production cycles).
Telecommunications companies simply do not have the deep pockets and large labor forces these days. These companies are standardizing both on an industry level and internally across product lines. Other market segments are also exhibiting this trend, which translates into strong demand for standard linear products, and the potential for displacement of application specific solutions.