Thus far in 2001, however, that rapid growth has stalled. In fact, Venture Development Corp. (VDC) expects shipment revenues to grow at a lowly 5 percent in 2001, approaching $5.5 billion by the end of the year.

Semiconductor market forecasts by analysts and vendors alike have been slashed across the board for 2001. Vendors of power supply and power-management ICs have felt the impact in the form of dramatically reduced revenues, job cuts and overproduction problems. No one denies the slump this market is experiencing. The question is, when will it get better?

VDC anticipates that the 10 following considerations will help to restimulate the power supply and power-management IC market. The market in question consists of these product categories: ac/dc off-line regulators, power factor correction (PFC) preregulators, pulsewidth-modulated and pulse-frequency-modulated controllers, dc/dc regulators, linear regulators, and battery-charging and -management ICs.

• Application markets. Some of the application markets for power supply and power-management IC shipments are forecast to grow at rates varying between 16 percent and 19 percent over the next five years. Computers and telecommunications are still expected to be growth segments in the long term, driven by technological advances. Although applications in computers, related peripheral and data communication products are high-growth areas, price erosion in those markets is expected to dampen the revenue growth somewhat.

• Standard vs. custom IC markets. Custom-designed ICs are those that are not available as a standard catalog item. Although some user requirements are becoming more standardized, that is not expected to have much impact on the need for custom-designed ICs, which currently account for approximately 10 percent of the overall market. The need to minimize size and cost in high-volume applications will encourage manufacturers to continue to partner with key customers to provide suitable custom solutions.

• Geographic markets. Asia, accounting for the largest share, narrowly edges North America in power supply and power-management IC shipments. Those ICs are used mainly in consumer electronics, computers and peripherals. Long-term advantages continue to bolster Asia's greater geographical share, especially with the emergence of China as an attractive location for electronics manufacturing.

North America, currently a close second, will not experience the same growth rates as Asia over the next five years and will drop slightly in share. Japan and Europe account for almost all of the remaining share, especially in such manufacturing applications as telecom and automotive. The share for other geographic areas is small and should grow consistently with the market because of manufacturing in developing countries.

Distribution channels. In 2000, almost half of worldwide power supply and power-management ICs sales were made directly by company sales staffs. Sales to distributors accounted for more than one-third, with the remainder attributed to manufacturers' representatives. Vendors will continue to place emphasis on direct sales and sales through distributors, while the share of sales through manufacturers' representatives will increase, mainly because of the expansion of the Asian market.

• Power supply requirements.There are trends toward requirements for lower output voltages, more power, tighter voltage regulation and faster responses to abrupt changes in load current. Indicative of those newer requirements are the various voltage regulator module (VRM) specifications for powering microprocessors. Other trends include requirements for ever-higher efficiency and expanded use of distributed power architectures.

• IC trends. Trends that are evident in requirements for power supply and power-management ICs include lower quiescent current requirements, tighter tolerances (due to the use of lower supply voltages), the ability of ICs to be turned on and off by an external signal, soft start, settable oscillator frequencies to prevent interference, and integration of multiple voltage output functions on the same chip.

• Packaging. Size, heat dissipation and manufacturing cost are the primary issues surrounding IC packaging. Much research and development is being conducted in the area of IC packaging. There are interrelationships among size, thermal transfer, isolation, efficiency, performance and cost. Surface-mount packages are preferred but are not always possible in higher-current applications.

Battery charging and management. Changes in battery chemistries are affecting charging control and protection. There also is an increasing need for more accurate fuel gauging; reduced heat dissipation; reduced chemistry volatility risks; and the ability to gather data on battery voltage, current and temperature through the use of more intelligent battery-charging and -management ICs.

'Smart' responses
Standards and regulations for "smart" batteries are increasingly important to OEM designers as they strive to effectively and economically respond to evolving consumer requirements for portable electronics. While definitions of smart can range from simple safety electronics to a full smart battery system, how smart a battery system really is depends on its communication capabilities and the accuracy of various predictions, as well as other parameters.

• Standards and regulations. Standards and regulations greatly affect designs and implementation of technological advances. Important standards include Energy Star, Blue Angel, power factor correction (PFC), Advanced Configuration and Power Interface, OnNow, Wired for Management, Instantly Available PC, Smart Battery System and System Management Bus. While establishing certain limitations, those standards and regulations also foster developments in power management. They help provide a common set of design limits and tools that are used in cooperative design efforts among IC manufacturers, hardware and software designers, battery manufacturers and other OEMs.

• Competition. Despite the fact that there are more than 60 participants in this market, the top seven vendors account for more than 50 percent of the merchant shipments of these ICs. In fact, the "80/20 rule" applies to this market, with approximately 80 percent of 2000 revenues attributed to the top 20 percent of the IC manufacturers.

But the market for these ICs is failing to grow and most likely won't see significant improvement before the end of the year. Power supply and power-management IC vendors will continue to hold their breath and wait for a repeat of the 1998-2000 blitz.

Joan Plante and Nathan Andrews are Analysts with Venture Development Corp. (Natick, Mass.). This article is based on VDC's ongoing research for its report on "The global market for power supply and power management integrated circuits."

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