Welcome to the first article in our new Commodities Analyzed series! For the next three weeks, we will take a deeper look at data and analysis from Supplyframe Commodity IQ’s recent mid-quarter summary, offering a look at what users can expect and learn from the information available to them.
In our first entry, we look at analog components, offering a combination of real-world data, deep expert analysis, and a better understanding of which industries generate the most demand for this commodity group. Let’s get started!
Analog Components Overview
Analog components were the fastest-growing segment of the global semiconductor industry in 2022, with 20.8% revenue growth, according to World Semiconductor Trade Statistics (WSTS). While revenue growth is expected to decelerate in 2023, WSTS predicts that analog will be the only segment of the worldwide integrated circuit (IC) market set to expand in 2023.
An analog chip typically includes a transistor along with passive elements such as an inductor, capacitors and resistors. Analog chips are prone to noise, or small variations in voltage, which can cause errors.
Top analog suppliers include Texas Instruments, ONSemi, ADI, Infineon, Renesas, STMicroelectronics, and NXP. Commodity IQ analysis indicates that 80% of the Texas Instruments portfolio (most likely including analog and logic ICs) may see lead times between 8-10 weeks in 2023, a dramatic shift from 2022.
Qualcomm is a key player in power management integrated circuits (PMICs) for battery management in mobile devices. Although there has been some consolidation in the market, there is an abundance of analog companies. The PMIC market is projected to reach $52.3 billion by 2027, up from about $43.6 billion in 2022.
Global electronic component demand and sourcing activities in the first quarter of 2023 are expected to be down by 2%, while engineering design will be off by 20%, indicating demand erosion as end markets cool. However, analog, mixed-signal and power management ICs remain heavily constrained largely because of shortages of 130-nm production capacity, which is the ideal node for analog devices. Transition to smaller nodes is unlikely to occur for at least a year.
How Supplyframe Analyzes the Analog Market
On a real-time basis, Supplyframe Commodity IQ analyzes and forecasts analog component market dynamics, prices and lead times. Commodity IQ also projects component design and demand and production volumes. In 2022, analog power management and mixed-signal devices were the fastest growing sector of the global semiconductor market, posting annual sales of $89.6 billion and a growth rate of 20.8%, according to WSTS.
The organization projects the analog market to slow significantly in 2023 posting a growth rate of 1.6%. The Commodity IQ Lead Time Index for analog power PMICs is over three times the baseline and has been trending upward since Q1 2021. In Q1 2023, over 70% of contracted PMIC lead times were in the over 52 weeks lead time band of the commodity at-volume lead-time trend.
At-volume, analog power ICs are forecast to increase by 8.1% from Q1 to Q2, and, like signal ICs, power IC price increases are projected to be lower at 6.0% from Q2 to Q3. In Q4 2022, the analog signal IC market pricing was up by 25.3% and sits at more than double the baseline of the Commodity IQ Price Index.
In 2023, the global semiconductor market is projected to decline by 4.1% to $557 billion, driven by the memory segment. In this latest forecast, this category is projected to fall to $112 billion in 2023, dropping by 17% compared to 2022. Other major categories are expected to post single digit growth like analog, discrete, optoelectronics and sensors.
Top Priority Industry Segments
The automotive sector is the largest market for analog components, accounting for about one-third of the worldwide market, including both signal and power devices. Analog semiconductors represent a significant factor contributing to automotive chip supply constraints; cars are the largest application market for analog, accounting for 32% of worldwide analog chip revenue in 2021, according to the Semiconductor Industry Association. Industrial and communications sectors account for 27% and 21%, respectively.
Most component sectors are expected to reduce inventory by the end of H1 2023. However, the auto sector will not be among them. Despite improving supply in multiple semiconductor sectors, automotive chip availability is likely to be constrained throughout 2023, with 90% of automotive ICs at nodes equal to or larger than 40nm.
Artificial Intelligence (AI)
The production of artificial intelligence (AI) systems is a rapidly growing market for analog components. That’s because a single specialized analog AI chip requires less than 10 watts, which is a fraction of the power required for GPUs that consume more than 100 watts for the same results. This opens the door for integrating analog chips directly into edge devices where power and heat are a major concern. For example, a camera on a production line might have a specially made analog chip integrated directly into it, allowing it to run a pre-trained algorithm for part recognition, rather than sending the voluminous visual data to a more powerful external system for processing and waiting for the response.
The human brain has long been a model for AI, but as a system it is neither completely analog nor digital but some mixture of both. To create AI that truly reflects human abilities, unifying the benefits of analog and digital chips is an important step on that road, offering benefits not just on the cutting edge but to smart devices installed in homes and factories.
Commodity IQ Forecast For the Analog IC Market
According to Supplyframe Commodity IQ, the high-performance analog ICs market is set to rebalance in the first half of 2023, with the second quarter Q2 being the last change for companies to take delivery of order pushouts against considered non-cancellable, non-returnable orders.
What could this kind of intelligence do for your organization? How would you use this information to make smarter, more profitable decisions? Now, imagine if you had known about this months in advance. Commodity IQ is a powerful way to see risk in your sourcing and act on it with a proactive mindset.
Users recently received their first mid-quarter summary, with more to come. Visit Supplyframe.com to learn more and download your free sample report!