Automotive industry’s appetite for MCUs drives prices

Market news |
By Christoph Hammerschmidt

According to the latest quarterly update from IC Insights, the economic recovery last year ensured increased demand for microcontrollers – the market researchers registered growth of 23% to a record high of $19.6 billion. The year before, the outbreak of the Covid 19 virus crisis had depressed sales by 2 %.  For the current year, IC Insights forecasts a 10% increase in global microcontroller sales to an all-time high of $21.5bn, with growth in automotive MCUs outpacing most other end-user categories this year. It is unclear, however, whether these figures already take into account the outbreak of war in Ukraine.

A sharp increase in the average selling price of microcontrollers in 2021 pushed the ASP up by 10% to US$0.64, which was the same as the average price before the 2019 pandemic.  The ASP increase in 2021 was the highest annual growth rate for MCU selling prices in more than 25 years and resulted from the tight supply of microcontrollers in the 2021 economic recovery. For two decades, the MCU market has faced significant price declines, but the ASP decline has slowed over the past five years.  IC Insights now expects the ASP for MCUs to grow at a compound annual growth rate (CAGR) of 3.5% between 2021 and 2026.

Production and supply chain bottlenecks slowed overall MCU shipment growth to 12% in 2021, pushing global microcontroller shipments to an all-time high of 30.9 billion units last year. IC Insights’ forecast shows that total MCU shipments will grow at a CAGR of 3.0% over the five-year period to 35.8 billion units in 2026.

Over the 2021-2026 period, total microcontroller shipments are expected to grow at a CAGR of 6.7%, reaching $27.2 billion in the final year of the forecast. Over the next five years, sales of 32-bit MCUs are expected to grow at a CAGR of 9.4%, reaching $20.0bn in 2026.  The 4- and 8-bit MCUs, on the other hand, are less in demand; IC Insights experts see a stagnant market for this category over the next five years. In 2026, the market researcher estimates that sales of such devices are expected to reach about $2.4 billion, while sales of 16-bit microcontrollers are expected to grow at a CAGR of 1.6% to $4.7 billion at the end of the forecast period 2021-2026.

The slump in the automotive industry and weak global economy contributed to a 9% decline in MCU shipments this year in 2019, the sharpest unit decline since the semiconductor downturn in 2009 (-11%).  Surprisingly, MCU shipments rebounded in 2020, growing by 8%, despite the coronavirus crisis and widespread production shutdowns to contain the pandemic.

MCU demand in the 2020 virus crisis was driven primarily by sales of home entertainment systems and electronics products purchased by quarantined consumers, including big-screen TVs, Internet of Things-connected products and more sensors built into smartphones.

MCUs in “general” embedded applications (including smartphones, computers and peripherals, industrial applications and consumer products) account for about 46% of microcontroller sales, while just over 40% comes from automotive systems and 14% from the smart card market for banking, credit and debit cards, travel cards, ID cards and other applications.  Sales of automotive MCUs are expected to grow at a CAGR of 7.7% over the next five years, while the general MCU segment is forecast to grow at a CAGR of 7.3% and the smart card segment is expected to grow at a CAGR of 1.4% until 2026.

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