The average selling price (ASP) for microcontrollers is expected to continue on a downward spiral, which is good news for buyers, but bad news for the bottom line of many MCU manufacturers. Currently, unit shipments are surging but falling prices are keeping revenue growth in check, according to IC Insights.
IC Insight’s mid-year forecast reports microcontroller shipments rising 33 percent in 2015 to 25.4 billion MCUs worldwide due to an uptick in units for smartcards and 32-bit applications, particularly driven by the Internet of Things (IoT) market. However, revenue growth is only expected to increase by four percent in 2015, reaching $16.6 billion, up from about $15.9 billion in 2014.
The reason for the significant disparity is that MCU tags are expected to fall by 21 percent in 2015 to $0.65 compared to $0.83 in 2014, when the ASP for MCUs fell 12 percent, according to IC Insights.
Analysts don’t expect ASP trends to improve much next year. IC Insights forecasts a 14 percent drop in MCU ASPs in 2016 with microcontroller revenue growing seven percent to $17.7 billion and unit shipments increasing by 25 percent to 31.6 billion worldwide.
The report also indicates that microcontroller unit growth started to climb in 2014 driven by shipments of low-cost MCUs used in smartcards for protection in electronic banking and credit-card transactions, mass-transit fares, government IDs (such as electronic passports), medical records, and security applications. Smartcard MCU shipments increased by 26 percent in 2014, and is expected to climb by 41 percent in 2015 to 12.9 billion units worldwide, followed by 25 percent growth in 2016 to 16.1 billion units.
“The mid-year forecast significantly raises the projection for smartcard MCU shipments through 2019 as U.S. credit card companies, banks, retailers, government agencies, and other industry sectors begin to broadly adopt secure “chip-card” technology, much like Europe and other country markets have done since the 1990s,” said IC Insights. “In the U.S., massive data breaches in credit card transactions at retail stores and growing concerns about identity theft have finally resulted a major move to smartcards for higher levels of security, anti-fraud encryption, and greater protection of lost or stolen debit and credit cards."
Total microcontroller shipments also are increasing because of strong demand for 32-bit designs and other single-chip solutions to support sensors in wireless systems and connection to the IoT, according to IC Insights. IoT-related MCU sales are forecast to grow 16 percent in 2015 to $405 million with unit shipments increasing by 40 percent to reach 431 million units.