Fourth quarter shifts: Q4 analog revenue update

USA: Analog, the semiconductor components tasked with conditioning or manipulating those "real world" signals (temperature, position, sound, light, or pressure for example), is critical to applications across all major markets.

Because of its fundamental importance to most product designs, as well as requirements that make integration with digital circuits difficult, analog remains a good bellwether for the general health of the semiconductor industry.

Databeans expects a slowdown in post-holiday product builds for global analog revenue. Fourth quarter revenue is predicted to decline 7 percent sequentially from $11.06 billion in the third quarter down to $10.3 billion. First quarter 2011 sales will rebound slightly from a low fourth quarter, growing 3 percent sequentially to a little over $10.6 billion globally.

As a whole, pricing will remain consistent and even with additional capacity coming online, there should be little change in pricing from 2010 going into 2011 as most of the realized cost for analog is in design and not necessarily in manufacturing.

Databeans further divides the analog market into two general segments. The first is general purpose analog, which are designed taking a "standard cell" approach in mind and are products found across all application markets.

General purpose analog will experience milder declines in the fourth quarter of 2010, dropping 6 percent to $4.5 billion, before returning to quarter three revenues by the beginning of 2011.

Power ICs are the largest of these markets, and due to their ubiquitous nature across the industry, will experience the lightest declines of any analog product in the fourth quarter dropping just 2 percent to $2.45 billion in total sales.

The other major segment of analog products is application specific in design and restricted to their respective application markets (automotive, computer, consumer, communications, and industrial). Because these products are tied to individual applications, they are far more vulnerable to the sudden ups and downs found in their respective markets.

As a whole, the analog ASSP market will decline by 8 percent down to $5.6 billion between the third and fourth quarters of 2010. However, it is expected to rebound slightly by 2 percent sequentially going into the first quarter of 2011.

In particular, the computer analog segment will experience the greatest declines of any individual analog market, dropping by approximately 17 percent from the third quarter to the fourth quarter this year. Industrial analog will follow with another 14 percent decline, while communications will experience the mildest declines of any analog ASSP category, falling 3 percent sequentially in the fourth quarter.

In terms of individual market share, the analog and mixed signal markets remain relatively concentrated, with the top ten suppliers easily owning a majority share of the industry. This has kept competition somewhat lower and made large swings in market share uncommon. Texas Instruments, STMicroelectronics, and Infineon remain among the list of overall market leaders in analog ICs.

Worldwide Analog Quarterly Revenue ForecastSource: databeans estimates.