Strong growth in MCUs for IoT applications and suppliers jockeying for marketshare resulted in several acquisitions. IC Insights reveals how this changed the pecking order of MCU vendors in 2016.
In 2016, Netherlands-based NXP overtook Japanese company Renesas Electronics as the world’s largest microcontroller supplier with MCU revenues climbing 116% following its ₹75,032.34 crore ($11.6 billion) purchase of U.S.-based Freescale Semiconductor in December 2015, according to IC Insights
Before the acquisition, Freescale was ranked second in MCUs and was catching up with Renesas in microcontroller sales with only ₹1,358.34 crore ($210 million) separating the two companies in 2015 versus about a ₹6,468.31 crore ($1 billion) gap in 2014. Renesas suffered a 19% drop in MCU dollar sales in 2015 mainly because of the weak yen exchange rate that year as well as the continued fallout from Japan’s troubled economy. In 2016, Renesas’ fall in MCU sales eased, dropping by 4% to nearly ₹16,170.76 crore ($2.5 billion), or about 16% of the total microcontroller market. In 2011, Renesas’ MCU marketshare was 33% of worldwide microcontroller sales.
IC Insights released a table ranking the largest MCU suppliers in 2016 by dollar-sales volume (below). Among the top MCU suppliers, NXP, Microchip and Cypress Semiconductor moved up in sales ranking during 2016 with strong increases in revenues. This was driven by acquisitions of IC companies that sold microcontrollers.
The Freescale acquisition moved NXP from sixth in the 2015 MCU ranking to the top spot in 2016 with a marketshare of 19% (₹18,758.09 crore or $2.9 billion). About three-quarters of NXP’s 2015 microcontroller sales were 8-bit and 16-bit MCUs used in smartcards. After Freescale’s acquisition by NXP, smartcard MCUs accounted for a little over one-quarter of the company’s microcontroller sales in 2016.
Figure 1: Acquisitions boosted rankings of MCU vendors. Suppliers not making significant acquisitions in microcontrollers posted low, single-digit percentage increases or declines in MCU sales in 2016.
Although overall growth in microcontrollers has wobbled and stalled in the past couple years, MCUs remain at the epicenter of growth in the IoT, automotive, robotics, embedded applications and other emerging systems, according to IC Insights. Major MCU suppliers have been improving their portfolios to address these key markets. Part of that improvement process has included merging and acquiring competitors in order to gain a quick foothold into these developing markets. For instance, MCUs developed and introduced by Freescale are aimed at a wide range of embedded control applications, including significant amounts in automotive systems. NXP and Freescale both have developed extensive 32-bit MCUs with Cortex-M CPU design cores licensed from ARM in the U.K.
Another company that benefitted from the acquisition approach is U.S.-based Microchip Technology. That company climbed from the fifth spot in the 2015 MCU ranking to the third in 2016 with sales increasing 50% to ₹12,936.61 crore ($2 billion) following its ₹21,992.24 crore ($3.4 billion) acquisition of Atmel in 2Q16.
Atmel was ranked ninth in MCU sales in 2015 (₹5,226.39 crore; $808 million). Prior to buying Atmel, Microchip was the only major MCU supplier not licensing ARM CPU technology. For about 10-years, Microchip has developed and sold 32-bit MCUs, based on a RISC-processor architecture developed by MIPS Technologies, which is now owned by the U.K.-based Imagination Technology. Six months after completing the Atmel acquisition, Microchip said it would expand both its MIPS-based PIC32 MCU product line and Atmel’s ARM-based SAM series. Microchip has promised to “remain core agnostic, fitting the best solution with the right customer and for the right application,” according to IC Insights.
The market research firm added that Cypress Semiconductor moved into the eighth place in the MCU ranking with sales increasing by 15% in 2016 to about ₹4,023.29 crore ($622 million). Cypress boosted its presence in MCUs when it acquired Spansion for about ₹32,341.53 crore ($5 billion) in stock in March 2015. Originally spun out of Advanced Micro Devices (AMD) as a NOR flash memory supplier, Spansion had purchased Fujitsu Semiconductor’s microcontroller and analog business in 2013 for ₹711.51 crore ($110 million). Spansion also licensed ARM’s 32-bit CPU cores for microcontrollers in 2013.
Cypress’s growth was not only due to revenue from Spansion’s MCU business but also from growth in the company’s programmable SoC (PSoC) products.
Now for declines: the biggest one was posted by Samsung, which saw its sales drop by 14% last year because of weakness in the smartcard microcontroller market. Samsung sells MCUs to OEMs and serves in-house needs for its own brands of consumer electronics, computers and communications systems, including smartphones.