The figure below shows that since 1998, only the automotive and communications end-use segments have gained marketshare. Driven by the global explosion of smartphone demand, the communications market almost doubled its share of the IC market from 18.5% in 1998 to 35.0% in 2020.
Automotive’s marketshare increased from 4.7% in 1998 to 8.7% in 2019 before falling back to 7.5% during Covid-plagued 2020. The automotive share of the total IC market has never been greater than 9.0% while the communications share of the IC market peaked at 37.2% in 2013. In 2020, the communications IC market was 4.7x the size of the automotive IC market, IC Insights writes.
In many cases, automotive ICs represent only a small portion of an IC supplier’s total sales. Example: At TSMC, the world’s largest foundry, automotive applications have never accounted for more than 5% of its sales. Producing automotive ICs does not typically require leading-edge technology — many non-memory automotive ICs continue to be manufactured on 200mm wafers — but it does require strict adherence to rigorous reliability and testing requirements and a commitment by the IC manufacturer to supply a customer’s long lifecycle needs. It is also worth noting that automotive IC end-users are notorious for being tough negotiators, oftentimes leaving slim margins for the automotive IC supplier – despite these stringent requirements.
Despite the current automotive IC shortage, the average selling price for many automotive IC products has remained fairly constant. For example, the ASP for automotive application-specific ICs was $0.96 in 2020 which is even 15% less than the total application-specific IC market ASP last year, and only $0.95 in 1Q21. The automotive application-specific IC ASP in 1Q21 was less than it was in 2020.
Many IC industry headlines have recently focused on the shortage of automotive ICs, but given its relatively small size, strong growth in