In the past two years, the MCU market has been on the rise, and the top 5 MCU manufacturers in the world have hit record highs in both revenue and net profit. This year's market conditions are obviously ailing. After more than a year of destocking and adjustment, what is the current MCU market pattern? How do the five major MCU manufacturers view the future market development of microcontrollers?
Microcontroller Market Overview
With the continuous development of social digitization and intelligence, MCU has become the main control chip of many electronic devices, driving the rapid development of the industry. According to IC Insights data, the global MCU market size will be approximately US$19.6 billion in 2021, a year-on-year increase of 23.4%. It is expected to maintain a compound growth rate of 6.7% in the next five years and reach US$27.2 billion in 2026.
A microcontroller is a microcomputer system that integrates core functions such as a processor, memory, and an input/output interface. It is mainly designed, manufactured, and applied as the control core of an embedded system. According to different application fields, there are special types and general types. The hardware and instructions of the dedicated MCU are designed for specific purposes, while the general-purpose MCU provides all the resources that can be developed to users, with relatively comprehensive performance and a relatively large market share, about 73%.
When choosing an MCU for different systems, it is necessary to consider the number of bus bits to realize corresponding operations and functions. Among them, 8-bit and 32-bit MCUs are the mainstream of the market, accounting for 38% and 44% of the market respectively.
Those who are familiar with the semiconductor industry should be very clear that the TOP5 manufacturers in the MCU market include Infineon, Renesas, NXP, STMicroelectronics, and Microchip Technology, which together account for 81.5% of the entire MCU market share.
In contrast to the market situation in recent years, due to the impact of the global new crown epidemic, the market demand for MCU products has declined. Global sales fell by about 13% in 2019. In 2021, driven by demand for downstream home appliances, automotive electronics, energy management, and industrial control, the supply and demand of MCUs is tight. The market will rebound sharply by 23%, and shipments will increase by 13% to 31.2 billion units, achieving the highest growth rate in history. In 2022, the demand for consumer electronics will be weak, and the MCU industry will be sluggish, but the overall growth will maintain a low single-digit positive growth.
TOP5 MCU Manufacturers
The leading microcontroller manufacturers include Infineon, STMicroelectronics, NXP, Microchip, and Renesas. With their strong technical strength, rich product lines, and wide application fields, they occupy an important position in the microcontroller market. They continuously launch new products and technologies to promote the development of microcontroller technology and the expansion of its application fields.
Infineon Technologies
Infineon is one of the leading microcontroller manufactures. Its MCU product lines mainly include TriCore AURIX, MOTIX, PSOC, Traveo, XMC, etc. The TriCore AURIX series uses the self-developed TriCore core, while other products are developed based on the ARM architecture. In 2019, Infineon acquired Cypress to enhance its competitiveness in the automotive and industrial control fields.
In the third quarter of fiscal year 2023, the revenue reached 4.089 billion euros, the profit reached 1.067 billion euros, and the profit margin was 26.1%. The revenue achieved in the first three quarters was 12.16 billion euros, a year-on-year increase of 20.69%. The net profit was 2.384 billion euros, a year-on-year increase of 65.10%. Overall, the company's performance will maintain a good growth trend in 2023. According to the company's forecast, the expected revenue in 2023Q4 is about 4 billion euros, and the estimated revenue for the full year of the fiscal year 2023 is about 16.2 billion euros.
Source from Internet
Infineon Technologies CEO Jochen Hanebeck said: Infineon was able to deliver a strong third quarter performance in a challenging market environment thanks to our structural growth drivers that remain focused on digital transformation and the transition to a green economy. That's why we take a forward-looking long-term strategy and invest in additional capacity.
Infineon’s order backlog totaled 32 billion euros at the end of June, still around double the company’s annual revenue. Several product categories, such as MCUs and high-voltage semiconductors, remain fairly tight, especially MCUs, and the company expects the tightness to continue throughout the year, the company said.
Renesas Electronics Corporation
Among the MCU products of Renesas Electronics, the RX, RL78, and RH850 series use the core developed by Renesas, and the RZ, RA, and Renesas SynergyTM platforms use the Arm architecture to better meet the needs of major manufacturers in the industry and the Internet of Things.
Renesas Electronics’ revenue in 2023Q2 was 368.7 billion yen, a month-on-month increase of 2.5%, and a year-on-year decrease of 2.2%. Operating profit was 129.1 billion yen, a year-on-year decrease of 3.5%; the consolidated revenue in the first half of 2023 was 728.091 billion yen, a year-on-year increase of 0.72%. Net profit was 195.805 billion yen, a year-on-year increase of 77.30%.
Renesas Electronics President and CEO Shibata Hidetoshi said that the performance in the second quarter of 2023 is almost in line with expectations, and although he wants to prepare for the recovery, there is still an overall sense of uncertainty. Looking ahead, the company said that the overall revenue in the third quarter will continue to grow to 370 billion yen, but it will still fall by 4.5% year-on-year, and the profit margin may decline, from 35% in the second quarter to about 32.5%. From the perspective of long-term goals, the company plans to achieve sales growth of 20 billion US dollars in 2030, and become the world's top three embedded semiconductor solution suppliers, and its market value will increase by 6 times compared with 2022.
NXP
After NXP acquired Freescale Semiconductor in 2015, it became one of the world's largest MCU manufacturers with a 17% market share. But before the merger, NXP's global MCU market share was only one-fifth of Freescale.
In 2023Q2, NXP’s revenue was US$3.3 billion, down 0.4% year-on-year and up 5.7% quarter-on-quarter, reaching the upper limit of the previous guidance (US$3.2±100 million), mainly due to the higher-than-expected performance of all end markets. Q2 gross profit margin was 58.4%, +0.6% year-on-year/+0.2% quarter-on-quarter, higher than the previous median gross margin guidance (58.2%); in the first half of 2023, NXP’s revenue was US$6.42 billion, down 0.43% year-on-year. Net profit was US$1.313 billion, a year-on-year decrease of 1.06%, mainly due to the decline in demand for the Internet of Things and mobile terminals.
For 2023Q3, NXP indicates that it expects revenue in the third quarter to reach US$3.4 billion, a year-on-year decrease of about 1%, and a median quarter-on-quarter growth of about 3%. The company will strictly manage channel sales and maintain a 1.6-month distribution channel inventory level. Considering that the channel sales will continue to be strong in the coming period, they may start to increase general inventory to meet the possible rebound in demand.
STMicroelectronics
STMicroelectronics has a relatively rich MCU product line, mainly including the 8-bit STM8 and 32-bit STM32 series. STM8 has 138 products, mainly including four series: STM8S, STM8L, STM8AF, and STM8AL. In 2007, when downstream customers demanded low power consumption and high performance of MCUs, ST took the lead in developing STM32 series products using the ARM Cortex-M architecture, leading the 32-bit MCU market trend. The STM32 Microcontroller has 18 product lines and 1201 product models, which are widely used in automotive electronics, industrial control, the Internet of Things, medical services, consumer electronics, security monitoring, and other fields.
From the perspective of 2023Q2 performance, STMicroelectronics’ net income in the second quarter was US$4.33 billion, a year-on-year increase of 12.7%, with a gross profit margin of 49%, and a net profit of US$1 billion; in the first half of 2023, the company achieved a net income of US$8.573 billion, a year-on-year An increase of 16.12%. The net profit was US$2.045 billion, a year-on-year increase of 26.70%. Looking ahead to the third quarter, the company said net revenue would be $4.38 billion, with a gross margin of 47.5%.
STMicroelectronics President and CEO Jean-Marc Chery said that second-quarter revenue was above the mid-point of our business outlook forecast range, in line with expectations. Looking ahead to the business in the third quarter, the median net revenue is expected to be US$4.38 billion, an increase of approximately 1.2% year-on-year and an increase of approximately 1.1% quarter-on-quarter. The company expects the full-year revenue of 2023 to be about 17.40 billion US dollars, with a fluctuation of 150 million US dollars. The median value is an increase of 8% over the same period last year. Revenue will grow by about 6% in the second half of 2023 compared to the second half of 2022.
Microchip Technology
Microchip Technology is a leading manufacturer of 8-bit MCUs, and 8-bit MCUs based on PIC and AVR have strong competitiveness. With the acquisition of Atmel in 2016, the 32-bit MCU product line was broadened and quickly occupied the market. Its 32-bit MCU adopts ARM Cortex-MO+/M4/M4F/M23/M7 and MIPS cores, covering downstream fields such as industrial, consumer, and automotive.
Net sales in the first quarter of fiscal 2024 reached a record US$2.289 billion, a year-on-year increase of 16.55%, and net profit was US$667 million, a year-on-year increase of 31.39%. It is worth noting that Microchip Technology's products are known for their high gross profit. In 2024Q1, the gross profit rate was 68.09%, which once again hit the best level in the company's history.
Ganesh Moorthy, President, and Chief Executive Officer of Microchip, said that our revenue increased by 2.5% sequentially and 16.6% year-on-year against the backdrop of weak macroeconomic conditions and increased business uncertainty. This is the company's 11th consecutive quarter of revenue growth. In the future, we will continue to respond to the challenging market environment, further assist customers in reducing inventory risks, and defer non-reschedulable backlog orders to future quarters. Even as our broad customer base experiences demand uncertainty, we expect our operating metrics to demonstrate resilience through this business cycle.
Conlusion
With the development of technology, especially the rise of AI, manufacturers must optimize MCUs to achieve higher performance, lower power consumption, higher integration, more security, and customization. In the next few years, the market will have more manufacturers and MCU suppliers for you to select.