Will FPGAs outgrow the semiconductor market?

Written by Paul Dillien February 25, 2010 Hits: 201 Favorites

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A recent report suggested that Altera and Xilinx will grow at twice the rate of the semiconductor market. Before the semiconductor "melt down" in 2000 when the dot.com bubble burst, both companies were growing fast. Since then they have only tracked the market (in spite of encouraging results in the quarter ending December 2009).

The analyst put his prediction down to the FPGA vendors benefitting from the falling number of ASIC starts. The ASIC industry imploded once the costs of masks and engineering tasks like verification rose to stratospheric levels, and Structured ASICs have never filled the gap. Today the total cost of leading-edge ASICs makes them only suitable for a few designs that can amortise the development costs over huge volumes.

Xilinx and Altera dominate the PLD market with a combined market share of 85%. No other vendor gets on the radar or has more than 6% share.

My calculation is that the PLD market in 2009 was worth around $3.2B. This is split into FPGA at $2.5B, with the balance spread over CPLD at around $450M and software and services.

The cost of all FPGAs including the Spartan and Cyclone families have reduced significantly over recent years, when measured by the number of logic elements you get for a dollar. However, the Virtex and Stratix families earn the majority of the FPGA revenue dollars. Another point to note is that although the cost per logic element reduces significantly with each new generation, the average chip price does not. You get more for your money, but the day when a mid-size FPGA costs below a dollar is still nowhere to be seen.

The high performance FPGA families represent, I estimate, around 55% of the total by revenue, but only around 12% by quantity shipped. If you take the view that there is already good penetration by Virtex and Stratix families in sockets priced at, say, $100 to $500+, then the growth needs to be driven by the low cost families.

The key question is when do you think that the low-cost devices will overtake the full-feature families?

(The above data points were taken from the FPGA Market Report that I have just released. Anyone wanting to find out more can visit: www.high-tech-marketing.co.uk/FPGA )

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Paul Dillien