The world's top 10 MCU manufacturers are out, and none of them are in Mainland China!

Single-chip microcontrollers for embedded control and computing functions are ubiquitous and continue to be designed into more systems.Much of the new MCU growth is driven by embedded automation and the proliferation of sensors.The popularity of MCU was a key factor in the inability of suppliers to keep up with the strong rebound in 2021 from the 2020 global recession triggered by the COVID-19 pandemic.

After a 7% drop in 2019 due to the weak global economy, and a 2% drop in 2020 due to the Novel Coronavirus crisis, MCU sales rebounded in 2021, rising 27% to a record $20.2 billion.The 2021 surge is the highest percentage increase in MCU since 2000.MCU average selling price (ASP) climbed 12 percent in 2021, the highest annual increase since the mid-1990s.Production-constrained MCU shipments grew only 13% in 2021 to 31.2 billion units.

According to IC Insights' latest 2Q2022 update of the 2022 McClean Report service (Figure 1), the sales rankings of the five largest microcontroller vendors remained unchanged from 2020 during last year's strong MCU recovery.The 2Q update shows the top five MCU vendors for 2021, of which three are in Europe (NXP, Stmicroelectronics and Infineon), one in the US (Microchip) and one in Japan (Renesas Electronics).

Five of the largest microcontroller vendors develop and sell ARM-based MICROcontrollers.These companies accounted for 82.1 percent of global MCU sales in 2021, compared to 72.2 percent in 2016, indicating an expanding field of giants in microcontrollers.The largest MCU vendor increase since 2016 is due to major acquisitions and mergers.

According to the updated report, the five largest MCU vendors are significantly larger than the rest of the top 10 microcontrollers.For example, the bottom half of the top 10 (Texas Instruments, New Tang, ROM, Samsung, and Toshiba) accounted for $2.3 billion in MCU sales last year, or 11.4 percent of the market.Outside the top 10, MCU vendors accounted for just 6.5% of the market in 2021.

In 2021, no. 1 NXP in the Netherlands slightly expanded its MCU revenue lead over No. 2 Microchip by $103 million.Microchip added about $40 million to its sales lead over No. 3 Renesas Electronics last year, according to new estimates from IC Insights' second-quarter update.

No. 4 Stmicroelectronics saw the strongest sales growth in the MCU rankings, with revenue up 35% in 2021, which nearly put the company ahead of Renesas Electronics and just $46 million behind its Japanese rival.Renesas was the top MCU supplier in the first half of the last decade, but was ousted in 2016 after NXP acquired Freescale of the United States in late 2015.Renesas' market share in MCU sales was 17.0% in 2021 compared to 33.1% in 2021.

Germany's Infineon remained fifth in the 2021 microcontroller rankings, with sales up 22% to $2.4 billion, about $996 million less than ST's sales in the MCU segment last year.Infineon ranked among the top five MCU companies after acquiring Cypress Semiconductor of the United States for $9.3 billion in April 2020 to further expand automotive microcontrollers, power management and other embedded system applications.

ICinsights: MCU prices will continue to riseMicrocontroller sales picked up quickly with the strong economic recovery of 2021, when the MCU market climbed 23% to a record $19.6 billion after falling 2% in 2020 amid the COVID-19 virus crisis, according to IC Insights.IC Insights forecasts that global microcontroller sales will grow 10% to reach an all-time high of $21.5 billion in 2022 (Figure 1), with automotive MCUS growing faster than most other end-use categories this year.

A strong rebound in the average selling price of microcontrollers in 2021 saw their ASP rise 10% to $0.64, which was the average price before the 2019 COVID-19 pandemic.The ASP growth in MCU in 2021 was the highest annual growth rate for MCU in the past 25 years.This is mainly due to tight supply of microcontrollers during the economic rebound in 2021.The MCU market has been facing steep price declines for two decades, but ASP declines have slowed over the past five years.IC Insights now expects MCU ASP to grow at a 3.5% compound annual growth rate (CAGR) between 2021 and 2026.

Production and supply chain bottlenecks prevented total MCU shipments from growing to 12 percent in 2021, which helped global microcontroller deliveries reach an all-time high of 30.9 billion last year.IC Insights forecasts that total MCU shipments will grow at a cagR of 3.0% over the next five years, reaching 35.8 billion units by 2026.

Total microcontroller sales are expected to grow at a compound annual growth rate of 6.7% from 2021 to 2026 and reach $27.2 billion in the final year of the forecast.Sales of 32-bit MCUS are expected to grow at a compound annual growth rate of 9.4% over the next five years, reaching $20 billion by 2026.Meanwhile, sales of 4/8-bit MCUS are not expected to grow for the next five years, remaining stuck at about $2.4 billion through 2026.Revenue for 16-bit microcontrollers is expected to grow at a cagR of 1.6% over the 2021-2026 period to $4.7 billion at the end of the forecast.

The downturn in the automotive industry and the weak global economy in 2019 led to a 9% decline in MCU shipments for the year, the most severe unit decline since the semiconductor downturn of 2009 (-11%).But surprisingly, MCU unit shipments rebounded in 2020, growing 8% despite the coronavirus crisis and extensive lockdown measures to mitigate the pandemic.Demand for MCU in the 2020 virus crisis was driven primarily by sales of home entertainment systems and electronics purchased by quarantined consumers, including large-screen TVS, Internet-of-things connectivity products, and more sensors being packed into smartphones.

About 46 percent of microcontroller sales came from MCUS in "universal" embedded applications (including smartphones, computers and peripherals, industrial uses and consumer products), while a little more than 40 percent came from automotive systems and 14 percent from the smart card market for banking, credit and debit card purchases, bus fares, ID cards and other uses.Automotive MCU sales are projected to grow at a cagR of 7.7% over the next five years, while universal MCU revenues are projected to grow 7.3% and the smart card market is projected to grow at a cagR of 1.4% through 2026.

• Yole: MCU prices will continue to rise over the next five years

As Yole predicted, MCU prices rose in 2021 by even more than they expected, leading to a very strong rebound in MCU industry revenue at the end of 2021, with MCU prices rising significantly in 2021 despite supply chain disruptions that led to an inability to meet demand in multiple markets,And it's going to go up over the next five years.In other words, these artificially high prices are unlikely to fall much before 2026.

According to Yole's forecast, there is a risk of overbuilding in fabs driving down prices by 2024 and beyond, but this is unlikely to directly affect the microcontroller market, as new fabs are not aimed at mature manufacturing technologies needed for traditional MCUS, but rather the advanced process market needed for cutting-edge MPUs, Gpus and accelerators.It is more likely to incentivize integrated design manufacturers and contract manufacturing services to temporarily keep prices high in order to restore some of the investment in renovations, new factories and other measures to provide new capacity for high-demand cutting-edge technologies.

To bring prices down significantly requires one or more manufacturers to develop strategies to increase share by weakening competition.This may be a short-term win for some smaller suppliers to gain share, but in the end, maintaining a higher AVERAGE selling price and reinvesting will reap more long-term dividends, so this is less likely than the likelihood of a gradual decline in average selling price that may benefit most suppliers regardless of market share.

Demand for semiconductors, including MCUS, still appears to be outstripping supply as supply chains remain disrupted and lead times to fulfill orders continue to increase, even as manufacturers raise prices to curb demand that keeps them running at full capacity.In some markets, current estimates are already six months or more.

As new fabs began to ease the pressure, manufacturers and their respective governments to support the current measures is expected as early as in late 2023 and early 2024 to improve the supply, but the repair is unlikely to disrupt shipments of correction to the level before because many consumers and the industry just chose the alternative solution (such as a used car) or completely lost their purchasing power.

• ICInsights: Automotive microcontroller sales to grow 23% in 2021

The automotive microcontroller market is huge, accounting for approximately 40% of total microcontroller (MCU) sales over the past decade.It has been unbalanced for the past few years.Global automotive MCU sales increased by 12% in 2017;Growth slowed in 2018 to just 1 percent.

Automakers have had to temporarily shut assembly lines this year due to a continuing shortage of microcontrollers due to the COVID-19 pandemic, but auto microcontroller sales are expected to surge 23% to $7.6 billion in 2021 during the economic recovery and set a new record.Robust growth of 14% in 2022 and 16% in 2023 is forecast.

More than three-quarters of automotive MCU sales are 32-bit microcontrollers, which are expected to reach about $5.8 billion this year.16-bit MCU revenue is expected to reach $1.3 billion and 8-bit MCU revenue is expected to reach $441 million in 2021.Average selling prices for 32-bit MCUS have helped drive up sales this year, in part because of tight supply in the market.The mid-year forecast shows a compound annual growth rate (CAGR) of -4.4% for ASP for all 32-bit MCUS from 2015 to 2020.But it will grow 13% to $0.72 in 2021.

Automotive infotainment is expected to account for 10% of 2021 automotive MCU sales, or approximately $780 million, including entertainment and information systems for retrieving digital maps, identifying locations, and transmitting access data from the Internet and satellite;Microcontrollers used in other parts of the vehicle are expected to account for 90 percent of revenue, or $6.8 billion, this year, including engine control, powertrain, brakes, steering, electric Windows, battery management and more.Infotainment MCU sales in 2021 will be 59% higher than in 2020 ($495 million);Other revenue from the automotive MCU is expected to rise 20 percent from last year ($5.7 billion).