ASIC CHIP MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

ASIC Chip Market Size and Trends

The ASIC chip market is estimated to be valued at USD 20.29 billion in 2024 and is expected to reach USD 32.84 billion by 2031, growing at a compound annual growth rate (CAGR) of 7.10% from 2024 to 2031.

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The ASIC chip market is expected to witness significant growth during the forecast period. Implementation of advanced technologies such as artificial intelligence, machine learning, and 5G is increasing the demand for Application-Specific Integrated Circuit (ASIC) chips from various end-use industries including automotive, consumer electronics, telecommunications, and data centers. Increasing investments by leading market players to develop more efficient and cost-effective ASIC chips is another factor anticipated to drive the demand for application-specific integrated circuits. Extensive research and development activities taking place particularly in the automation and transportation sectors will further aid in revenue generation in the ASIC chip market in the coming years.

Growing Demand for Digitalization

The growing demand for digitalization across various industry verticals is expected to be a key driver for the ASIC chip market in the coming years. With digital transformation becoming integral to business operations, there is an increasing need for specialized and efficient computing capabilities that can power next-generation technologies. ASIC chips are well-suited to meet this need as they can be customized for very specific applications, delivering optimized performance.

For instance, in February 2021, Intel partnered with the U.S. Defense Advanced Research Projects Agency (DARPA) for a three-year collaboration aimed at advancing domestically manufactured Application Specific Integrated Circuit (ASIC) platforms. This partnership, named Structured Array Hardware for Automatically Realized Applications (SAHARA), focuses on designing custom chips with cutting-edge security features. A secure and reliable source of advanced semiconductors is crucial for the U.S. The collaboration involves combining Intel's top-notch eASIC structured ASIC technology with modern data interface chiplets and enhanced security measures, all manufactured entirely within the U.S. using Intel's advanced 10nm semiconductor process. This initiative aims to support developers in the defense and commercial electronics sectors to swiftly create and deploy custom chips for their specific needs.

Market Concentration and Competitive Landscape

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The design and engineering of modern systems has become increasingly complex over the years as new technologies emerge and more advanced capabilities are expected from electronic devices. This rising complexity in workloads and requirements is driving the need for specialized processor chips that can efficiently handle the specific tasks involved. Application-specific integrated circuits (ASICs) are now being adopted across industries as they can be custom-designed and optimized for the exact functions needed.

As systems continue to incorporate more sophisticated algorithms and integrated functionalities, the underlying chip architectures need to keep pace. ASICs provide a means to hardwire innovative accelerators and customized instruction sets that general purpose CPUs struggle to match. This ability to optimize at the chip level down to the transistor is driving ASIC adoption across industries handling data-intensive and low-latency workloads. Looking ahead, emerging technologies such as 6G, augmented reality/virtual reality, autonomous robotics, and quantum computing will place even higher demands that only ASICs can efficiently address. According to 2020 data from the United Nations Conference on Trade and Development, the worldwide semiconductor revenue grew by 6% year-over-year despite the challenges of the global pandemic, a testament to the continued expansion of digital technologies.

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The ASIC chip market faces several challenges. Firstly, developing ASIC chips requires huge capital investments and takes significant time to design and manufacture which increases risks. Secondly, the market is dominated by few large players which makes it difficult for new small players to enter and gain footholds. Technology also evolving at a rapid pace which necessitates continuous innovation to design more powerful yet efficient chips. Customers also expect lower costs and better features with each generation which compels companies to optimize their development and production processes.

Market Opportunities: Surge in Demand for Specialized Chips

Steady growth in applications using AI, machine learning, IoT, and 5G connectivity is driving the demand for specialized chips. Many companies developing new age devices and equipment require customized ASICs. There is hence potential for niche market players to partner with such firms. Growing needs for efficiency and performance in areas like data centers.

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The full custom ASIC segment is expected to contribute the largest share of 46.2% in 2024, due to growing needs for highly customized and application-specific solutions. Full custom ASICs are designed entirely based on a customer's unique specifications to serve a dedicated purpose. This provides advantages over other types of ASICs by allowing for maximum optimization tailored exactly to the target application's requirements.

One major driver is the aerospace and defense industry's utilization of full custom ASICs for advanced sensors, avionics, and other critical systems onboard fighter jets, satellites, and spacecraft. These missions demand the highest levels of customization, reliability, and performance in very compact sizes and power constraints. Full custom ASICs are able to meet stringent specifications that off-the-shelf solutions cannot achieve. The customization also enables new technological capabilities to be designed directly into an integrated circuit.

Medical devices are another sector increasingly relying on full custom ASICs. Implantable devices like pacemakers utilize them to miniaturize components while integrating diverse functions optimized for long battery life. Medical imaging and scanning equipment also employ fully customized chips for high-resolution signal processing and complex algorithms. This ensures the devices precisely meet regulatory standards and deliver improved diagnostic abilities.

As applications continue pushing the limits of existing technology, the demand is projected to grow for ASIC solutions that can be painstakingly customized down to the transistor level. While carrying higher development costs, full custom ASICs deliver unparalleled performance advantages that open up new possibilities in strategic industries. Their unique benefits positioned this segment to maintain its leading market share.

Insights, By Application- Evolving Consumer Preferences Fuel Strong Performance in Consumer Electronics

The consumer electronics application segment is expected to hold the largest share of 34.78% in 2024. Rapid changes in consumer preferences and new product introductions make this a highly dynamic space driven by frequent innovation.

Smartphones are a major contributor, with ASICs custom-designed for tasks like graphics processing, machine learning-based image enhancement, and fast 5G networking. ASIC capabilities allow new phones to feature eye-catching displays, AI-powered cameras, and lightning-fast connectivity demanded by users. As smartphones add more sophisticated multimedia, AI, and computational photography functions, specialized ASICs play an expanding role.

Smart home devices like voice assistants, smart appliances, and streaming devices also employ ASICs to power intuitive voice control interfaces, advanced processing of camera/sensor inputs, and seamless multi-room media functionality. Custom chips enable these devices to deliver intelligent, personalized experiences around the home. Gaming consoles additionally fuel ASIC demand through requirements for ultra-smooth graphics, networking, and physics simulation. ASICs are optimized to handle these tasks much more efficiently than general-purpose processors. Evolving consumer needs for novel technologies in various connected devices maintain strong momentum behind the consumer electronics segment's leading share of the ASIC market. Its diverse product categories continue presenting new opportunities for specialized ASIC solutions.

Regional Insights

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In 2024, the ASIC chip market is set for significant advancements, with the Asia Pacific region leading the forefront in both market share and growth rate. Asia Pacific is anticipated to dominate the market share, holding a commanding 47.9% share among all other regions. This dominance can be attributed to the region's well-established manufacturing ecosystem, particularly in countries like China, Taiwan, South Korea, and Japan, which serve as major hubs for semiconductor production. Moreover, Asia Pacific is expected to exhibit the highest Compound Annual Growth Rate (CAGR) of 9.17% in 2024 compared to all other regions. This robust growth trajectory is fueled by increasing demand for consumer electronics, automotive electronics, and the rapid adoption of emerging technologies such as 5G, artificial intelligence (AI), and Internet of Things (IoT). Furthermore, supportive government policies and substantial investments in semiconductor infrastructure further bolster Asia Pacific's accelerated expansion in the ASIC chip market.

While Asia Pacific leads the charge, other regions also play significant roles in shaping the ASIC chip market landscape. In North America, encompassing the U.S. and Canada, the market share remains substantial, propelled by leading semiconductor companies, advanced technological innovation, and high demand across various sectors including data centers, networking, and automotive electronics. However, the growth rate in North America might be comparatively lower than that of Asia Pacific, influenced by factors such as market saturation and geopolitical uncertainties.

Europe maintains a moderate presence in the ASIC chip market, with countries like Germany, the U.K., and France contributing to its market share. The region is anticipated to witness steady growth, driven by investments in research and development, automotive electronics, and industrial automation applications. In Latin America, while the market share is smaller due to economic challenges and lower technological adoption rates, gradual growth is expected supported by digitization efforts and telecommunications infrastructure expansion. Similarly, the Middle East and Africa (MEA) region, with modest market share, may experience moderate growth propelled by infrastructure development and digital transformation initiatives.

In summary, while Asia Pacific dominates the ASIC chip market both in terms of market share and growth rate in 2024, other regions such as North America, Europe, Latin America, and the Middle East and Africa also contribute to the market's dynamic landscape, each influenced by regional-specific factors and growth drivers.

Market Report Scope

ASIC Chip Industry News

• In November 2023, Alchip Technologies, Ltd. Which is a fabless semiconductor company introduced a new automotive ASIC platform at the Design Solutions Forum 2023. This platform aims to simplify the ASIC design process for global automotive IC manufacturers and addresses the specific needs of automotive companies.
• In April 2023, AMD which is a semiconductor company revealed the AMD Alveo MA35D media accelerator, which features two 5nm ASIC-based video processing units. These units support the AV1 compression standard and are designed to power live interactive streaming services at scale.
• In February 2023, Fortinet, a cybersecurity company, unveiled FortiSP5, the latest advancement in ASIC technology. This technology enhances security for distributed network edges by providing improved computing power, lower costs, and lower power consumption.
• In September 2022, Infineon Technologies AG which is a semiconductor manufacturer, launched a new product line of OptiMOS 5 IPOL buck regulators with digital interfaces for network ASICs/FPGAs and server CPUs. These regulators offer an efficient solution for various applications.
• In March 2022, Key ASIC Berhad announced a partnership agreement to develop a Digital Economy Park in Shaoxing City, China. The agreement involves several parties, including Key ASIC Berhad, the Shaoxing Government, Cheerplan (China) Investments Co. Ltd., and Jiaoyang Integrated Circuit Manufacturing Co. Ltd.
• Additionally, Meta plans to use custom ASIC chips supplied by Broadcom for its metaverse hardware development. These chips are expected to significantly contribute to Broadcom's revenue for fiscal year 2022.
• In March 2021, Ebang International Holdings Inc., a blockchain technology company, announced the completion of a 6 nm ASIC chip designed for Bitcoin mining machines. This chip is expected to offer better performance in the market. The company plans to start mass production of the chip when market conditions are favorable.

*Definition: The ASIC chip market is focused on the design, development, and sales of Application-Specific Integrated Circuits (ASICs). ASICs are integrated circuits customized for a particular use, rather than intended for general-purpose use. This market caters to companies developing specialized electronics requiring high levels of performance, low power usage, and small size factors. Major players in this market design and produce ASICs for various applications including automotive, industrial, telecommunication, consumer electronics, and others.

Market Segmentation

• Type Insights (Revenue, USD Bn, 2019 - 2031)
• • Full custom ASIC
  • Semi-custom ASIC
    • Array based
    • Cell Based
  • Programmable ASIC
    • Field-Programmable Gate Array (FPGA)
    • Programmable Logic Device (PLD)
• Application Insights (Revenue, USD Bn, 2019 - 2031)
• • Aerospace Subsystem & Sensor
  • Telecommunication Products
  • Medical instrumentation
  • Data processing systems
  • Consumer Electronics
  • Others
• Regional Insights (Revenue, USD Bn, 2019 - 2031)
• • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • South Africa
    • GCC Countries
    • Israel
    • Rest of Middle East & Africa
• Key Players Insights
  • Advanced Micro Devices, Inc.
  • ASIX Electronics
  • Bitmain Technologies Holding Company
  • Broadcom Inc.
  • Comport Data
  • DWIN Technology
  • Faraday Technology Corporation
  • FUJITSU
  • Infineon Technologies AG
  • Intel Corporation
  • Nvidia Corporation
  • OmniVision Technologies, Inc.
  • ON Semiconductor Corporation
  • Samsung Electronics Co., Ltd. (Samsung Group)
  • Seiko Epson Corporation
  • Semiconductor Components Industries, LLC
  • Socionext America Inc.
  • STMicroelectronics
  • Taiwan Semiconductor Manufacturing Company Limited (TSMC)
  • Tekmos Inc.
  • Texas Instruments, Inc.
  • Xilinx, Inc.