system on a chip (SoC) market is estimated to be valued at USD 199.46 Bn in 2024, exhibiting a CAGR of 3.2% over the forecast period 2024-2031. Furthermore, growing demand for portable electronic devices such as smartphones, tablets, and wearables is expected to drive the market growth.
Market Dynamics:
Global system on a chip (SoC) market growth is driven by increasing demand for portable electronic devices and growing adoption of Internet of Things (IoT). Rapid urbanization and digitalization has boosted demand for smartphones, tablets, and other portable electronics where SoC plays a vital role. Integrating multiple components into a single circuit has enabled manufacturers to optimize functionality and reduce the overall product cost. Emerging applications of IoT across various industries is expected to boost demand for sophisticated SoCs with enhanced connectivity and processing capabilities over the forecast period.
Global System on a Chip (SoC) Market- Drivers, Restraints and Opportunities
Increasing Demand for Energy Efficient and Space Saving Devices
Growing demand for energy efficient and smaller form factor electronic devices is expected to drive the market growth. SoC enables the integration of all the essential components of a computer or any other electronic systems into a single chip, thus, reducing the space and power requirements significantly. This allows manufacturers to develop highly compact devices that require minimal power and space. Rising consumer preference for portable devices like smartphones, tablets, wearables, and othersthat are lightweight and offer longer battery life boosts demand for SoC solutions globally. SoC offers an ideal solution to fulfil this demand and its adoption is expected to rise at a considerable pace in the near future.
Growing Adoption of IoT and Connected Devices
Growing popularity and commercialization of technologies like Internet of Things (IoT), artificial intelligence (AI), machine learning, and other is another key factor stimulating the SoC industry. SoC provides an ideal platform for development of various IoT and connected devices as it enables integration of multitude of electronic components and communication capabilities into a single chip. This greatly simplifies design complexities and reduces production costs of IoT devices. The rapid proliferation of IoT across industrial, consumer and business applications has augmented the implementation of SoC. The global number of IoT connections is projected to multiply over the next decade. This rising installation of connected devices worldwide will definitely boost demand for SoC ICs in the near future.
Declining Profit Margins due to Intense Competition
The intensely competitive environment in the SoC market poses a major challenge for players. Due to widespread availability of similar technology across vendors, it is difficult to differentiate products and gain profitability. Moreover, continuous decline in ASP (average selling price) of chips over time has also negatively impacted margins. Designing cutting-edge SoC solutions involving latest fabrication process nodes requires massive R&D investments. However, returns on such investments may get hampered by swift price erosion in the industry. The bargaining power of large OEM customers also compels SoC vendors to offer price reductions periodically, putting pressure on their bottom-lines. Fierce competition among established and emerging players is likely to intensify further, leaving little room for profits.
IP Core Licensing Issues
IP core licensing issues associated with integration of third-party technologies and software into SoC designs is another key restraint. The complex nature of SoC development demands licensing of various hardware and software IP cores from different sources which involves lengthy negotiations and recurring royalty payments. At times, incompatible licensing terms and conditions make it difficult for vendors to seamlessly combine IP cores from multiple suppliers in a single chip design. Resolving licensing issues consumes significant time and resources of SoC players. Cross-licensing arrangements between giants like Apple, Qualcomm and Intel over patented technologies often leads to legal disputes and supply constraints. Such IP licensing challenges serve as a roadblock to rapid innovation in the market.
Growing Demand for 5G Network Infrastructure
Massive rollout of 5G networks worldwide in the near future offers substantial opportunities for SoC vendors. 5G requires deployment of advanced infrastructure including ultra-dense network of smaller cellular towers, fiber backhaul connectivity and edge computing capabilities. 5G base stations and networking equipment integrating powerful multi-core SoC solutions would be indispensable for implementation of next-gen cellular networks. Global investments in 5G infrastructure may exceed US$ 600 billion by 2025. This presents a multi-billion-dollar market potential for SoC ICs supporting 5G infrastructure build-out. Leading SoC companies are already aligning resources to capitalize on this opportunity through innovative product offerings.
Surging Popularity of Autonomous Vehicles to Boost SoC Implementation
Growing R&D toward development of autonomous vehicles powered by AI and machine learning algorithms brings significant prospects for SoC market. Self-driving cars require massive processing power and real-time analytics to function safely without human intervention. SoC platforms combining high-performance multi-core CPU clusters, GPUs, image processing units, radar/LiDAR co-processors and connectivity chips are perfectly suited to meet autonomous driving computing needs. As autonomous driving technology matures, annual sales of self-driving vehicles are forecast to rise immensely in the next 10-15 years. The ensuing rise in automotive semiconductor content per vehicle including advanced SoCs will drive new revenue streams amounting to billions of dollars. SoC players are actively collaborating with automakers to tap into arising autonomous vehicle sector.
Link: https://www.coherentmarketinsights.com/market-insight/system-on-a-chip-soc-market-3755
Key Developments:
- In September 2023, GlobalFoundries and Microchip Technology, through Microchip's subsidiary Silicon Storage Technology (SST), launched SST ESF3 third-generation embedded Super Flash technology NVM solution. This cutting-edge solution, available for production in the GF 28SLPe foundry process, offers remarkable performance, reliability, and cost efficiency. It is well-suited for advanced MCUs, smart cards, and IoT chips used in consumer and industrial applications.
- In July 2023, Renesas Electronics Corporation collaborated with AMD to develop the ISLVERSALDEMO2Z reference design, providing a space-ready version of the AMD VersalTM adaptive system-on-chip (SoC) XQRVC1902. This design incorporates essential radiation-hardened power management components for space avionics systems, ensuring reliability in extreme space conditions.
- In March 2022, Imagination Technologies announced that its IMG B-Series BXE-4-32 GPU, with IMGIC image compression technology, had been integrated into Realtek’s latest System-on-Chip (SoC), RTD2885N.
Key Market Players:
Key companies covered as a part of this study include Apple Inc, Broadcom Limited, HI Silicon, Huawei Technologies Co. Ltd., Infineon Technologies, Intel Corporation, Intel Corporation, Magna International Inc, Maxim Integrated Products, Inc, MediaTek Inc, Microchip Technology Inc, NXP Semiconductors N. V., ON Semiconductor, Qualcomm Technologies Inc, Renesas Electronics Corporation, Samsung Electronics Co. Ltd., Semiconductor Components Industries, LLC, STMicroelectronics N. V, Taiwan Semiconductor Manufacturing Company Limited, Texas Instruments, Toshiba Corporation are the major players.
