On Tuesday, IC Insights offered new forecasts for the American microcontrollers market. The research firm stated the segment would continue its year-long decline. However, the organization also predicts the microprocessor sales will rally in 2020 and will rise steadily through 2023.
Why the MCU Segment is Struggling
After posting record sales in 2017 and 2018, the microcontroller segment hit a wall this year. Like the rest of the semiconductor industry, the sector suffered from the ongoing U.S. China trade war. Washington’s imposition of import taxes on Chinese goods has resulted in an across-the-board decline in profits. Moreover, microcontroller unit (MCU) shipments have fallen in tandem with decreases in the worldwide automotive market.
In recent years, sales of components used in vehicle brake control, parking assistance, and tire pressure monitoring among other systems precipitated an MCU market boom. But as global automobile sales are nearing Great Recession level lows, manufacturers haven’t needed to order as many microprocessors.
Consequently, IC Insights forecasts the MCU segment will be down 6.6 percent year to date. Accordingly, the firm predicts microcontroller sales totaling $16.5 billion this year, down from 17.6 percent last year. However, the company’s analysts forecast the sector’s financial fortunes will improve a great deal next year.
How the Microcontroller Segment Will Recover
Despite its current struggles, IC Insights holds the MCU market will recover due to the sharp increase in demand for microprocessors. As MarketWatch notes, the rising popularity of electric vehicles requires automakers to integrate more semiconductors into their products. Specifically, the organization believes carmakers will need to buy more microcontrollers to facilitate the integration of new power-saving, energy consumption, and driver’s safety systems.
Furthermore, analysts believe the growing popularity of Internet of Things technology will drive the need for even more automotive MCUs. Indeed, next-generation consumer vehicles will not only be equipped with more car-to-car communication systems but also chipsets that allow them to communicate with smart cities. Accordingly, those new autonomous and semiautonomous automobiles will need a lot of components to function.
Because of those industry-wide changes, IC Insights forecasts microcontroller sales reaching $17.1 billion in 2020. The research company also predicts the sector will experience a compound annual growth rate of 3.9 percent through 2023. By that time, the global segment should be producing $21.3 billion in sales and shipping 38.2 billion MCUs.