What's all this magnificent seven record-breaking chip-spend stuff about, anyway?

07-08-2018 |   |  By Paul Whytock

This summer must go down as one of the great record-breaking seasons of all time for a whole gamut of reasons, including one that directly impacts on the world of electronics.

For instance, those with a sceptical stance relative to global-warming cannot ignore the number of high temperature weather records that are being smashed worldwide.

And the world of football has also had some long-standing records broken when Portugal captain Christiano Ronaldo scored three goals against Spain making him at 33.5 years the oldest player to ever score a hat trick in a World Cup game.

But weather and football apart, another global record that will be broken by the end of 2018 is the amount of money spent on designs using semiconductor devices which is expected to soar to over $300 billion according to global information analysts IHS Markit.


The Magnificent Seven

Breaking News Pic B Chip spend record

In this case, the record-breaking scenario has nothing to do with the mythical gun-slinging Magnificent Seven pictured here but is all about the purchasing power of seven of the premier world markets for chips which are confidently predicted by IHS to send last year's record high of just under $270 billion straight up Boot Hill.

Among the major market areas contributing to this are the wireless communications, automotive and industrial systems sectors which not only need huge amounts of innovative chip designs to constantly evolve their products but have the fat corporate wallets to afford them.

It's all about what is referred to as the chip design spend by SAM, better known as the Served Available Market. But who are these magnificent seven global areas that are serving SAM so well in its record-breaking aspirations?

IHS Markit has globally surveyed both geographic and semiconductor application influences.


Major Driving Force

In terms of areas it says that Asia Pacific will be a major driving force on semiconductor buying decisions with an impressive design spend share of 46%. Unsurprisingly this situation is bolstered by the fact that Chinese and South Koran original equipment manufacturers are now located in the Asia Pacific region.

Moving west the USA will continue to maintain its position of having the largest share when it comes to a single country with an impressive 28% slice of the market, although this is a percent down on its performance last years. A contributing element to this very slight contraction could be the way that spending on wireless products in that country has reached saturation point and the market for tablets, laptops and smart phones has slightly fallen. But despite that IHS believes America's design spend will grow 4% this year to more than $88 billion.

Close behind the United States in second place is China/Hong Kong with a 25% share of the global total When it comes to spending growth rates South Korea has achieved a 13% rise with both India and Germany not far behind with 9%.

IHS analysis has shown that when it comes to those magnificent seven major application-driven markets for chip-design spending, the largest share this year will be in wireless communications with a hefty 37% share. However, despite this impressive figure it is expected that wireless comms as a chip design spending area will remain at this level because of the leveling off of consumer demand for tablets and smart phones.

Following wireless comms in second place is the computing sector and running third behind that is industrial system apps, a situation driven by the gradual impact of the Internet of Things and how it is being integrated into new equipment.


Chip-Hungry Sector

Taking fourth place on the grid is that ever reliable chip-hungry sector, automotive. In the past twenty years the level and amount of sophisticated electronics that have helped car makers remain market competitive has steadily escalated and in my opinion this trend will continue as we see more safety related and automated driving systems being designed into vehicles.

Taking spot number five is that slightly more fickle area that is driven by consumer demand. Trends here will fluctuate as wearable tech continues to achieve fashionable and aspirational status but, as already mentioned, sales of tablets and smart phones flattens.

Taking the final two places amongst the magnificent seven are computer peripherals in sixth place with demand for ever-increasing amounts of storage helping to keep that area buoyant and last but not least in seventh place wired communications. More info can be found in the IHS Markit report Design Activity Tool, World and Regions


By Paul Whytock

Paul Whytock is Technology Correspondent for Electropages. He has reported extensively on the electronics industry in Europe, the United States and the Far East for over thirty years. Prior to entering journalism, he worked as a design engineer with Ford Motor Company at locations in England, Germany, Holland and Belgium.

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