Analog Technology's Comeback Kid

By Maury Wright -- Movers & Shakers, 6/22/2006

Analog is the new black on technology runways. The stability and economics of analog led National Semiconductor to refocus on the segment. Even market leader Texas Instruments rededicated itself to the segment when analog veteran Tom Engibous became CEO. But analog is no simple segment. The market is fragmented in terms of vendors and technologies. The IC vendor value proposition ranges from purely component price to application-specific specialty features.

For system designers, the resurgence of analog is understandable. Skyrocketing data rates have led a return to analog signal processing. Andy Rappaport, a venture capitalist at August Capital, made that point in the keynote speech at EDN's Innovation Awards banquet on April 3, noting that DSPs can't keep pace with today's speedy interfaces. National Semiconductor chairman and CEO Brian Halla always asserts analog ICs are critical to the user experience in hot products, driving HDTV displays or extending portable products' battery life, for instance.

The analog IC companies chased a total 2005 market value of $38.85 billion, states iSuppli; Garner Dataquest pegged it at only $32.0 billion. The difference highlights the fragmentation in analog and the difficulty of defining the term. iSuppli counts MEMS ICs in its analog forecast, including TI's DLP chips for TVs and projectors. Gartner doesn't count MEMS. But the definition question goes beyond MEMS.

Jean-Philippe Dauvin, chief economist and group VP at STMicroelectronics, states, "We use die surface area to define analog. If more than 50 percent of a chip's surface area is devoted to analog, it is analog. Less than 50 percent surface area means a digital chip. iSuppli and Gartner may define analog on a functional basis instead." These differing definitions affect the analysts' ranking of the competitors. As the chart indicates, iSuppli ranks STMicroelectronics second in analog. Says Steve Ohr, research director at Gartner Dataquest, STMicroelectronics ranks eighth in analog with $328 million in sales.

Within the analog segment, you can slice and dice the market several ways. Gary Grandbois, principal analyst at iSuppli, claims that about one-third of the market consists of standard linear ICs typically offered by multiple sources. The other two thirds, says Grandbois, are application-specific analog chips. Market leader TI divides the market even further. The company offers multisourced products through its Standard Linear & Logic Group. According to Ohr, that commodity business earns TI about $300 million.

The bulk of TI's analog revenue comes from the High Performance Analog group, which TI splits into application-specific and standard analog. The latter segment, managed by vice president of High Performance Linear Business Art George, includes four types of ICs: amplifiers, converters, interfaces and power management.

TI believes that even standard products in the high-performance segment deliver features to design teams that make or break a product. "When you think about high-performance analog products, it's really products that provide system-enabling performance," says George.

TI's analog-centric work is only part of the reason the company leads the analog segment. Its work in DSP—especially its mobile handset success—and its investment in semiconductor process technology are keys. George states, "Out strength in DSP and analog is what separates us from almost every other company in the industry. We are a great signal conditioning and processing company, be it analog or digital."

George may be correct, but it also doesn't hurt that TI can leverage its handset customers in a system sell, bringing high-performance analog and standard linear to the component buy. Regarding the system sell's importance for TI, Ohr proclaims it a "major advantage."

TI's fab capability helps it deliver high-performance products and hit cost targets. George states, "I want to reemphasize our synergy between the digital and analog businesses."

Maury Wright is editor-in-chief of EDN.