Next-Generation Integrated Circuit Market

Market Overview

The global next-generation integrated circuit market size was valued at USD 996 million in 2022. It is anticipated to reach USD 3260 million by 2031, growing at a CAGR of 14.08% over the forecast period (2023-2031).

There is an increase in the demand for enhanced network connectivity worldwide, which has led to increasing adoption of 5G, thereby boosting market expansion. Moreover, the surging proliferation of IoT devices also requires lower latency, enhanced efficiency, and improved functionality, which further increase the demand for next-generation integrated circuits, augmenting market growth.

A next-generation integrated circuit is a collection of electronic circuits assembled on a single piece of flat, compact, and typically silicon-based semiconductor material. It typically integrates advanced semiconductor devices and chip designs that provide enhanced performance, lower power consumption, and improved functionality compared to the previous generation. The composition of this system includes miniaturized active components, like transistors and diodes, as well as passive components, including capacitors and resistors.

Circuits composed of discrete electrical components generally exhibit superior size, cost, and speed attributes compared to circuits made using a multitude of minuscule transistors densely integrated into a compact chip. The adoption of next-generation integrated circuits is rapidly increasing as a substitute for discrete transistor designs, mostly due to their extensive manufacturing capacity, dependability, and the modular approach to circuit design.

Market Dynamics

Global Next-Generation Integrated Circuit Market Drivers

Improving Network Connectivity

The proliferation of 5G networks is propelling the advancement of integrated circuits (ICs) capable of managing the augmented data throughput and lower latency demands of 5G communications. This development is generating new prospects within the semiconductor sector. According to statistics, from 2019-2020, the proportion of global smartphone shipments containing 5G-enabled devices will increase from 1% to 20%. There is an expectation that by 2023, 5G-enabled smartphones will surpass 4G shipments in terms of market share, reaching a share of 69%.

Additionally, according to a GSMA report, it is anticipated that by 2025, one-third of the world population will be covered by 5G networks. Similarly, CNBC was informed by executives of some of the largest technology and telecommunications firms in the world that 6G, the successor to 5G mobile internet, will likely debut in 2030. Thus, such developments in network connectivity are expected to drive the demand for next-generation integrated circuits, thereby boosting market expansion.

Rising Adoption of IoT Devices‌

The Internet of Things (IoT) is a network of connected devices integrated with sensors, network connectivity, software, and requisite electronics that enable them to collect and exchange information. The interconnected devices can remotely control and manage several tasks and functions. Therefore, they are crucial for implementing automated processes across different industry verticals. An increasing number of IoT devices necessitate low-power, energy-efficient integrated circuits (ICs) that can manage a variety of sensor inputs and communication protocols.

In 2018, the global count of active Internet of Things (IoT) devices was estimated to be approximately 7 billion. The IT industry is projected to surpass the 10 billion threshold by 2020 and is expected to increase to 20 billion by 2027. On the other hand, the rising adoption of IoT technology across different industry verticals has led to increased data traffic. The ever-growing demand for efficiently managing voluminous information has led to the need for a fast and uninterrupted data connection. Moreover, IoT technology is anticipated to find wide uses in applications such as autonomous cars and robotic surgeries, where any data latency can cause serious impacts on life and safety. The factors above boost the market growth.

Global Next-Generation Integrated Circuit Market Restraint

Technical Limitations Leading to High Costs

Due to the requirement for extensive research and development (R&D) efforts, including the creation of novel fabrication techniques and tools, the development of advanced ICs can be expensive. It is frequently necessary to make advancements in semiconductor materials, manufacturing processes, and design techniques to create next-generation integrated circuits. The process of surmounting technical obstacles can be both laborious and costly.

Maintaining Moore's Law, which posits that the number of transistors on a semiconductor doubles every two years, becomes increasingly challenging and costly as process nodes cease to expand. Technical and physical constraints can impede progress. All these factors restrict market growth.

Global Next-Generation Integrated Circuit Market Opportunities

Advancements in Next-Generation Integrated Circuit

The key participants in the market are striving to advance next-generation integrated circuits to enhance the efficiency of the products. For instance, in January 2022, Magnachip Semiconductor Corporation announced the development of a next-generation organic light-emitting diode display driver integrated circuit (OLED DDIC) for automotive displays, thereby expanding its OLED DDIC product line. It is also compatible with rigid and flexible OLED displays and supports a broad spectrum of resolutions, including FHD.

Furthermore, in September 2022, Siemens Digital Industries Software unveiled the Tessent™ Multi-die software solution. This solution aids clients in significantly expediting and streamlining crucial design-for-test (DFT) activities for next-generation integrated circuits (ICs), which are constructed using 2.5D and 3D architectures. In response to the ongoing challenge faced by the global IC design community to develop higher-performing, more power-efficient ICs that are also smaller, next-generation devices are incorporating more intricate 2.5D and 3D architectures. Such developments are expected to create opportunities for market expansion.

Regional Analysis

Asia-Pacific Dominates the Global Market

Based on region, the global next-generation integrated circuit market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa. 

The Asia-Pacific market is witnessing prominent expansion in the global market owing to the rapid advancements in the network infrastructure of the region, like the deployment of 5G. For instance, as per the Mobile Economy APAC 2023 Report by the GSMA, 5G is projected to comprise more than two-fifths (41%) of mobile connections in the Asia-Pacific region by 2030. This represents an increase from 4% in 2022. The expected spike in growth can be ascribed to several factors, including a reduction in the average cost of 5G devices, extensive network expansion in numerous countries, and the collaborative endeavors of influential governments to incorporate mobile-enabled technologies into various aspects of society. By 2030, the Asia-Pacific region is projected to witness a substantial rise in 5G connections, reaching approximately 1.4 billion. Therefore, the region's robust proliferation of 5G is driving the global next-generation integrated circuit market.

Furthermore, there has been a surge in the research of integrated circuits in the region, thereby boosting the market expansion. For instance, researchers at the IIT, Guwahati have developed a technology for the design of dependable, secure, and rapid integrated circuits (ICs). This innovation aims to facilitate more efficient and rapid computation. As stated by the research team, the investigation encompasses every facet of the automated electronics design process, including synthesis, verification, and security. Moreover, it aids in fortifying the ecosystem of electronics manufacturing within the nation.

North America is projected to experience substantial expansion over the forecast period. It is one of the most technologically advanced regions owing to the presence of developed nations like the U.S. and Canada. Ever since the rollout of 5G technology, the region has been at the forefront of its adoption. The latest data from Omdia, published in June 2023, indicates that North America maintains its position as the 5G wireless connectivity leader, owing to the increased demand for enhanced 5G network services resulting from sustained adoption. As of the conclusion of the first quarter of 2023, the region exhibited a noteworthy total of 133 million 5G connections and an astounding 503 million LTE connections. At roughly 36 percent, North America's 5G penetration rate is increasing, with 14 million new 5G connections coming online in the first quarter of 2023. This is expected to boost the market expansion in the region.

Segmental Analysis

The global next-generation integrated circuit market is segmented by product type, technique, component, and application.

Based on product type, the global next-generation integrated circuit market is segmented into digital, analog, and mixed-signal integrated circuits. 

A semiconductor device known as a Digital Integrated Circuit (IC), commonly abbreviated as digital IC or microchip, comprises an intricate configuration of digital logic gates and additional digital components seamlessly integrated onto a solitary silicon substrate. These digital building elements execute particular digital operations, including memory management, data manipulation, control functions, and arithmetic operations. In addition, digital ICs are utilized in many applications and are fundamental to modern electronic systems. They can be found in simple calculators, advanced microprocessors in computers, and intricate systems in industries such as telecommunications, automotive, and consumer electronics.

Based on technique, the global next-generation integrated circuit market is bifurcated into thin and thick film, monolithic, and hybrid or multichip integrated circuits. 

A hybrid or multichip integrated circuit (IC) is a category of electronic circuitry wherein a single package or assembly integrates numerous integrated circuits or semiconductor chips. These chips may comprise microprocessors, memory chips, analog or digital signal processing components, or other specialized duties. A hybrid or multichip method aims to leverage the individual strengths of numerous processors to produce a more powerful or application-specific circuit. In addition, hybrid or multichip integrated circuits are frequently employed in scenarios that require a delicate equilibrium between performance, reliability, and customization. They are utilized in the automotive, consumer electronics, telecommunications, and aerospace industries, among others.

Based on components, the global next-generation integrated circuit market is divided into modulators, attenuators, lasers, optical amplifiers, and photodetectors. 

In multichip integrated circuits (ICs), modulators are circuits or electronic components designed to carry out modulation operations. Modulation refers to the procedure by which one or more characteristics of a carrier signal are altered after an information signal to efficiently transmit data across a communication channel. Depending on the application, multichip integrated circuits, comprising numerous semiconductor chips or dies interconnected on a single substrate, may employ modulators for various purposes. The system's specifications, communication protocol, and intended use determine the modulator utilized in a multichip integrated circuit.

Based on application, the global next-generation integrated circuit market is divided into automotive, consumer electronics, healthcare, and others.

In the healthcare sector, the function of next-generation integrated circuits (ICs) is growing in importance as they facilitate the development of numerous cutting-edge applications and enhance pre-existing medical technologies. ICs are critical components in smartwatches and fitness monitors, among others. These integrated circuits can transmit and process data about physical activity, sleep patterns, and pulse rate, enabling users to monitor and control their health in real-time. In addition, the constant expansion of the application of integrated circuits of the next generation in healthcare facilitates technological and scientific progress, enhanced patient outcomes, and more individualized and effective medical care. These developments are contributing to the resolution of some of the most critical issues in healthcare at the moment.

Recent Developments

• January 2023- Siemens Digital Industries Software unveiled Questa™ Verification IQ software. This innovative solution assists logic verification teams in surmounting many obstacles linked to the exponential increase in design intricacy of cutting-edge next-generation integrated circuits (ICs).
• May 2023- Aehr Test Systems, a global provider of semiconductor test and production burn-in equipment, announced that a current major silicon photonics customer has placed the initial order for a new high-power configuration of its FOX-XP™ system for manufacturing wafer-level burn-in of next-generation silicon photonics integrated circuits (ICs).