Application Specific Integrated Circuit Market Trends [2031]

Report Description

Application Specific Integrated Circuit Market Outlook 2031

The global application specific integrated circuit market size was valued at USD 15.9 Billion in 2022 and is likely to reach USD 26.53 Billion by 2031, expanding at a CAGR of 5.8% during 2023 – 2031. The market's growth is attributed to the increasing adoption of mobile phones.

Increasing adoption of mobile phones is expected to boost the demand for application specific integrated circuits. Application integrated circuits are used in mobile phones to provide high performance by processing images, videos, and audio.

It also manages the power consumption of mobile phones, which encourages its adoption in these devices. Therefore, rising demand for mobile phones is propelling the market. For instance

• The number of mobile devices operating across the world was 15 billion in 2021 and is expected to reach 18.22 billion by 2025.

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An application-specific integrated circuit (ASIC) is an integrated circuit that is designed to serve a particular application or purpose. It helps designers to optimize sophisticated electronic devices. It is widely used in telecommunication, industrial, automotive, consumer electronics, and other industries to improve efficiency as it is specifically designed to do one thing at a time. 

Full custom ASIC, semi-custom ASIC, and programmable ASIC are types of application specific integrated circuits. It completes the assimilation of the entire system or device by incorporating the functionalities of medium-sized and smaller integrated circuits onto a solitary chip.

The COVID-19 pandemic hampered the demand for application specific integrated circuits. The rise in COVID-19 infection motivated the government to impose several preventive measures such as the closure of international borders, which affected the supply chain industry. This impeded the market as manufacturers faced a shortage of raw materials.

Moreover, a drastic fall was seen in the production and sales of smartphones in 2020, which hindered the market as application specific integrated circuits are utilized in smartphones to manage power consumption. For instance,1.35 billion smartphones were sold worldwide in 2020 compared to 1.54 billion in 2019.

However, the fall in the severity of infection in late 2020 and the increased incidence of remote working culture propelled the demand for application-specific integrated circuits as these circuits are used in PCs and computers to enhance performance. For instance, PC shipments in 2020 reached 309 million compared to 263 million in 2019 an increase of 18% from the previous year.

Impact of Artificial Intelligence (AI) on Application Specific Integrated Circuit

The introduction of artificial intelligence and growing technological advancements create a lucrative opportunity in the market. AI-powered application specific integrated circuits are specialized chips designed explicitly for AI applications such as processing AI algorithms.

AI-enabled ASIC plays an important role in data centers as it reduces the energy footprint of data centers. AI-backed ASIC is used in healthcare to power AI algorithms that can analyze medical images, detect anomalies, and even predict patient outcomes, leading to faster diagnoses, and more accurate treatment.

It is also utilized in automobiles to offer split-second decisions by processing vast amounts of data from sensors and cameras.

Application Specific Integrated Circuit Market Dynamics

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Major Drivers

Rising spending on data centers is projected to boost the demand for application specific integrated circuits. Application-specific integrated circuits (ASICs) are computer chips designed for a specific type of workload that is used in data centers for hosting certain types of applications.

It processes data more quickly while using less power, making data centers more sustainable. This enhances the demand for application-specific integrated circuits in data centers. Thus, increasing spending on data centers is estimated to boost the market. For instance,

• According to a report, spending on data center systems increased by 11.1% from the previous year amounting to USD 212 billion in 2022.

Growing automobile industry is expected to drive the market. Application specific integrated circuits are widely used in automobiles for airbags, advanced driver assistance systems, in-vehicle communication, engine management, transmission control systems, and alternator electronics. Thus, the growth in the automobile industry is anticipated to enhance the market. For instance,

• According to the European Automobile Manufacturers Association, 85.4 million motor vehicles were produced worldwide in 2022 an increase of 5.7% compared to 2021.

Existing Restraints

The high initial cost associated with application-specific integrated circuits is expected to restrict the market. The cost of ASIC is expensive as it requires mask layers, custom logic cells, and testing.

Moreover, these integrated circuits are non-reprogrammable, which means once they are produced, they can't be changed, changes in the design incur additional costs. This limitation associated with application-specific integrated circuits is projected to hamper the market.

Emerging Opportunities

The evolution of Industry 4.0 creates a lucrative opportunity in the market. Industry 4.0 led to the adoption of several smart and electronic devices, creating demand for application-specific integrated circuits as these circuits are used to control the functionality of electronic devices.

Moreover, increasing investment in R&D activities by major market players to develop and introduce new application-specific integrated circuits for blockchain technology, creates an immense opportunity in the market. For instance,

• On April 4, 2022, Intel Corporation a manufacturer of graphic chips, flash memory, and motherboard chipsets announced the launch of a new Intel application-specific integrated circuit (ASIC) Blockscale to provide customers with energy-efficient hashing for proof-of-work consensus networks. Blockscale enables blockchain applications to scale their computing power without compromising on sustainability.

Scope of the Application Specific Integrated Circuit Market Report

The report on the market includes an assessment of the market, trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Application Specific Integrated Circuit Market Segment Insights

Product Type Segment Analysis

Based on product type, the application specific integrated circuit market is categorized into full custom ASIC, semi-custom ASIC, and programmable ASIC. The semi-custom ASIC segment held a large share of the market in 2022 due to its extensive range of applications and lower complexity. Semi-custom ASICs can perform different functions within the area of their general application and are customized partially, which increases their adoption in smartphones and other smart devices.

The full custom ASIC segment is expected to register significant growth during the forecast period owing to its ability to deliver enhanced speed and reliability while consuming a lesser amount of electrical power. Full custom ASIC is used in the manufacturing of microprocessors as they are fully designed for a specific application.

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Industry Vertical Segment Analysis

In terms of industry vertical the global market is segregated into telecommunication, industrial, automotive, consumer electronics, information technology, and others. The consumer electronic segment accounted for a major share of the market due to increasing adoption of wearable devices, smartphones, laptops, and routers and rising income level of the consumers.

Application specific integrated circuits are utilized in consumer electronics goods to provide low power consumption, IP security, compact size, and enhanced bandwidth. ASIC in smartphones and laptops provides superior performance compared to traditional integrated circuits, which increases its adoption in the consumer electronic industry.

The industrial segment is anticipated to witness considerable growth during the assessment period owing to growing infrastructure and rising demand for new products or services. Application specific integrated circuits reduce the chances of machine failure by replacing traditional components such as PCB traces and solder joints with one IC, which increases their demand in industries. Moreover, increasing adoption of several components such as thermal controllers, programmable timers, and 8-bit microcontrollers in industrial applications is propelling the market.

Regional Outlook

In terms of region, the application specific integrated circuit market is divided into Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. North America dominated the market in 2022 due to rising development in consumer electronics products, increasing adoption of electric & hybrid vehicles, and the presence of major market players such as Broadcom, Faraday Technology Corporation, Texas Instruments Incorporated, and Intel Corporation.

Moreover, increasing number of data centers in the region is propelling the need for application specific integrated circuits as these circuits are utilized in data centers for hosting certain types of applications. For instance, there were 5,375 data centers located in the US by September 2023.

The market in Asia Pacific is expected to expand at a high CAGR during the projection period owing to increasing digitalization and growing automobile industry. Additionally, rising spending in the IT industry is projected to create a lucrative demand for application specific integrated circuit as it is used in IT to process complex data.

In addition, increasing penetration of smartphones in the region is estimated to boost the market as these circuits are used in smartphones to process images, videos, and audio, and to manage specific functionality in the device.  For instance,

• The penetration rate of smartphones in Asia Pacific reached 76% in 2022 and is estimated to reach 90% by 2030.

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