IC Design Service Market Size, Share & Trends Growth [2031]

Report Description

Market Outlook:

The Global IC Design Service Market was valued at USD 18,495.2 Million in 2022 and is projected to reach USD 56,071.9 Million by 2031, expanding at a CAGR of 13.3% during the forecast period.

IC design service is the process of designing an integrated circuit (ICs). The primary objective of IC design is to perform a specific operation by assembling interconnected circuit elements. IC design services offer a comprehensive suite of solutions, from concept development and architecture design to layout and verification. These solutions cater to the diverse needs of semiconductor companies and other industries requiring custom IC solutions.

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IC design services are offered by specialized companies or design teams, catering to the requirements of clients seeking custom chip designs tailored to their specific applications. Outsourcing IC design allows companies to concentrate on their main strengths, lower their expenses for development & production, and speed up the delivery of their products to the market.

COVID-19 Impact on the Global IC Design Service Market

The research report finds that the COVID-19 pandemic had a significant impact on the operations of IC design resulted in less demand for direct labor when compared to foundries and OSAT firms. Thus, the IC design industry was not as severely affected by the pandemic as the semiconductor industry. Furthermore, EDA companies and foundries expanded their cloud-based design and verification environments. Thus, IC designers were able to overcome the operational and output shortcomings associated with having their personnel work remotely through these cloud-based platforms.

Artificial Intelligence (AI) Impact on the Global IC Design Service Market

The impact of Artificial Intelligence (AI) on the global IC design service market is an emerging area of research and development. Artificial intelligence (AI) is transforming the field of integrated circuit (IC) design, allowing semiconductor manufacturers to produce better circuits faster, more efficiently, and at a lower cost.

Advanced AI tools are significantly accelerating semiconductor chip design. These techniques can arrange 100 billion transistors on a single square inch, which was previously difficult for human engineers. Chips with process nodes less than 10 nm particularly used in smartphones, laptops, and others are the chip market's fastest-growing and most profitable segment. In recent years, the top EDA vendors have started selling advanced AI-powered tools, while chipmakers and tech companies have built their own AI design tools.

Macro-economic Factors

Economic Growth:

Global economic growth has a significant influence on the IC design services market. The global economic growth has resulted in substantial investments in the IC industry, leading to the market share concentration among dominant companies.

• For instance, in 2022, the Taiwan Semiconductor Manufacturing Company (TSMC) spent USD 30 billion toward production expansion. This move reduced its gross margin from 51.5% to 49.5%. TSMC also announced plans to construct a second chip manufacturing facility in Arizona, US, raising the initial investment to USD 40 billion.

Regional governments are also providing support to develop their national IC industry ecosystem. For instance, China has been aggressively constructing new fab capacities, accelerated by the introduction of the China Integrated Circuit Investment Fund.

Government Initiatives:

• US: The US government enacted the Creating Helpful Incentives to produce Semiconductors (CHIPS) for America Act in 2020. This act aims to restore semiconductor manufacturing in the US and secure the supply chain.

• European Union (EU): The EU initiated the Important Projects of Common European Interest (IPCEI) on Microelectronics. This project focuses on research and innovation in microelectronics, a key enabling technology for all critical digital technologies.

• China: In August 2020, the State Council of China issued the notice on several policies to promote the high-quality development of the integrated circuit industry and software industry. This notice provides a broad framework for the development of the semiconductor industry.

• India: In May 2020, the government of India outlined its Aatmanirbhar Bharat vision, with plans to become a self-sustaining semiconductor production unit. Some schemes that are introduced include the Production Linked Incentive (PLI), Scheme for Promotion of Manufacturing Components & Semiconductors (SPECS), and the Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme.

Technological Advancement

Technological advancements have a profound impact on the IC design services market. The demand for increasingly complex and efficient ICs increases, as technology evolves. This is particularly evident in sectors such as consumer electronics, automotive, and telecommunications, where advancements such as 5G, 6G, AI, and IoT are increasing the need for high-performance ICs.

Designing these advanced ICs is a complex task that requires specialized skills and knowledge. Therefore, many companies are outsourcing their IC design needs to specialized service providers, thereby boosting the growth of the IC design services market.

• For instance, in 2023, Sivers Semiconductors has secured a USD 1.3 million from HORIZON Europe to spearhead a 6G chip design initiative. The grant is expected to fund 90% of the involvement of Sivers in the project, which aims to develop millimetre Wave (mm Wave) building blocks for next-generation 6G technology over a span of 3.5 years. For example, plans were announced for the construction of first semiconductor fabrication plant in the country by the Israel-based International Semiconductor Consortium in February 2023.

Investments in R&D

Governments across the globe play a crucial role in promoting research and development (R&D), including in the field of Integrated Circuit (IC) design. They provide support through various means such as direct funding, grants, and tax incentives in various countries as follow:

• China: The government of China launched the National Integrated Circuit Industry Development Program in 2014, allocating funds to domestic chipmakers, research institutions, and talent development. The program fuelled rapid growth in the China IC industry, making the country the largest chip importer across the globe.

• US: The CHIPS Act of 2022 allocated USD 52 billion to boost domestic semiconductor manufacturing and R&D. the act aims to counter technological advancement in China and revitalize the US chip industry.

Market Dynamics

Market Drivers - Rising Adoption of Sophisticated and Miniaturized IC Designs

The increasing demand for more sophisticated and miniaturized IC designs is boosting the IC design service market by creating more demand for specialized and customized solutions for various applications and industries. As technology advances, the demand for more sophisticated and feature-rich electronic devices rises. Miniaturization induces the demand for complex and powerful system-on-chip (SoC) designs, which integrate multiple functions and components on a single chip. This increases the demand for IC design services that can handle the challenges of SoC design, such as verification, optimization, and testing.

• For instance, the latest transistor technology in terms of nanometer (nm) scale is the 2 nm chip technology, which was unveiled by IBM in May 2021. This technology uses nanosheet FETs, which are a type of gate-all-around (GAA) FETs, to achieve 45% higher performance or 75% lower energy use than the most advanced 7 nm node chips. IBM claims that this technology can fit up to 50 billion transistors on a chip, the size of a fingernail.

Market Drivers - AI and ML Integration for Error Detection in IC Designs

The continuous evolving IC technology has made it possible to produce chips with several millions of transistors. However, it has increased the complexity in IC design, leading to errors. AI and ML are increasingly being used for detecting these errors by applying various methods and techniques to analyze the data and features of the ICs, such as their images, waveforms, electrical behavior, and functional performance. AI and ML algorithms are used to identify and correct anomalies, defects, and inconsistencies that indicate the presence of errors in the IC designs, which may compromise the quality and reliability of the electronic systems that use them.

• For instance, Machine learning-based error detection and design optimization method is increasingly being used for error detection.

Market Restraints - High Investment Requirements

The IC design service market requires high capital expenditure for acquiring skilled engineering resources, software licenses, and design tools. The market is highly dependent on the availability and cost of skilled engineers and technicians, which can be challenging in some regions. A team usually includes several people, which includes a Product Definition Engineer, who writes the specification; Analog Design Engineers, who take the specification and design the analog portion of the IC and small digital sections; Digital Design Engineer who writes the register transfer logic (RTL) code for digital sections that are more than 100-1000 gates; Place and Route (P&R) Engineer who takes the RTL code and generates a layout for just the digital logic gates; Top Level System Simulation Engineer who simulates the whole mixed mode IC, including building models for the analog pieces; Layout Designer who handcrafts the IC schematic into a physical database, drops in the digital P&R, and routes up the pads and peripheral electronics; Test Engineer who designs the test hardware and writes the production test program; and a Program Manager, to oversee the overall IC development team.

Market Opportunity - Proliferation of 6G Technology

The proliferation of 6G technology is projected to create numerous opportunities for the IC design service market by increasing the demand for advanced and customized ICs for various applications and industries. 6G technology is expected to offer data speeds of up to 100 Gbps, ultra-low latency, massive connectivity, and enhanced intelligence, enabling new use cases such as holographic communication, brain-computer interface, and quantum internet. To support these use cases, the IC design service market will need to provide innovative solutions for high-performance, low-power, and secure digital circuits, as well as integrate artificial intelligence and machine learning into the design process.

• For instance, in 2022, Department of Telecommunications (DoT) of India launched Bharat 6G Alliance (B6GA) to drive Innovation and Collaboration in Next-Generation Wireless Technology, a collaborative platform consisting of public and private companies, academia, research institutions, and Standards development organizations.

Scope of the Report

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

Segmental Outlook

The Global IC Design Service Market is segmented on the basis of type, service type, enterprise size, application, and end-use industry.

On the basis of type, the Global IC Design Service Market is segmented into analog IC, digital IC, and mixed IC. The digital IC segment held significant share of the market in 2022 and is projected to expand at a significant CAGR during the forecast period. The growth of digital ICs is driven by the rising complexity and miniaturization of IC designs, which require increasingly sophisticated and efficient digital circuitry for high performance and functionality.

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Based on Service Type, the IC design service market is segmented into Circuit Design, Layout Design, Package Design and Others. The Circuit Design Segment is expected to hold a significant market share during the forecast period, owing to rising demand for high-performance and low-power digital circuit design, as well as increased use of automation tools and software. These technologies enable designers to automate repetitive processes like circuit development, simulation, and verification, freeing up time for more difficult and imaginative design work. Also, Emerging technologies such as nanotechnology, quantum computing, and neuromorphic computing are expected to revolutionize the Circuit design process.

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On the basis of enterprise size, the IC design service market is segmented into small & medium enterprise and large enterprise. The large enterprise segment held significant market share in 2022 and is projected to expand at a significant CAGR during the forecast period, owing to the rising demand of IC design services in large enterprises. IC design services help the organization to stay forefront in technological advancements and maintain a competitive edge in the market.

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Based on application, the IC design service market is segmented into micro components (MCU/MPU), FPGAs, memories, analog, optical sensor, non-optical sensors, digital ASICs, and others. The memories segment held significant share of the market in 2022 during the forecast period. IC design services provide a flexible, efficient, and cost-effective approach to memory application development, enabling the creation of complex and reliable memory-based products for various applications.

Based on End-Use industry, the IC design service market is segmented into Communication, Consumer Electronics, Automotive, Computing, and Industrial. The computing Segment held significant share of the market in 2022 and is projected to expand at a significant CAGR during the forecast period, owing to advancements in big data analytics, artificial intelligence, and machine learning, there has been a significant increase in demand for high-performance computing. ICs used in computers, servers, and data centers are critical components of these systems, driving demand for IC design services in this segment. Also, the adoption of cloud computing is driving the demand for ICs in data centers, as more data centers are being built to support cloud computing services.

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Regional Outlook

On the basis of region, the Global IC Design Service Market is divided into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa. North America held significant market share in 2022. The growth is largely attributed to the growing consumer electronics industry in the region. The market is characterized by the presence of major industry players and advanced technology resources. The adoption of IoT devices and the prevalence of data centers have boosted demand for IC design services in the region. The US dominates the North American IC design service market. The government support and investment in the IC industry, such as the CHIPS for America Act, aim to boost the domestic production and research of semiconductors.

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Key Companies Strategies & Developments

• On November 2023, Synopsys, Inc. stated that it has expanded its ARC Processor IP portfolio to include new RISC-V ARC-V Processor IP, allowing buyers to select from a variety of flexible, extensible processor solutions that provide maximum power-performance efficiency for their target applications.

• On October 2023, Cadence Design Systems, Inc. announced the acquisition of Intrinsix Corporation from CEVA, Inc. Cadence Design Systems, Inc. received a highly qualified engineering team with expertise in advanced nodes, radio frequency, mixed-signal, and security algorithms, allowing it to scale its system and IC design services team and increase its presence in important high-growth verticals, including aerospace and defense.

• On September 2023, Qualcomm Technologies, Inc. announced that it has entered into an agreement with Apple Inc. to supply Snapdragon 5G Modem‑RF Systems for smartphone launches in 2024, 2025, and 2026. This agreement reinforces the track record of the company of sustained leadership across 5G technologies and products.

• On December 2022, Taiwan Semiconductor Manufacturing Company Limited announced starting of the construction for a second fab, which is expected to begin production of 3nm process technology in 2026. This is in addition to the first fab in Arizona, which is set to begin production of N4 process technology in the first half of 2025. Additionally, the company is moving forward with its proposal to build a fab in Kumamoto, Japan.

Key Benefits for Industry Participants & Stakeholders

• In-depth Analysis of the Global IC Design Service Market

• Historical, Current, and Projected Market Size in terms of Value and Volume

• Potential & Niche Segments and Regions Exhibiting Promising Growth Covered

• Industry Drivers, Restraints, and Opportunities Covered in the Study

• Recent Industry Trends and Developments

• Competitive Landscape & Strategies of Key Players

• Neutral Perspective on Global IC Design Service Market