The Programmable Logic Market
Programmable logic devices (PLDs) are semiconductor logic blocks that can be programmed after they are manufactured. The most common PLDs are Field-Programmable Gate Array (FPGAs). As integrated circuits become more complex FPGAs become more cost effective in electronic devices within communications, storage, industrial, consumer electronics and other end product markets. PLD chips will always be larger and slower than ASICs, but as more focus and energy is expended on design, more designs move to PLD.
“The cost of developing an ASIC, in general, doubles every generation. On 180nm, it was US$7-8 million, on 90nm it was in the neighborhood of US$40 million. As of yet, there are no ASICs on 65nm, but the development costs would be US$70-80 million.”
-Xilinx CEO Wim Roelandts, Apr 2007
The programmable logic device (PLD) market is a duopoly with Xilinx and Altera controlling 85% of the market. From design win to customer beginning volume production can be two years so market share is a lagging indicator, but by all accounts Xilinx and Altera appear to be continuing to gain market share. An FPGA family typically reaches peak sales four to five years after introduction.
These two companies have taken a billion dollar of revenue from ASIC vendors over the past five years. The PLD market has grown a little less than 10% annually the past three years, but the market is expected to grow 10 – 15% annually over the next five years and the top two firms should grow earnings even faster. With the growth of embedded systems and the utilization of communication systems it is possible that the programmable logic market’s growth could even accelerate further. However, it may be a couple years before the PLD market growth begins accelerating.
In the Programmable Logic Device (PLD) market Xilinx and Altera are followed by Lattice with 7% market share, Actel with 6%, and Quicklogic with 1%. Over the next few years Xilinx and Altera should not lose or gain meaningful market share. These companies will grow because the four billion dollar PLD market is growing within the $72 billion semiconductor logic industry. PLD’s are receiving major designs wins in the overall semiconductor logic market specifically in products that used to be serviced by Application Specific Standard Products (ASSP) and the Application Specific Integrated Circuit (ASIC).
Every year PLD’s make more economic sense as designing and manufacturing semiconductor devices become more time consuming and more expensive. Initially just a prototyping tool, PLD’s can now cost effectively ramp up to 100,000’s of units. Some low cost PLD’s such as Altera’s FPGA Cyclone® series are now in devices selling in the low millions of units a year.
PLD’s offer a much more stable platform than other logic choices such as ASIC’s or ASSP where the devices have to be re-designed and re-tested every couple years. This can be a problem for products such as automobiles which typically are not re-designed more than once or twice per decade.
As more chips are embedded in different products the addressable PLD markets expands. The volume point where ASIC’s are more cost effective over PLD’s is now almost 100,000 units, five years ago it was 10,000 units. Due to this PLD is taking market share from the ASIC industry and ASSP industry.
While ways to measure semiconductor markets can vary widely the current markets that PLD can and is moving into are the ASIC market valued around roughly $15B, the ASSP market valued around roughly $15B, the very high performance DSP market valued around $3B, and the embedded processor market valued around $3B. If one was to include some of the high performance ASSP vendors such as Broadcom in the ASSP market it could be valued much higher (potentially around $45B), but the PLD vendors are not about to compete with these products.
