April 2007

The emerging Structured ASIC segment breathed new life into an ailing overall ASIC market. Structured ASICs allow previous users who have left overall ASIC market to once again contemplate using a Structured ASIC solution for their application.

The emergence of the Structured ASIC represents a new category of semiconductors for the industry. The Semiconductor Industry Association (SIA) does not currently have a category labeled “Structured ASIC.” Therefore, Semico Research Corporation has created a definition that captures most of the important features that can be used to define a Structured ASIC.

· Use of movable (re-usable) Intellectual Property (IP).

· Use of internal on-chip buses.

Silicon on Insulator (SOI) began as a material for niche markets but has gained considerable attention and traction because of its technology benefits driving product market penetration. This resulted in an excess of 100% growth of SOI wafer demand in 2006 compared to the SOI wafers used in 2005.

What’s driving this growth? SOI is being deployed in products that require increased switching speed and lower power operations. These products include MPUs in high-speed network servers and other performance driven applications. One market segment that has seen broad adoption of SOI chips is the game console market. All three leading game console manufacturers (Microsoft, Nintendo and Sony) have designed in SOI-based processors.

The NAND flash memory market continues to be one of varying market dynamics. In 2006 NAND revenues grew only 9%, down sharply from the double and triple-digit percent increases of previous years. On the positive side, gigabyte shipments continue to increase at the fastest rates in the history of the semiconductor industry, growing at a rate of 217% in 2006. Annual gigabyte growth is projected to continue at 102% CAGR from 2006 to 2011. While this is slower than in previous years, this growth is still impressive compared with previous growth rates of other memories.

“NAND market pricing is like a rubber ball: what goes up must come down, and then back up again,” said Adrienne Downey, Senior Analyst of Non-Volatile Memory at Semico Research Corporation. “Revenue growth was spectacular for several years, but as more manufacturers enter the market, prices fall to profit-erasing levels. Shortages tend to appears when a significant new application hits the market and consumes all the available NAND in sight.”