Market Trends of Communication Integrated Circuits Industry
Logic IC Segment is Expected to Hold Significant Market Share
- The swift progress in communication technologies, including 5G, the Internet of Things (IoT), and edge computing, is propelling the need for logic integrated circuits (ICs) in the communication industry.
- These ICs are essential for facilitating effective communication, data transfer, and network connectivity. There is a significant demand for logic ICs tailored for high-speed interconnections, wireless communication standards, and network infrastructure to accommodate the growing data rates, minimal latency, and extensive connectivity needs of contemporary communication systems.
- In addition, demand for logic ICs is driven by the proliferation of machine learning and artificial intelligence technologies in various applications such as natural language processing, image recognition, or predictive analytics. These ICs are essential for accelerating AI model inference, optimizing neural network algorithms, and facilitating efficient data processing in AI-enabled devices and systems. As AI and ML continue to advance, logic ICs capable of efficient and high-performance computation will be increasingly in demand.
- Moreover, owing to the digitalization of corporate business practices and increased streaming and internet usage, the demand for data is growing. Additionally, the rapid growth of cloud computing drives considerable investments in data center infrastructure.
- According to the global SWF, data centers accounted for one-third of global government investment in digital infrastructure as of 2023. This initiative concurrently will drive the market for logic ICs as data centers require powerful logic ICs to handle large-scale data processing, storage, and management tasks. Additionally, these are designed for energy efficiency and are sought after to optimize power consumption in data centers and cloud computing environments.
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China is Expected to be the Fastest-growing Region in the Market
- Artificial intelligence, advanced wireless networks, and quantum computing such as 5G are also opening up new frontiers of communication ICs demand in China. For instance, as per GSMA, 5G will become the lead network technology in China by 2025. As the demand for high-performance computing devices accelerates, the rollout of 5G networks is keeping pace, with integrated circuits (ICs) playing a pivotal role.
- Furthermore, the expansion of the communication integrated circuit market within the country is being propelled by the integration of cloud technology, the rising establishment of data centers, and the progress of 5G technology. According to data provided by Sppedtest by Ookla and GSMA, in the first half of 2023, Hong Kong was the leading country in terms of 5G availability (42.3%), followed by countries such as Australia, South Korea, Thailand, and the Philippines.
- Similarly, as of October 2023, China boasted around 3.22 million 5G base stations, accounting for 28.1% of the nation's total cellular base stations. With 5G swiftly cementing its role as a pivotal player in the communication sector and streamlining data transfers across the manufacturing ecosystem, these infrastructural strides are set to propel the country's market growth.
- In addition, the growing cloud and data center market in the region is expected to drive the demand in the communication ICs market. As reported by Cloudscene, as of September 2023, China had 448 data centers, surpassing all other countries in Asia-Pacific. Furthermore, China ranked fourth globally in terms of the total number of data centers during the same month.
- Moreover, the country is also witnessing an increase in the construction of data centers, further creating demand for communication ICs. For instance, in August 2024, Equinix, Inc. declared an initial investment of USD 124 million for the development of its specialized International Business Exchange (IBX) data center located in Hong Kong. Designated as HK6, this facility will be linked to Equinix's five pre-existing data centers, which function as a central point for data and economic interactions among multinational corporations and local and mainland Chinese businesses within the Greater Bay Area (GBA).
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