Global prices for microcontroller chips are likely to dip by "a couple of percent" through 2008 due to fierce competition and pricing pressure, a senior executive at Japan's NEC Electronics Corp <6723.T> said on Saturday.
The chipmaker also sees the microcontroller (MCU) market growing 7 to 8 percent in 2008, with growth tapering slightly in 2009, Shige Ishikawa, microcomputer division general manager, told Reuters in a telephone interview.
NEC Electronics, which recently opened a development centre in Chengdu, Sichuan province in western China, also hopes to expand its share of China's MCU market to over 10 percent by 2009, compared to 5-6 percent now, Ishikawa said. "We are targeting more than a two-digit number. Hopefully we will achieve that in 2009," Ishikawa said.
"Asia markets, particularly China, are the fastest-growing markets for microcontrollers," he said. Ishikawa is attending the China High Tech Fair, held in the country's southern boomtown of Shenzhen. Microcontrollers make up about a quarter of sales at NEC Electronics, which makes chips for Nintendo Co's game console Wii and for Toyota Motor Corp's Lexus luxury car, and is 70 percent-owned by NEC Corp NEC Electronics has said it ranks third in world-wide MCU sales.
The global consumer MCU market was worth around 30.5 billion yuan ($4.06 billion) in 2006, according to Beijing-based market research firm CCID Consulting, with China accounting for about half of that market.
China's consumer MCU market will be worth 17.92 billion yuan and 21.37 billion yuan in 2007 and 2008, CCID said. Analysts expect chip sales in China to rise due to rapidly growing demand for semiconductors used in air conditioners and car electronics.
But prices for semiconductor chips -- particularly memory chips such as Dynamic Random Access Memory and NAND flash -- have slumped because of lingering global oversupply and stiff competition. "The market competition is getting tougher and tougher, and prices will be defined by customer demand and market competition," Ishikawa said.
Asked how much global MCU prices could fall, he said: "Maybe two to three percent or even five percent." A microcontroller chip -- often referred to as a "computer on a chip" -- is often used in automatically controlled devices such as car engine control systems and power tools, and are able to control several processes while minimising power consumption.
NEC Electronics said in August it hoped its Chengdu office would help double its sales in mainland China to 100 billion yen by 2010, from 50 billion yen last year. NEC Electronics posted a net loss of 1.33 billion yen ($11.31 million) for April-June, and is forecasting a 15 billion yen net loss for the year to next March.