FPGA market set for steady demand growth

Market finds support from mature niches as well as increasing leading edge requirements for high-end applications.

The market for field programmable gate arrays (FPGAs) is growing at a steady pace, as mature nodes remain well suited to customers’ needs while leading edge applications continue advancing.

Revenue is set to increase at a compound annual growth rate (CAGR) of 10% over the period from 2023 to 2029 to reach $15.4 billion, according to Yole Group’s forecast.   

The market is being supported by trends in 5G telecom and networking equipment, as well as growth in industrial applications. In particular, demand for FPGA systems is rising strongly for higher-priced segments including networking acceleration, data center, and advanced driver-assistance systems (ADAS) applications.

What is the status of the technologies? What are the latest innovations? What does the market stand for? Let us have a stop and read Yole Group’s viewpoint written by John Lorenz, Senior Technology & Market Analyst, Memory at Yole Group.

This analysis has been extracted from the following products: Status of the Processor Industry and Processor Market Monitor.

FPGAs can reduce the lead time and upfront cost required to design a chip, allowing developers to buy a design off the shelf and program it to their specific needs rather than designing a custom chip from scratch.

They have an important niche in supplying customers developing applications that do not require large enough volumes to justify the development of a specialist application-specific integrated circuit (ASIC) or want to beta test ideas for new custom chip designs to avoid creating silicon waste, notes John Lorenz.

Data centers drive high-end FPGA demand

John Lorenz Senior Technology & Market Analyst, Memory at Yole Group
FPGAs are standing in two worlds, where the most advanced keep moving along at the leading edge while there remains a cohort of conventional FPGAs that are still perfectly suited for mature processes. Their value proposition has little to do with increasing transistor density– it’s about the flexibility of the final product.

Revenue from sales of FPGAs for consumer systems is likely to remain flat, in line with generally saturated consumer demand.

The use of FPGAs in the automotive sector is expected to grow further in the coming years with the increasing requirements for sensors in ADAS, particularly in new sensing technology such as imaging radar. And in the defense and industrial sectors, volumes are so small that FPGAs provide more convenience and flexibility than custom designs, saving on costs. They are also key in in keeping silicon designs for defense applications under wraps, as developers can program FPGAs without manufacturers seeing them.

Applications that are prime for FPGAs – such as broadband communications towers that allow engineers to update algorithms within the chip, as well as data centers responding to growth demand from artificial intelligence (AI) – are driving the overall market growth.

High-end FPGAs used in data centers and testing, measurement, and emulation (TME) are based on much larger die sizes and sold at much higher price points than for other applications. The volumes are so much lower than for mainstream FPGA applications that economies of scale do not come into play as much and the price must carry a larger portion of non-recurring expenses than the higher volume chips. These also tend to ship as part of a whole card, included in the average selling price (ASP).

High-end FPGAs compete in some sense with graphics processing units (GPUs) in data centers, though for the moment GPUs have taken the lion’s share of AI acceleration workloads.

John Lorenz from Yole Group
Mainstream FPGAs resemble the trend we expect to see, where more complex applications demand larger solutions and are thus getting more expensive – but this is true for the ASIC alternatives as well, as they require more design and node development, increasing the critical volume, below which FPGA is a lower cost proposition.

Suppliers to benefit from ASIC volume crossover

There is a point of volume crossover, after which ASICs start becoming cheaper than FPGAs. Given the rising cost of ASIC development, this is increasing with each generation, making FPGAs more and more attractive. Yole Group expects the sector’s revenue to grow over time as FPGA placements scale with specific end systems.

Xilinx, which was acquired by AMD in 2022, is the supplier that most stands to benefit from this growth, as it accounts for more than 50% of the market – bringing in around $1 billion in revenue per quarter. Intel, which acquired Altera in 2015, holds the second largest market share, while smaller players such as, Microchip, Lattice, and Achronix make up the remainder.

FPGAs fill an important niche role and Yole Group will continue to monitor developments in this growing market.

Stay tuned!

About the author

John Lorenz is Senior Technology & Market Analyst, Memory at Yole Group.  

John is engaged with in-depth analysis of the dynamic memory market and is in charge of the Yole Group’s DRAM research.

Prior to joining Yole Group, John spent 15 years with Micron technology, where he played pivotal roles in process engineering and in market intelligence and strategy.

John has a Bachelor of Science degree in Mechanical Engineering from the University of Illinois Urbana-Champaign (USA), with a focus on MEMS devices.

Related products