Programmable Logic, the Top Commodity of 2015

Programmable Logic, the Top Commodity of 2015

According to the Semiconductor Industry Association, the global semiconductor sales in 2015 top $335 billion. Within this, the commodity with the most revenue at 27% was programmable logic. Due to technology innovation, we are able to see programmable logic in anything from the Internet of Things (IoT) to cars or robots.

Programmable logic are parts that are meant to be programmed by either the manufacturer or the end user themselves and can usually be reprogrammed. The two main manufactures of programmable logic are Altera and Xilinx.

Towards the end of 2015, Intel completed its acquisition of Altera, the programmable logic company it agreed to acquire for $16.7 billion. Altera is now operating as a new Intel business unit called the Programmable Solutions Group (PSG). As the data center and IoT grow within Intel, they will start to combine programmable logic and Xeon cores into modules to create custom chips for customers. This will give Intel a leg up to the competition. Intel says that the first chip that combines Intel and Altera technology will go into servers, cars, robots, IoT, automation equipment and other products.

Programmable logic chipmaker Xilinx likes the 2015 numbers as well. Investors sweetened on shares of Xilinx after the company reported better than expected third-quarter sales. Shares in Xilinx, which makes programmable logic chips that are used in communications infrastructure, automobiles and industrials, jumped 8.59% to $46.78 by the close after BMO Capital Markets, a leading North America financial advisory service provider, said the company could be an acquisition target.

Xilinx is also changing control provisions, which allows for some protections for employees in the event of a change of ownership. “We believe the change in control provision significantly raises the probability of Xilinx being acquired by another company,” said Ambrish Srivastava, an analyst at BMO Capital Markets. “The last time we saw such a provision in our coverage was by Xilinx’s rival Altera, which ended up getting acquired by Intel, for a significant premium.”

Programmable logic is staying consistent with the semiconductor industry, as it has seen a wave of consolidation as companies try to boost growth and cut costs in the wake of weaker PC demand and increasing global competition in 2015. Programmable logic’s revenue are projected to increase as new products including IoT and robotics are designed and produced.

Advanced MP Technology is a worldwide trusted distributor for electronic components. We supply a wide range of programmable logic manufacturers including Altera and Xilinx to support customers in various verticals.