MCUs are the workhorses of the semiconductor industry, infusing life into devices across multiple markets. With Edge AI proliferating, suppliers see bigger sales opportunities ahead.
Microcontrollers are the unsung heroes of the electronics equipment world. Without them, the market as it is today will come to a halt, according to researchers at the Yole Group, a France-based semiconductor consultancy. MCUs touch almost all segments of the global economy, flourishing and believed to be critical components in markets as varied as farming, medical, aerospace, manufacturing, automotives and defense. Any major disruptions to the global supply of MCUs could prove catastrophic to OEMs and even national economies, as witnessed immediately after the end of the recent Covid 19 pandemic when automakers faced intense component shortages and halted production. “Many an automobile sat on a warehouse lot waiting for a ‘golden chip,’ said Tom Hackenberg, principal analyst, computing and software at Yole, in a report. “MCUs are also critical in other ways. Safety and security are key functions for MCUs. While a complex vision/AI platform may be key to the next generation of self-driving vehicles, vehicle design today – and probably for generations to come – will rely on MCUs to control critical safety and engine systems as well as secure the network communications throughout the vehicle.”
Even this glowing assessment of MCUs may be incomplete. As many as 4 out of 5 processors shipped in the electronics industry today are MCUs with the number continuing to inch higher. The advent of artificial intelligence will only further enhance the usage of MCUs, observers said. Microcontroller suppliers have gained greater relevance and focus than even in the past, seeing opportunities in the growing demand for artificial intelligence devices, from data center equipment and especially from devices that have the capability to generate and process information at the source rather than in the cloud. Edge AI – one of its various appellations – represents the greatest opportunity in decades for microcontroller suppliers to widen their revenue streams. This was evident at the 2025 Embedded World Exhibition held in Nuremberg, Germany, in March. While most of the exhibitors demonstrated their AI-related offerings, MCU vendors led the charge. Everyone had Edge AI offerings, either hardware or software related. Press releases touting Edge AI MCUs kept flowing through the 3-day event, in addition to multiple demonstrations showing the products and the applications.
“We’ve gone beyond talking about Edge AI to showing devices and software programs supporting it” said Rich Simoncic, chief operating officer at Microchip Technology Inc., in an interview, during which he talked about the company’s MPLAB AI coding assistant, a free tool the company is offering design engineers to support their product development activities. The Microchip tool is an interactive chatbot that the company said can trim product development time by 40 percent through code suggestions, assessment and tests. It can also connect designers directly with additional resources and human support if required, Simoncic said. Microchip itself has been proactive in introducing AI to its workforce and has used it extensively internally resulting in most of its production activities now auto scheduled. “AI is so pervasive within Microchip now that we’re starting to offer it to our distribution channels and customers on a website for coding improvements,” Simoncic said.
Market share battle
Forecasters say demand for MCUs will grow at a low double-digit compounded annual rate over the next five years. MCU sales will rise to $57 billion by 2030, from a projected $35 billion for this year, according to Mordor Intelligence. As a result of projections like this, the battle for leadership of the MCU market has grown fierce with the top 3 vendors accounting for more than half of shipment and all jostling for leadership of the sector. The leadership of the segment changed late in 2024 with Infineon Technologies claiming the title of No. 1 for the first time, having slipped past fellow European vendor STMicroelectronics after the Geneva-based company’s sales dropped on inventory correction. Infineon’s MCU business has outperformed the market for many years, increasing 13 percent annually between 2015 and 2024, the Munich-based company said, in a report.
Citing Omdia, Infineon said its market share rose to 21.3 percent in 2024, from 17.8 percent, in the previous year. “The fact that we have strengthened our position is proof of our superior product portfolio, software and easy-to-use development tools that exceed our customers’ expectations,” said Andreas Urschitz, chief marketing officer and member of the management board of Infineon, in a statement. “Over the past decade, we have repeatedly outgrown the total market and gained market share by offering our customers highly functional and efficient system solutions that are at the heart of many innovations that drive decarbonization and digitalization.”
The microcontroller market has faced some turbulence in recent years due to weakening demand and inventory oversupply. Sales in the sector declined over the last several years due to reduced demand from the automotive and industrial sectors. Companies like Microchip and ST experienced double-digit sales declines and are still working on reducing inventories that had piled up on a surge in orders after the end of the Covid-19 pandemic. Infineon was also impacted but it avoided the worst of the storms because its exposure to the affected markets was not as deep. It was also shielded by its widening sales of microcontrollers outside of the automotive market to consumer, IoT and industrial OEMs. No supplier is immune from the vagaries of the market, though, which is why all microcontroller vendors are avidly exploring Edge AI opportunities.
Edge AI will give microcontroller suppliers even better insulation against the any future market weaknesses because their devices are finding a home in many more OEM equipment and in more segments of the electronics industry as well as in markets they already support. It will also help them avoid the conundrum of product commoditization as Chinese vendors enter the market, they said. “Over a third (38%) of all MCUs were shipped to Mainland China for assembly into a wide variety of electronic devices or subsystems before being shipped around the globe,” said Hackenberg at Yole. “There has recently been a strong drive supported by China’s government to decrease its dependence on foreign sources of critical semiconductor components, spawned by US trade sanctions on semiconductors and semiconductor manufacturing that could be used for advanced military applications.”
