A pretty good overview of the current state of the DSP market....note that author believes that 25% growth for this year is conservative.
techweb.com
July 05, 1999, Issue: 1068
Section: Analysts' Outlook
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DSPs Drive New Era In ICs
Will Strauss
After lackluster growth in 1998, a generally bad year for chips, the DSP market is resuming its historically strong growth rate. DSP technology is becoming the market driver for the entire semiconductor industry, fueled largely by the worldwide thirst for connectivity. And the technology is also being provided in a variety of integrated circuits that are not called DSP chips.
The traditional general-purpose, programmable DSP chip market is still driven by digital wireless, disk-drive controllers and analog modems. Without doubt, the digital wireless market is exploding. The largest supplier to this market, Texas Instruments Inc. (Dallas), estimates that new handset shipments will reach 245 million units in 1999-more than twice the total of worldwide PC shipments. Put another way, that's 4.7 million units shipped per week.
Hard-disk drive (HDD) controllers are another market for DSP chips, more than a half-billion dollars' worth for the motor and read arm control functions and another half-billion or so for the hardwired digital read channel (which employs a key DSP algorithm). Advances in disk densities, with recent 60 percent annual increases in areal density, have been outpacing Moore's Law. Predictions are that the figure will soon balloon to almost 100 percent annual increases for the next several years-brought about by several technology advances that will require more DSP Mips for the more-complex control algorithms. By the end of 1999 we will see jumps from an average 4.3 Gbytes per 3-inch platter to some 10 Gbytes per platter.
TI is the clear No. 1 provider of DSP chips into the controller market, while Lucent Technologies is the No. 1 vendor of digital read channel chips. Other major DSP players in the HDD controller market include Cirrus Logic, IBM, Lucent, NEC and STMicroelectronics. Other players in read channels include Cirrus Logic and TI fighting for the No. 2 spot and STMicroelectronics close behind after its recent acquisition of Adaptec's Peripheral Technology Group. Note, however, that most of those companies do not report their shipments as "DSP chips," even if they are programmable.
Analog modem chips are still a big and growing DSP market, with virtually every home PC and many corporate PCs now being shipped with a modem. Although we predict that some 90 million dial modem chips of all speed classes will ship worldwide in 1999, prices have declined to the point where this is a business with a sub-10 percent margin on the client end of the connection.
To get modem prices even lower, virtually all PC houses are now shipping controller-less modems, which include a DSP chip but employ the host CPU for the protocol and handshaking functions once performed by on-board microcontrollers. To cut costs even more, some PC houses are beginning to ship so-called software modems, where the DSP algorithms are executed on the host CPU along with the control functions. PC-Tel is the major vendor of software modems in the PC market space, but Altocom has probably ported modem software to more platforms, including PDAs, than any other company. Though small, at around 4 million units, this is a faster-growing market than DSP-chip-based units.
Traditional DSP and modem chip suppliers are now emphasizing the remote-access market, which includes banks of modems at Internet service providers and corporate gateways. Here, margins are much greater and the competition is less intense. Major players include No. 1-ranked Conexant Systems followed by Texas Instruments, Lucent Technologies and Analog Devices.
But the remote-access market is quickly changing from a modem-pool concentrator one to a voice-over-Internet Protocol (VoIP) gateway market. VoIP involves compressing speech signals and sending them as data over a packet-based network using the IP. Because a given dial connection to the gateway could be a modem, a fax or voice, DSP chips handling those calls must quickly change operational profiles. Many of the early implementations are for voice or modem connections to the Internet, but some are opting to handle even more types of connections. For example, Conexant's AnyPort chip set-packing three DSPs and an ARM RISC controller in a single package-also accepts fax and ISDN connections for link-ups to an IP or ATM network. A number of relatively new chip suppliers serve this emerging market. Soon to join early players AudioCodes Ltd. and 8x8 Inc. are several quiet but well-funded startups.
The packet-switched IP technology will ultimately supplant much of the existing circuit-switched public phone network in over a few decades and will take on many forms, including VoIP-over-cable, LAN, ADSL and wireless. Only a few hundred thousand DSP-enabled ports have shipped to date. However, we can expect double-digit millions to ship within the next two or three years.
Suppliers are also moving into the broadband ADSL and G.lite markets. Lucent has shipped close to 250,000 G.lite modems to PC OEMs this year, a figure that's twice the world market for last year. Analog Devices is shipping ADSL "heavy" chips in production quantities, too.
Globespan Semiconductor claims installed-market leadership. But in this relatively small, brisk market, market share can shift with each new contract. Heavyweights Conexant, Motorola and TI are investing heavily, but the high-growth prospects have attracted a number of startups, among them Centilium, Integrated Telecom Express, Rosun Technologies and Virata.
Audio has become a significant programmable DSP socket, much of it in professional studios for CD recording and mastering. Playback on consumer devices has been largely in the form of non-programmable DSP chip implementations-nothing to sneeze at, since the PC music synthesis market is a multiple-hundred-million-dollar market fed by DSPs from companies like Cirrus, ESS Technology and Yamaha.
But the hot audio market this year is for "personal audio" players incorporating MP3 (MPEG-1, Level 3) audio, a DSP audio compression algorithm that allows stereo recordings to be downloaded over the Internet to one's own PC and then transferred to a portable player for playback through a decompressing DSP chip. Diamond Multimedia is the early player market leader, with its Diamond Rio family. The Rio employs a combination DSP-codec chip from Micronas Intermetall and is said to be shipping at a rate of hundreds of thousands per quarter. Consequently, there are already a half-dozen other units on the market based on DSP chips from STM, TI and others. Programmable DSP chips are de rigueur, because MP3 will almost certainly be upgraded to include digital watermarking and possibly encryption to prevent illicit copying. Moreover, many believe other audio-compression algorithms may quickly supplant MP3. In any event, this is a market that will soon ramp up to the million-unit annual shipment level.
Last year's negative IC market growth (-9 percent) brought on by the Asian financial crisis and bombing memory prices also held back the DSP market, which grew only some 9 percent over 1997. Most of that growth was in digital wireless. This year, however, has seen prices firming in disk-drive controllers and modem chips; the digital wireless market continues to set records and new DSP-based products are hitting the street. Consequently, we forecast 25 percent growth in the programmable DSP chip market, to $4.4 billion. That number is conservative, as Forward Concepts has underestimated unit growth of the digital wireless market every year for the past four years. Long term, we see the DSP chip market returning to its historic 30 percent-plus growth levels, predicting that shipments will reach the $13.6 billion level in 2003.
Programmable DSP chip sales are dominated by Analog Devices, Lucent Technologies Microelectronics, TI and Motorola. Other programmable DSP chip players include Hitachi, NEC, STM, Zilog and a few others. Note, however, that many of the companies mentioned in this article aren't DSP chip vendors and their sales are not included in the revenue figures cited. They don't report their IC sales as DSP chips, but they all employ DSP as the central technology in the products mentioned. Many of those chips are not programmable and their makers don't supply assemblers, compilers or algorithm development capabilities to their OEM customers. The poster child for that category is Conexant Systems, with annual DSP-based chip revenue that runs to several hundred million. Most of its DSP chip sales are reported as "microperipherals, communications."
Other companies report their DSP-based chip sales as microperipherals in other categories, like audio or graphics, or simply as "ASICs." We count just over 100 chip vendors that provide DSP-based products of one kind or another, from speech-recognition chips to HDTV receivers. Their (non-programmable) DSP chip sales are estimated to be more than $6 billion dollars in 1999, a much bigger market than that for programmable DSPs. The lesson is that the total DSP chip market is much bigger than most people know.
New microprocessor architectures, like very long-instruction word (VLIW), allow multiple computing engines on the same die. Consequently, we are seeing a proliferation of MPUs adding DSP capability, with Intel's MMX instruction extensions as one of the early attempts. The new Pentium III should remedy many of the shortcomings of MMX for DSP algorithms running on the host. AMD's K6-III provides similar extensions for DSP, graphics and related operations.
Why add all that math capability to a host processor? Quite simply, the bulk of the processing budget of the average PC or workstation in another year or two will be primarily for Internet and other connectivity, audio and video encoding and decoding, and 3-D graphics-not traditional things like word processors, spreadsheets and databases. That's why Intel's Merced will borrow VLIW technology that is becoming mainstream in the DSP world. Look for other players in the workstation market to announce chips with even more DSP computing horsepower.
Much is being made of the market for multimedia-based set-top boxes and future "computing appliances" in infinite varieties. It is more than likely that most will incorporate DSP technology, many employing a single chip that can handle the DSP tasks (like modem modulation) in addition to the RISC controller tasks. This is a market segment that Intel is targeting with its next-generation StrongARM chip. In a sense, DSP is a victim of its own success. It's beginning to lose its identity as a distinct entity as DSP capability becomes embedded in the majority of computing devices.
-Will Strauss is president of Forward Concepts Inc., a Tempe, Ariz., research firm that tracks markets driven by DSP technology (www.forwardconcepts.com).
Copyright (c) 1999 CMP Media Inc. |
