Chip Makers Reap Benefits Of Cell-Phone Boom
EE Times - 11/19/99, 6:14 a.m. ET
SCOTTSDALE, Ariz. - Continuing its boom, the worldwide
cellular phone market will experience double-digit growth
into 2000 and IC makers serving the cellular handset
market stand to reap the benefits, according to "Emerging
IC Markets 2000," a new report from IC Insights.
Worldwide shipments of cellular handsets grew 61 percent from 101
million units in 1997 to 163 million units in 1998, and are projected to
grow another 58 percent this year to reach 258 million unit shipments,
the report says.
Significant but lower double-digit growth will continue in 2000 as the
number of cellular phone subscribers increases worldwide. IC Insights
predicts that worldwide cellular handset shipments will grow 38
percent to 356 million units next year.
The world's leading handset supplier, Nokia of Finland, is forecast to
ship 81 million units or $14 billion worth of handsets in 1999. Those
handsets will contain $3.3 billion worth of ICs, according to IC
Insights' estimates.
Semiconductor manufacturers that provide IC content for cellular
phones, especially digital signal processors, flash memory devices, RF
baseband and analog chips, will experience a direct benefit from the
growth.
"Texas Instruments, Lucent, Conexant, Advanced Micro Devices,
Intel, STMicroelectronics, TriQuint Semiconductor and Analog
Devices are among the companies to benefit from cellular handset unit
growth," said Bill McClean, president of IC Insights.
As handset manufacturers move to more integrated handset designs to
reduce the board area and lighten the weight of a handset, McClean
said companies producing system-on-chip designs such as LSI Logic
and VLSI Technology, a subsidiary of Philips, and companies that
provide multichip packaging technologies such as Intel, Fujitsu,
Mitsubishi and Silicon Storage Technology, stand to gain.
But these companies can't count on monstrous cellular handset growth
in North America and Western Europe forever. They will have to count
on growth in offshore markets beyond 2003, McClean said.
"Eventually you get to a point of diminishing returns, where the market
can't grow as much," he said.
When cellular phone penetration rates approach 50 percent, industry
analysts agree the market nears saturation and handset unit growth is
likely to slow, said McClean.
For example, Finland currently has the highest cell-phone penetration
rate in the world at 70 percent, and handset shipments to Finland are
expected to be flat this year, he said.
But there is still a lot of potential growth in North America, Western
Europe and Asia-Pacific.
Worldwide penetration of cellular phones was 5 percent in 1998, and
forecasters predict the penetration rate will reach 22 percent by 2003.
The cellular phone penetration rate is currently about 25 percent in
North America, but that rate will reach 50 percent in North America
and Western Europe by 2003, for a total subscriber base of 482 million
in those areas. McClean believes the growth of cellular shipments to
those regions will begin to flatten after 2003.
But shipments to the Asia-Pacific region, excluding Japan, will barely
reach 17 percent penetration by that time. In fact, the Asia-Pacific
region is poised to be the world's largest market for cellular handsets
by 2003 with 695 million subscribers, which would make it larger than
the combined markets of North America, Western Europe and Japan,
said McClean.
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