Here is a good piece on wireless chips. Although the market is slamming wireless - it shouldn't slam the component makers like RFMD, CREE, etc.
The market overreacted to MOT and NOK's announcements a few weeks ago. Handset growth is not slowing - and it's going to be huge once people realize they can get data, for which they'll need a new phone.
Long RFMD (2nd largest holding - bought 2wks ago)
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Bring On The Chips
August 21, 2000 issue
Wireless Week
Peggy Albright
While wireless handset manufacturers are beating up each other to get their hands on crucial semiconductor components, the component firms are sizing up a playing field of their own, eying sky-high opportunities for wireless phone chip sales.
When you get right down to it, wireless phones can’t exist without those chips. And advancing wireless technologies along with continuing customer demand for greater handset functions are creating a mushrooming wireless semiconductor business.
Some of the latest figures on the chip market came out this month from Cahners In-Stat Group, owned by Wireless Week’s parent company, which projects semiconductor revenue growth from wireless handsets through 2004. Overall, the firm expects semiconductor revenue from this sector to increase at a compounded annual growth rate of 40 percent through 2004, providing a total revenue of more than $53 billion. Revenue in 1999 was $9.76 billion.
"It’s a huge market, and even a small percent of it will yield a lot of revenue. The bad part for some manufacturers is there’s a lot of new players entering the market," says Allen Nogee, a senior analyst at Cahners In-Stat.
The determination of new companies to get a piece of the action will prompt some suppliers to change or expand their traditional roles, and nudge others to acquire start-ups as competing businesses to put them into a position where they can build added market share, Nogee says.
One example Nogee cites is Texas Instruments Inc., which recently announced plans to purchase Dot Wireless, a CDMA baseband technology start-up founded a couple years ago by part of Qualcomm’s original engineering team. The acquisition of Dot will enable TI - already by far the leading DSP supplier to the wireless industry, to continue to expand its influence deeper into handset functionality.
Another example is Qualcomm itself, which now is spinning off its semiconductor business. The move was driven by Qualcomm’s need to get beyond its previous CDMA-only focus, which was constrained by the company’s intellectual property rights licensing process and to get into the GSM market, which it previously shunned. Qualcomm also hopes to produce multi-mode CDMA-GSM devices that will serve both CDMA and GSM customers’ global-roaming needs.
While most phones today are second generation, by 2004 the majority will be 2.5 generation, although 3G will begin taking off that year, according to Cahners In-Stat. The group also expects today’s 2G market comprising 230.7 million handsets in 1999 to reach 358.5 million in 2004.
Nagee says In-Stat’s revenue projections considered all semiconductor content in wireless handsets, including analog and digital baseband technologies, radio-frequency parts, memory, analog-to-digital converter functions, power management devices and discrete components.
The 2.5G market, which includes the 1XRTT phase of cdma2000, GPRS and EDGE, will not see sales until this later this year. But it should make a fairly fast start, producing about one-half million sales in 2000. These terminals should reach 591.4 million in sales in 2004.
Third generation, which includes cdma2000 and W-CDMA, will begin producing device sales next year, when Japan rolls out its networks. The 3G segment should see 51.6 million terminal sales in 2001, and as many as 321.7 million terminal sales in 2004.
It all adds up to billions of chips, and that’s nothing to sneeze at. <<
- Eric - |
