January outlook: where IC markets are headed
IC design revenues outpace European chip business; Despite slowdown, Semico is still bullish about foundry business; IDC's PC sales outlook still looks overly-optimistic; Market researchers get bullish again over Internet appliances; Infrastructure for ne
By Robert Henkel
Semiconductor Business News
(01/05/01 14:38 p.m. EST)
European IC design revenues
outpace traditional IC business
SEVENOAKS, England--Here is one European semiconductor market that people sometimes overlook. And while European chip makers chalked up a boomer year, this market--Europe's specialist IC design companies--did even better.
Europe's independent chipless, fables, and contract IC design houses grew by 51% in 2000, according to Future Horizons, notching up $2.8 billion in IC design revenues. That beats the 32% growth chalked up by Europe's traditional semiconductor industry. This is the second year in a row that the IC design houses grew faster that the chip makers. In 1999, they grew at 72% as compared to 8% for the vertically integrated semiconductor companies.
And that will continue for the next five years, Future Horizons says. It forecasts European IC design revenues will grow at a compound annual growth rate of 33%, twice that of the traditional semiconductor industry. By 2005, IC design revenues in Europe will hit $10.3 billion, predicts the English market researcher, a market that will be split in thirds by the fabless, chipless, and system-on-chip companies.
More than 180 high-level IC design houses in Europe were surveyed by Future Horizons. Market leader is UK's ARM Ltd., which grew by nearly two-thirds in the first three quarters of 2000 over 1999. Other leading European firms offering RISC and DSP processor core design services include ARC Cores, DSP Group, and Vulcan ASIC. In system-on-chip design, leading companies include NeuW Group, Sican, Tality, and S3 Group.
Semico still sees foundry business
growing by as much as 20% in 2001
PHOENIX--At least one market researcher is sticking to her guns on what 2001 will look like for the silicon foundry business. Joanne Itow, who tracks this market for Semico Research here has not revised her original forecast downward for next year despite an overall slowdown that's suddenly reared its ugly head.
Itow had originally projected that the foundry industry would grow 17% in the number of wafers shipped in 2001, as compared to 2000. "I am still looking at 18% to 20% growth," she says.
And that's even after she revised her forecast upward for 2000. "It looks like 2000 will be larger than I originally thought," she says. "Originally, I projected the foundry industry would grow in the high-30s. Now, I am looking at 40% to 50% growth for 2000.
Itow figures the silicon foundry business jumped from 9.2 million wafers shipped in 1999 to 13.7 million in 2000. In 2001, the number of wafers shipped will grow to about 16.4 million wafers shipped, she says.
But Itow acknowledges some worrisome signs developing in the market. The three largest foundries--Singapore's Chartered Semiconductor, Taiwan's United Microelectronics, and Taiwan Semiconductor Manufacturing (TSMC)--have reported some softening in December. TSMC, for example, originally expected to be sold out for 2001, she notes. Now, they look for a capacity utilization of 95% in the first quarter and 90% in the second quarter--"that's still not bad," Itow notes.
Prices are still fairly stable. "Wafer prices dropped slightly in the fourth quarter," she says, on average prices dropped 1.5%." But that picture could change quickly. With a slew of capacity coming online in 2001, coupled with new foundry players in China, South Korea, and Malaysia, the industry could be in for a price war. But there is no sign yet that vendors are dropping prices.
Itow continues to believe that a downturn will hit the foundries in 2002. "We're still projecting a downturn and overcapacity in 2002," she says.
IDC's forecast for slowing PC sales
in 2001 still looks overly-optimistic
FRAMINGHAM, Mass.--International Data Corp. says the worldwide PC market de-accelerated in the fourth quarter of 2000, and expects growth to slow even more in 2001. The reason is sluggish consumer demand in the U.S. for the next two-to-three quarters and a depressed European market.
IDC projects the worldwide PC market to grow by 16.6% in 2001, down from 18.8% in 2000, IDC predicts. I think that even this prediction is far too optimistic.
Over the long run, IDC says, worldwide growth will slow even more as the business and consumer markets continue to saturate and growth in emerging markets moderates.
Even the fourth quarter of this year looks slow. Worldwide PC shipments are projected to reach 40.15 million units in the fourth quarter of 2000, up 19.6% over the like period a year ago and sequential growth of 19.8% from the third period of this year, they said.
U.S. retail and direct channels experienced weakening demand in the fourth quarter, IDC notes. Consumer demand will remain depressed for two to three quarters, it says, before accelerating again. But "even though the fourth-quarter consumer market is weak, the U.S. commercial market is slowly warming," points out Roger Kay, IDC analyst.
The current PC business in Western Europe, is reversed, however. Consumer demand is healthy, but the corporate segment is weak. Asia/Pacific continues to grow, he says, with this market growing 43% in the third quarter over a year ago. Fourth quarter shipments are expected to be up 33% over last year.
Market researchers get bullish
again over Internet appliances
BOSTON -- Market analysts are getting bullish again about the Internet appliance market. There have been a heckuva lot of false starts here in recent years, but this time it is for real, insists Strategy Analytics here.
The U.S. Internet appliance equipment market will grow 24% annually over the next five years, according to the market researcher. Shipments of Internet appliances are projected to grow from 5.6 million units in 2000 to 31.3 million by 2005, it predicts. Revenue from these products should grow from $1.8 billion in 2000 to $5.4 billion in 2005, Strategy Analytics says.
Its market forecast is based on 6.3 million U.S. homes having online appliances such as interactive TV, online games consoles, and Web terminals. By 2005, the market researcher expects 65% of U.S. homes will have an online TV and 5% a Web terminal.
Early attempts to generate a mass market for Web Terminals by Netpliance, Virginconnect, and other small companies failed because of flawed business models, according to Strategy Analytics. But the picture will change now, it says, because major PC players such as Compaq and Gateway are now entering the market, hoping that these products will offset the declining growth rates in their core PC business.
Infrastructure for next-generation
cell-phones in Europe to be costly
LONDON--Moving to the next generation of wireless Internet services will result in a whopping $125 billion being spent over the next seven years for infrastructure equipment in Europe alone, according to a new study from the Strategis Group.
These investments will come as European operators to triple their installed base of cellular base stations from 265,000 in 2000 to 720,800 by 2007, predicts the Washington, D.C., market researcher.
With the advent of high-speed wireless-data protocols such as the general packet radio service (GPRS), Europe is already in the midst of moving from second-generation (2G) to 2.5G cellular technology. In the next phase, the region will be from the global system for mobile communications (GSM) standard to a third-generation (3G) protocol called wideband code-division multiple access (W-CDMA).
These technologies place "extraordinary demands for base-station and switching equipment," says Jake Saunders, an analyst for the firm. "Operators will need to install a dense array of standard, micro- and pico-base stations," he says, because wireless Internet access speeds "not only depend on how fast the end-user is moving, but also how far he or she is from the base station."
In-Stat is more than a little bullish
about the residential-gateway market
SCOTTSDALE, Ariz.--Here's another market forecast that seems far too bullish--even if the global economy was still moving in high gear. It's from Cahners In-Stat Group, which sees the emerging market for residential gateways shooting up from $100 million in 2000 to $5 billion.
Here's a market that didn't even exist in 1999 emerging as one with many different industries shipping actual products by early 2001. Causing this astronomical rise, In-State says, will be rapid implementation of integrated voice, video, and data services along with home networking. Residential gateways are an emerging device class that interconnect the Internet with the home network to deliver new value added services to the home user.
Residential gateways will evolve from today's relatively simply devices that provide basic broadband access to complex, integrated-services gateways that will make possible remote management and value-added services such as home security control and video-on-demand. From a market that didn't really exist in 1999, the beginning of 2001 will see actual products shipping by many different industries.
Market drivers, In-Stat says, include: growing pervasiveness of broadband connectivity; service providers looking for value-added services for increased differentiation' continued convergence--as well as divergence--of technologies in the home. This will create many different device classes, the market researcher says, that all can be connected through some form of residential gateway.
Allied touts an exploding
digital set-top box market
OYSTER BAY, N.Y.--Another colossal market is being pointed out by the ever-optimistic market research community. This time it's the digital set top box market.
Allied Business Intelligence is reporting that a worldwide conversion from traditional analog broadcasts to digitally-encoded transmissions is powering the emerging digital set-top box business to a $21 billion global market by 2005. Allied figures that the global installed base will surge from 44 million in 1999 to 339 million boxes by 2005. That's some growth.
The key catalyst for growth will be the use of digital set-top boxes by both satellite and cable operators. "The massive growth in digital set-top box shipments is occurring at the same time as the set-top box is evolving beyond being a simple television transmission receiver," points out Joshua Wise, Allied analyst. "With expanded feature sets, newer generations of digital set-top boxes are at the epicenter of the convergence between the entertainment, computing and broadband industries."
The first wave of digital set-top boxes came in the Direct Broadcast Satellite market. A year ago, more than three-quarters of all digital set-tops were being used by DBS subscribers. The second wave of boxes is now underway in cable TV. By 2005, Allied predicts that the cable platform will account for 40% of the total worldwide installed base of digital boxes and should have begun to outsell boxes based on the satellite platform.
The third wave will come from terrestrial digital television, but that will be delayed until 2003, or until more countries begin DTV broadcasts. DTV transmissions have been delayed by standards wrangling, most notably in the U.S., Allied notes. But more than 100 U.S. TV stations are now broadcasting some DTV content, so the market researcher expects this market niche will ultimately explode.
BGA revenues to top $11.3B in '04,
while CSP revenues will hit $4.6B
SAN JOSE -- While revenues from chip-scale packages (CSPs) will grow faster than those of ball grid array (BGA) packages over the next five years, they will still have total revenues well below that of BGAs.
This is due primarily to the fact that CSPs have a lower average input/output count, according to Electronic Trend Publications' annual IC packaging report. The CSP is a minimal package that is about the size of the die and comes in many forms. BGA packages encompass all surface-mount array packages that are of greater than chip-scale size. In most cases, BGAs have solder balls on the underside of the substrate.
Packaging revenues from CSPs will shoot up from about $800 million in 1999 to an estimated $4.6 billion in 2004, while BGA revenues will increase from $4.2 billion to $11.3 billion in 2004, according to Electronic Trend. In units, the firm predicts, CSPs will soar from about 1.3 billion in 1999 to around 9.9 billion in 2004 and BGAs will climb more slowly from 1.7 billion in 1999 to 6.3 billion in 2004.
Because applications for ICs are "proliferating at an astonishing rate," the number of IC packages needed to support them also proliferates, according to Electronic Trend.
Subject 50522 |
