Can you believe this story:
Downturn won't hurt IC market
for cellular phones, IDC predicts
MOUNTAIN VIEW, Calif.--The recent slowdown in the economy plus the OEMs' big inventories are not going to dampen the chip market for cellular gear, according to IDC. And the opportunities for semiconductor vendors in the cellular market will continue to be very attractive, the market researcher predicts.
The upcoming year will turn out to be as a major period of transition in the cellular handset market as technologies migrate from being "voice-only" applications. "Development of these next-generation handsets over the next few years promises to dramatically change the business environment and competitive landscape that we see today," says Michael Nguyen, chip analyst for IDC.
For the next three years, second-generation (2G) handsets will account for the largest portion of the global chip market for digital handsets. But third-generation handsets (3G) "will have a stronger impact beyond 2003, especially as new features drive more logic and memory content to support higher bandwidth communications and multimedia computing," predicts Nguyen.
This migration to next-generation handsets is driving chip growth. Worldwide digital handset chip revenues will increase at a compound annual growth rate (CAGR) of 18%, IDC predicts, from about $17 billion in 1999 to more than $38 billion in 2004. That growth will require a fast-growing handset market, which the market research firm estimates will post a 24.4% CAGR during this period and reach 780 million units in 2004.
The global system for mobile communications (GSM) cellular segment now accounts for more than half of all these chip revenues due to its large installed base of users. This is particularly true in Europe and Asia. After 2002, however, GSM growth will start slowing as CDMA (code division multiple access), TDMA (time division multiple access), and 3G (third generation) cut into the GSM market.
By 2004, 2G CDMA and TDMA markets will account for over 43% of the market, IDC says. The move of 3G handsets, which includes primarily CDMA2000 and W-CDMA standards, will also start impacting the future significantly the market as voice and data-enabled cellular systems drive convergence.
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