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Solid demand seen for satellite boxes for free DTV

Posted: 18 Nov 2002 ?? ?Print Version ?Bookmark and Share

Keywords:stmicroelectronics? decoder boxes? digital satellite boxes? cable? tv receiver?

While most chip vendors strain to find a bright spot in a chronically depressed market, STMicroelectronics has reported an uptick in demand for free-to-air satellite decoder boxes in Europe, the Middle East, and Africa.

Although it is unclear if this phenomenon has legs enough to revive consumer chip vendors' confidence in the economy, Philippe Geyres, corporate VP at STMicroelectronics, singled out free-to-air digital satellite boxes - which require no operators and no subscription - as a hot spot where "good momentum is emerging in Q4." He made his comments during an interview at the electronica 2002 trade show in Munich, Germany.

The unexpectedly high demand for the boxes, which capture free satellite programming, counters a typical spate of bad news for the industry. The U.S. digital cable market has continued to slow down, a proposed merger between DirecTV and Echostar appears most certainly dead, terrestrial TV receiver operators are dragging their feet - as usual - in switching to digital, and high-end interactive TVs are not delivering their promises.

Barry Koch, VP and managing director for Microtune, agreed that Europe's terrestrial digital video broadcast has "stuttered. But free-to-air services are booming."

Christos Lagomichos, VP and GM of ST's set-top box division, reported that his company has seen a 50 percent increase in orders for free-to-air satellite boxes "just in the last two weeks." With such a sudden spike on the growth of the market, ST expects the industry's overall IC shipment for free-to-air satellite and terrestrial decoder market to reach eight million chips in 2002 alone. ST predicts to dominate three quarters of that market.

Lagomichos did caution, however, that the demand tends to be seasonal because such free-to-air boxes are sold on the retail market. It remains uncertain if the free-to-air box market can sustain its growth to rival big set-top box contracts from service providers or offset some of the lost deals.

Indeed, recent opposition to the proposed EchoStar/DirecTV merger, mounted by the FCC and the U.S. Justice Department along with 20 states, is almost certain to block the deal, dealing a big blow to some of the leading consumer IC vendors. ST, along with Broadcom, LSI Logic and others, was fiercely maneuvering for a $3 billion lottery ticket - the stipend EchoStar reportedly set aside to supplant incompatible satellite infrastructures currently owned by the two separate satellite operators.

Merger fallout

ST, a dominant player in the digital satellite boxes by owning a 100 percent market share of chips that go inside DirecTV boxes and 85 percent of silicon for EchoStar set-tops, would have very much liked the merger to take place, since the company was expecting a big replacement market for set-tops in 2003. ST was prepared to pitch such bandwidth efficient modulation technologies as 8PSKand Turbo-coding as a key to the transition to the converged infrastructure of EchoStar/DirecTV.

ST's Geyres is not completely writing off the merger scenario just yet, but he no longer sees much growth potential in the subscription-based digital satellite box market, either.

In contrast, the free-to-air satellite box market - non-existent in the U.S. but growing big in the rest of the world - is turning into a cutthroat, price competitive market.

"We hope to reuse our satellite set-top expertise for free-to-air boxes," said Geyres. ST is prepared to meet the demand for such boxes with a range of features, including a personal video recorder (PVR) integrated with HDD. To that end, ST is long at last entering the DVD recorder silicon market, by sampling the company's first MPEG-2 encoder chip for consumer devices in Q1 of 2003.

The free-to-air box market boom by no means diminishes the importance of service operator-specified set-top box business for semiconductor companies. With Cablevision recently switching its suppliers from Sony Corp. to Scientific-Atlanta, ST has profited from it by getting their chips designed into Scientific-Atlanta boxes. While slashing spending for interactive TV, Cablevision has asked for "a high definition feature with PVR functionalities," according to ST's Lagomichos. That is what Sony could not deliver but Scientific-Atlanta's boxes based on ST's chip offer, he explained.

- Junko Yoshida

EE Times

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