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IC sector set to enjoy growth

Posted: 03 Jan 2003 ?? ?Print Version ?Bookmark and Share

Keywords:communication device? cellphone? lan? wan? mobile communication?

Ravi Agarwal

VP, Asia Pacific and Japan, Integrated Device Technology

The communications sector of APAC is set to become one of the stellar performers in the IC industry, powered by the large uptake in mobile communications and LAN/WAN applications with CAGRs of 20.8 percent and 33.1 percent respectively, according to Gartner. Key drivers within this sector will be the rapid take-off of digital phones and the supporting infrastructure as well as LAN switches and routers, including those to expand the reach of private networks and deliver the Internet.

Moreover, communications equipment in Taiwan is the fastest growing industry in IC application sectors, and is likely to remain so in the foreseeable future. It follows the OEM/ODM business model that made the island a leader in the IT industry. LAN/WAN applications are set to dominate in this sector, increasing some 82 percent according to Gartner. Wireless handsets, WLANs, broadband modems, and Gigabit Ethernet facilities and LAN switches will be important applications.

In Singapore, despite uncertainties, the future remains promising for IC vendors targeting the communications sector after last year's steep decline. Development of the broadband Internet and wireless applications will spark a thirst for bandwidth, with public network equipment production and the LAN and WAN application sector key growth areas for semiconductors. Access devices will help drive the industry into new territory. Mobile communications production revenue in Singapore is also set to increase slightly as migration in this offshore production in this sector continues.

Wireless communications and broadband will be the principal drivers of the communications IC market in South Korea next year and beyond. Activation for 3G mobile communications, as well as broadband driven networking communications and digital TV broadcasting service, will increase semiconductor demand. As a leader in broadband deployment, Korea presents tremendous opportunities for IC vendors. The spread of broadband, opening of the wireless network, completion of mobile platform standards, and expanded integration of wired and wireless communications are all key developments.

Meanwhile, the rapid uptake of broadband and wireless infrastructure spread propelled by the spread of wireless LAN and 3G will be critical factors for communications semiconductor vendors in Japan. A greater investment by the Japanese government in communications infrastructure would be the key variable.

Nearly one-third of all communications equipment in APAC outside of Japan is produced in Hong Kong and China. Fueled by the fast growing economy, the China/Hong Kong communications IC market will continue to exhibit growth from inventory-induced lows and begin to expand faster this year. Accounting for two-thirds of the communications sector, the IC market for mobile communications is expected to grow fast, mostly in cellphones as China has become the largest consumer of cellphones in the world.

As the Internet traffic and broadband adoption increases dramatically, LAN and WAN applications will also get an added boost, all creating excellent opportunities for semiconductor vendors. Consequently, WTO entry will create more business opportunities for foreign firms through easing tariffs and local content restrictions.

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