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Redefining wireless space - will Asia drive the way?

Posted: 13 Jan 2003 ?? ?Print Version ?Bookmark and Share

Keywords:cellphone? wireless device? gsm? telecommunication? embedded silicon?

Joe Yiu

VP, GM, Motorola Semiconductor Products Sector

The wireless industry has seen huge growth over the last 15 years, but it is now experiencing real challenges as the main drive markets in America and Europe reach their saturation points and face the slow adoption of 3G and wireless Internet. However, the industry remains to be presented with major opportunities. Even in the economic downturn, the industry expects to produce more than two billion cellphones in the next four years - more than TV receivers, computers, and PDAs combined. Asia is seen to lead this anticipated growth.

Volume: The Asia opportunity?

Five years ago, the Americas had the highest cellular subscriptions with 71 million, the Asia-Pacific region coming in second to the highest with 68 million, and Europe with 66 million. Following the growth curve, it will not be long before Asia becomes the number one consumer of cellphones and its related semiconductors. The Yankee Group predicts that 575 million units will be sold in Asia by 2005.

Asia is also the biggest manufacturer of wireless devices and the world's number one chip manufacturer. The Asia-Pacific region has also remained the world's number one chip market since 2001. By 2005, China alone will be making about 233 million cellphones annually - 34 percent of the projected global market.

Companies in Asia are also seen to be taking significant market shares as independent design houses (IDH), ODMs, and electronic manufacturing system integrators (EMSIs). According to strategy analysts, 26 percent of cellphones worldwide were made by contract manufacturers last year, which they predict will rise steadily to 38 percent in 2007, as first and second-tier handset vendors seek lower costs, production flexibility, and economies of scale.

Changing rules

The fundamental shift from voice-to-data and data-to-content applications has forced the value chain to shift over time. At the same time, digital technology has also ushered in a new era for service providers: China Mobile and NTT DoCoMo, to name a few, with 123 million and 93 million subscribers, respectively.

Traditionally, the market value chain is expected to remain constant, but with increased market competition, higher vocal consumer demand, and the success of consumer led models, the value chain seems to be reversing. Consumers now have a voice. Consumers now have certain expectations from their service providers who must in turn get the most from their embedded silicon providers and respective handset manufacturers.

Handset makers are tasked with providing the latest features as requested by consumers and service providers. They have to look to design manufacturers for quality designs that they, in turn, have to deliver quickly. This whole cycle then heightens what is expected of silicon providers of coming up with more advanced and newer features and functions, which includes Bluetooth, GPS, and image capture features, to name a few.

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