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CE, connectivity, geographic penetration to drive chip demand

Posted: 05 Jan 2005 ?? ?Print Version ?Bookmark and Share

Keywords:wireless? consumer? device? pc? notebook?

Yiu: The rising demand in consumer electronics, connectivity and wider geographic penetration will fuel industry growth in the Asia-Pacific.

As the semiconductor industry matures and expands into a diverse array of electronics end markets, its future growth will be less a function of technology and increasingly more responsive to the macroeconomic cycles.

Thus in 2005, unlike previous spikes in demand, the engines for chip industry will not be overhaul upgrades of corporate network, nor revolutionary new applications such as cellphones or the Internet. Instead, rising demand in consumer electronics, connectivity and wider geographic penetration will fuel sales. In particular, the economic boom in China and the ripple effects throughout the Asia-Pacific region will drive overall semiconductor growth.

As the economic forecasts stay supportive of the semiconductor industry in 20053.9 percent growth for Asia and 7.9 percent for Chinathe consumer space would remain active as end products such as DVD players and digital cameras continue to sell. According to the World Semiconductor Trade Statistics, sales of optoelectronic semiconductors are projected to grow another 13.4 percent in 2005, following a rapid jump of 37.3 percent in 2004.

Another growth area will be notebook-PC chips that generally make up only half as much in revenue as desktops. It is expected that wireless semiconductors would catch up with their desktop brethren by 2008 on a 16.1 percent CAGR, compared to desktop-PC chips at 2.9 percent.

The demand for mobility will fuel growth in wireless networks and new applications. For instance, Japan has 80 million cellphones, of which 85 percent are mobile-Internet accessible. This and the increasing number of home devices getting connected to networks will lead to a rising need for routers, WLAN, home servers, ADSL etc.

New applications are also emerging to enhance the wireless experience. MP3 is making way for MP4 that is practically a portable multimedia player capable of storing and playing music, movies and videos. We are ushering in a new era where wireless communications extend from "man-to-man" to "machine-to-machine." For instance, when a car senses that its brakes need a fix, the GSM module in the car will automatically send a message to the system at the service center and schedule an appointment. The customer service representative would then contact the car owner to confirm the arrangement.

Segment convergence of wireless, networking and consumer products will drive semiconductor growth. Asia will continue to be the growth engine for the worldwide semiconductor industry in 2005.

- Joe Yiu
Sr. VP and GM, Asia Region
Freescale Semiconductor Inc.

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