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Market research group lowers '06 DSP revenue forecast

Posted: 08 Nov 2006 ?? ?Print Version ?Bookmark and Share

Keywords:DSP? DSPs? Forward Concepts? market forecast? revenue forecast?

Market research group Forward Concepts has lowered its forecast for DSP revenues for 2006, citing the severe drop in quarterly prices for DSPs used in mobile phones as the reason. The company said September DSP shipments were up a "phenomenal" 32.5 percent, on a 3-month rolling average basis, but that this was not enough to lift shipments for the third quarter beyond a 2.2 percent rise, to reach $2.2 billion.

Forward Concepts now says DSP revenues for the year are likely to be about $8.4 billion, 10 to 15 percent below its original estimates.

On a unit basis, the figures are much better, with quarterly shipments up 6.7 percent. This is said to translate into a 4.3 percent drop in ASPs, largely because of a 10 percent decrease in prices of the chips destined for handsets.

"We attribute most of that drop to a greater mix of low-end cell phones for the third-world market, not a decrease in silicon area value", said Forward Concepts in a statement early this week. The computer and consumer segments are said to have enjoyed "dramatic gains" over the second quarter, while wireline communications DSP shipments were down almost 40 percent, with automotive also faring badly, down by 11 percent quarter-on-quarter. The computer segment fared best, increasing shipments by 31 percent.

Forward Concepts says that in view of the lackluster Q3 growth and lower cellular forecasts for the fourth quarter by Nokia, Motorola and Texas Instruments Inc, and the continuing problems at BenQ Mobile and Infineon Technologies, "we believe the touted projections (by others) of billion unit cell phone shipments will not happen in 2006."

The group is also lowering its long-term estimates for DSPs from earlier forecasts of 18 percent growth next year to 15 percent, and valuing the sector at $9.7 billionbut stresses this is because of accounting practices, not falling sales.

The shift is due to the World Semiconductor Trade Statistics organization dictating that SoC's incorporating DSPs with RISC or other cores are now to be reported in another category. While Forward Concepts says not all companies will follow the rule, due to legacy accounting, Texas Instuments' decision to shift its single chip GSM cellular offerings into the "MOS Special Purpose Logic, Cellular Subscriber" category starting in January is forcing its hand as tens of millions of "DSPs" will no longer be reported in the category.

- John Walko
EE Times Europe

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