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Weak sales, steep price shake TV SoC arena

Posted: 14 Feb 2012 ?? ?Print Version ?Bookmark and Share

Keywords:TV SoC? driver IC? LED backlight? smart TV?

IHS Inc. has revealed that TV SoC revenue dipped by 7.4 percent from $2.36 billion in 2010 to $2.19 billion last year. The weak performance was attributed to steep pricing pressures and poor TV sales. In fact, big industry names have abdicated as a result of the slump, the market research firm added.

Similar to the SoC segment of the market, revenue also declined in other areas of the TV semiconductor space such as in driver ICs, down from $2.68 billion in 2010 to $2.61 billion last year. The one bright spot in TV semiconductor market was in LED backlights, given the rapid adoption of LEDs by the general LCD TV market. That area grew from $2.87 billion to $4.1 billion, helping to propel the overall TV semiconductor industry to a $15.84 billion finish last year, up from $14.7 billion in 2010.

TV SoC market

Worldwide TV SoC revenue dropped 7.4 percent last year .

The TV semiconductor space is grappling with near term weakness in the sales of premium TVs, along with the commoditization of small screen LCD TVs. Average selling prices for SoC devices also fell last year to $8.40, down from $9.85 in 2010.

Other factors have hurt the industry including the near maturation of the flat-panel TV market in the previously high growth areas of Western Europe and North America, continuing uncertainty in the global economy and the rapid departure of legacy type CRT analog TVs depriving the flat-panel TV market of a once vigorous growth driver.

Opportunities for TV SoC
Despite the challenges for the SoC arena last year, growth opportunities remain in the TV semiconductor space in the years to come, especially as TV models are projected more functionalities. Such features, in turn, will drive the use of more overall semiconductor silicon per TV set, greatly benefiting the industry.

One such advanced feature is the smart TV functionality promising wireless connectivity and greater Web interactivity. The expansion of the connected or smart TV category of the market will help lift TV motherboard IC revenue, requiring more DRAM as well as flash memory.

TV makers are rapidly deploying Internet-TVs across their product lines, with even low-end models providing built-in applications such as Netflix or Hulu Plus. The use of dual core CPU and quad core graphics will also allow TV and STB SoC suppliers to move to much more open, programmable solutions, IHS stated.

Other TV features being adopted that will positively impact industry silicon usage are 3D playback support, 240Hz frame rates, LED backlight solutions, Bluetooth remote controls, and gesture and voice recognition capabilities. Also projected to help industry expansion in the near future is the ongoing transition from analog to digital TV sets in emerging markets such as Brazil, China and the APAC.

TV SoC: Survival of the Fittest
The downturn in the SoC space caused the departure of several key players from the business but proved a boon for Taiwan chip suppliers MStar Semiconductor Inc. and MediaTek Inc, which last year rose to near-total dominance within the TV video processor market. Combined, the two suppliers represented more than 56 percent of all TV SoC revenues and in excess of 65 percent of all TV SoC unit shipments.

MStar and MediaTek are almost assured of maintaining their hold on the market during the next few years, as several key suppliers have exited the TV SoC space. Departing players include Broadcom Corp., Zoran Corp. and Intel Corp. after unsuccessfully seeking to supply advanced TV SoC solutions for smart TVs.

Other merger and acquisition movements in the industry last year included the selloff by Integrated Device Technology of its HQV processor product line to Qualcomm Inc., and a similar divestment by Trident Microsystems, while in the midst of a bankruptcy filing, of its STB processor line to Entropic Communications Inc.

The rapid consolidation by the four U.S.-based companies above was forced by weak TV end equipment and semiconductor market last year. Also, the extensive reach of MStar and MediaTek into the design-in process for TVs in the semiconductor industry made it difficult for other firms to compete viably in the space, prompting the flurry of exits, reckoned IHS.

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