SOURCE: The Linley Group

October 09, 2008 08:13 ET

The Linley Group Predicts Continued Modest Growth in the Communications Silicon Market Despite U.S. Economic Worries

MOUNTAIN VIEW, CA--(Marketwire - October 9, 2008) - Predicting a steady growth rate of 5 percent per year in the wired communications semiconductor market segment, The Linley Group today released its Communications Silicon Market Forecast, 2007-2012, report. The firm says that despite recent economic turbulence in the United States, 2008 year-to-date sales of wired communications ASSPs have been relatively strong, and the revenue outlook for a number of product segments, including network processors and Ethernet devices, remains positive.

"Despite ongoing reports of doom and gloom in the U.S. economy, we believe a number of growth opportunities still exist, and the impact of the recent downturn will not be universal," said Joseph Byrne, senior analyst, for The Linley Group. "This report identifies the key products and technologies that will shape the communications silicon market over the next five years, enabling decision makers to make informed choices and better understand strategic directions in this dynamic market."

Network processors are among the fastest growing areas, having penetrated only one-third of their total addressable market to date, according to the firm. The Linley Group forecasts a compound annual growth rate (CAGR) of nearly 13 percent for this segment from 2007 to 2012. The firm also predicts a CAGR of 10 percent over the same five-year period for Ethernet semiconductors. In dollar terms, most of the growth is expected to come from Gigabit Ethernet (GbE), accounting for more than half of all clients shipped in 2007. The fastest growing Ethernet sector is 10G Ethernet (10GbE), with upside in both client and switching applications. Demand will be driven by both a natural migration to faster speeds, as well as the rising popularity of Fibre-Channel-over-Ethernet.

Other report highlights include (all growth rates CAGR 2007 to 2012):

--  Wireless handset shipments are expected to grow at about 8 percent,
    and the integration of additional functions in the baseband processor will
    minimize price declines.
--  The security accelerator market will rapidly decline, as accelerator
    functions become increasingly integrated into the embedded CPU.
--  The broadband market will begin to decline, with broadband subscriber
    numbers having peaked in 2008.  Industry revenue from broadband components
    in 2012 is anticipated to be less than revenue in 2007.  PON deployments
    will continue to rise, with strong growth coming from China.
--  PCI Express (PCIe) switches are the bright spot in the interconnect
    market, as PCIe becomes the standard chip-to-chip interconnect.
--  FPGAs are growing slightly faster than ASSPs/ASICs, becoming more
    capable and providing a less expensive alternative to these hardwired
    options.
--  Cellular chip shipments are on the rise, but price declines will limit
    sales growth. Meanwhile, non-handset devices (cellular modems, machine-to-
    machine applications, and new consumer products, such as the Amazon Kindle
    wireless reader, are expected to provide upside.
--  Connectivity chips (Bluetooth, Wi-Fi, GPS) for handhelds continue to
    experience strong growth.
    

About The Linley Group Communications Silicon Market Forecast

The Linley Group Communications Silicon Market Forecast spans major wired categories including network processors, security accelerators, Ethernet, broadband access, interconnect, and other networking ASSPs. Also addressed are FPGAs and embedded processors, as well as key mobile and wireless product markets, including connectivity chips, application processors, and baseband processors. The Linley Group technical analysts develop these forecasts after conducting comprehensive interviews with vendors and OEMs, and applying their in-depth knowledge of technology and market trends.

Availability

The Communications Silicon Market Forecast is currently available directly from The Linley Group and is priced at $2,995 for a single-user license. For further details, visit the web site at http://www.linleygroup.com/Reports/market_forecast_rpt.html.

About The Linley Group

The Linley Group, the leading provider of independent technology analysis for networking, communications, and consumer electronics semiconductors, covers emerging areas such as high-speed embedded processors, Gigabit and 10G Ethernet, mobile communications processors, and more. The company provides in-depth technology reports and interactive seminars as well as strategic consulting services tailored to the individual client. To get free access to The Linley Group's analysis of recent news and events in these markets, subscribe to our e-mail newsletters. More information about The Linley Group is available at http://www.linleygroup.com.

Note to editors: To speak to an analyst from The Linley Group about this report, please contact: Erika Powelson, Orr & Company, 831.424.1811 or email erika@orr-co.com.

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