Although analog modem chip revenues peaked in 1998, cable modem chips will lead digital modem revenues by 2002, says a newly published report from International Data Corp. (IDC). The Mountain View, CA-based research firm reports that growth in asymmetrical digital subscriber line (ADSL) and cable modem sales will help to advance the overall modem semiconductor market, with these modems shipping in small volumes now and ramping up in the later years of the forecast period.
Chips for today's analog modems will decline significantly through 2002 as digital modems at higher speeds replace analog ones and the industry moves to integrated controllerless and soft modems.
IDC reports that worldwide modem semiconductor revenues increased 3.8% to $1.2 billion in 1998. However, the compound annual growth rate (CAGR) from 1998 to 2002 for the overall modem chip market is likely to be flat at 0.2%. The move to controllerless modems, the slowdown caused by the battle over a 56 Kbps modem standard, and telco and pricing issues for the digital modem market are all contributing factors to a flat modem chip market.
"Competition in the marketplace is driving high levels of integration, which in turn is bringing down average selling prices,'' says Kimberly Funasaki, research analyst for IDC's Semiconductor Research program. "Broadcom is leading the cable modem chip market, although Conexant and Libit should be able to secure themselves as second-source vendors.''
IDC expects the strongest G.Lite modem chip vendors will be those who lead the V.90 modem chip market, including Conexant (Newport Beach, CA), Lucent Technologies (Murray Hill, NJ), Texas Instruments (Dallas, TX), and Analog Devices (Norwood, MA), because of their ability to leverage an existing customer base.
V90 still king
Analog modem chips (led by V.90) still comprise the bulk of overall market revenues, with V.90 modems holding on as the highest revenue generators at least through 2002. In 1998 analog modem chip revenues rose to represent nearly 80% of total modem semiconductor revenues. However, IDC expects analog modem share will drop to less than 65% of 2002's market as ADSL modem chips (including full-rate and G.Lite) post a 1998 to 2002 CAGR of almost 150%, and cable modem chips post about 50% growth.
Within overall analog modem chips, IDC predicts V.90 will peak in 1999, causing the total modem chip market to peak as well, at $1.3 billion (a moderate 2.3% year-over-year growth). Chip integration and modem average selling price pressures will remain factors in lowering overall revenues.
Worldwide Modem Semiconductor Market Review and Forecast, 1998-2002 (IDC #B18723) examines the semiconductor market for every major type of modem, including analog, cable, and ADSL, as well as ISDN terminal adapters. Forecasts are included through 2002.
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