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Growth predicted for semiconductors, even as TI stock drops on 1Q news

Texas Instruments Inc. may have experienced the flip side of optimism when its stock fell on its guidance last week. But a recent study assures the industry that the semiconductor space is not on the verge of a slowdown.

In a study titled, Worldwide Desktop and Mobile PC Semiconductor Forecast, 2003-2008, IDC predicts that the mobile PC semiconductor market will enjoy an overall revenue growth rate of 18 percent to $53.6 billion in 2004, a figure that surpasses the PC market.

“The recovery of the PC semiconductor market will hit its stride in 2004, specifically in the second half of the year,” said Shane Rau, IDC’s lead PC semiconductor analyst. “Carrying the recovery along will be the key trends of mobility, connectivity and increasing overlap between the consumer and PC markets.”

TI saw its shares drop after it forecast first-quarter sales of $2.84 billion to $2.95 billion, compared with an earlier range of $2.72 billion to $2.95 billion.

But analysts said TI’s ironic fate was not unusual in that it is a pattern with the Nasdaq and the Philadelphia Semiconductor Index. Caution among stock buyers contributed to the nearly 4-percent tumble of its shares just 24 hours after the TI forecast.

But IDC does not see any factor slowing down the market. The study highlights three findings for mobile PC semiconductors. The first point is that its revenue will move at a healthy compound annual growth rate of 16.1 percent, in contrast to desktop PC revenue growth of 2.9 percent. The sales of mobile PC chips will rise bout 50 percent to equal that of desktop PC by 2008.

The second highlight is that mobile PC price bands will grow during the forecast period, a thing not expected for its desktop counterpart other than a significant jump in those below $1,000.

On the third issue, it said “the communications subsystem of the mobile PC semiconductor market will achieve the highest growth rate during the forecast period, driven by the growth of wireless connectivity, such as WLAN technology embedded in mobile PCs,” said IDC.

Another semiconductor bellwether, Intel Corp., offered both bullishness and caution by setting up a new research and development center in South Korea, while shying away from developing applications based on Chinese Wi-Fi technology.

The company said its decision to set up an R&D center follows IBM Corp.’s action to set up a laboratory in South Korea to develop software for wireless handhelds.

Intel said the government’s “commitment to policies that support new communications technologies make Korea a great place for Intel to develop technologies and solutions that will support the convergence of computing and communication,” according to Pat Geisinger, senior vice president and chief technology officer at Intel.

Meanwhile, California Micro Devices showed industry zeal with its electromagnetic interference filter with electrostatic discharge protection for the LCD interface, data ports and buses in wireless handsets, personal digital assistants and other wireless devices.

The product, known as CM1405, has eight channels and provides lower overall cost per channel, according to the company.

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