Advanced devices will aid chip market going forward

While 2009 was dismal for overall semiconductor sales, smartphones, electronic readers and netbooks/smartbooks should help the industry in 2010.
“The year 2009 will be remembered as one of the most dismal years in the history of the global semiconductor business, with a plunge of more than $32 billion in revenue compared to 2008,” Dale Ford, senior vice president at iSuppli Corp., said in November in announcing the company’s 2009 preliminary estimates. “There was little room for anything but pessimism after the industry suffered a sequential revenue decline of 21.4% in the fourth quarter of 2008 and an 18% drop in the first quarter of 2009. However, semiconductor sales rebounded smartly after that, with sequential increases of more than 18% in the second and third quarters and an expected 5% rise in the fourth quarter. This strong rebound means 2009 will be much less painful than had been feared earlier in the year.”
The better-than-expected results for 2009 are linked to strong performances in the memory market and sales of chips for consumer electronics and wireless products, iSuppli said. “The wireless communications market for semiconductors is the most resilient segment in 2009 with an expected decline of only 8.2%. Next best will be the data processing segment, with a projected decline of 9.8%.”
The only market segments that showed increases in wireless handset sales were at the high end with smartphones, and at the very low end, as manufacturers targeted India, China and Africa with those devices, said analyst Will Strauss of Forward Concepts. Feature phones will continue to lose their luster as smartphones gain traction, Strauss commented.
Further, going into 2010, there is a lot of energy regarding netbooks and smartbook tablets, noting the difference between the two is netbooks area generally powered by Intel Corp. processors and smartbooks are powered by ARM processors, Strauss said. “Nvidia said 2010 is the year of the tablet. I don’t know if I buy that,” but Strauss said the rumors of Apple Inc. introducing a tablet in April are contributing to the buzz around the segment. “Let’s face it, when Apple does something, everyone listens. … Apple created its own ecosystem (with its application store) and made a lot of people who aren’t Apple rich.”
Going forward, Qualcomm Inc.’s Snapdragon app processor, which powers Google Inc.’s Nexus One smartphone, and Texas Instruments Inc.’s OMAP3 processors should be strong in the smart device space, Strauss said, although Marvel Technology Group Ltd. and Nvidia Corp. intend to play in the smartphone market this year as well. Intel also entered the smartphone segment, powering an LG Electronics Co. Ltd. device based on an upgrade of its Atom processor called Moorestown.
Beyond smartphones, the “emerging devices” segment that includes e-readers and the like will have a positive impact on the wireless chip segment, Strauss said. Forward Concepts has not made a prediction on how many units will sell this year, but Strauss noted others have estimated in the tens of millions. “It’s a real market. Beyond 3D TV, e-readers were the hot ticket at CES.”