Long-term Prospects for Handset Components Strong

The last 12 months has been a very trying time for both handset component manufacturers and handset manufacturers alike, reports In-Stat/MDR. The high-tech market research firm finds that, after many years of incredible growth, the handset industry has hit a series of stumbling blocks, including everything from a slow worldwide economy, to lackluster consumer acceptance of some new cellular services such as wireless data.

While the number of handsets continues to increase, the vast majority of handsets sold each year are standard, voice-centric devices, and not the data-centric devices that service providers were hoping for. Still, according to Allen Nogee, a principal analyst with In-Stat/MDR, "Signs of returning growth are starting to appear, and with 2.5G and 3G already in operation, long-term prospects for growth look good, and new technologies look promising, although the days of rapid growth in handset semiconductor revenue are behind us."

In-Stat/MDR has also found that in terms of semiconductor revenue, the next few years look relatively flat. While units are increasing, drops in component costs will compensate for any unit increases. From 2002 to 2007, the revenue from core handset semiconductors is forecast to drop at an average rate of a bit more than 3% per year.

In-Stat/MDR also noted however, that in terms of add-on components, those semiconductor components that add to the basic functionality of a handset, the future looks bright. These add-ons include Bluetooth, cameras, GPS location technology and MPEG-4 multimedia technology. Revenue from add-ons is forecast to grow from approximately $856 million in 2003, to almost $1.7 billion in 2007. In terms of size, the add-on segment of the total handset semiconductor market represents 10% or less than the size of the core handset semiconductor market."

Posted to the site on 28th May 2003