Electronics Market Outlook September 2003

woundcallousSemiconductor

Nov 1, 2013 (3 years and 7 months ago)

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Electronics Market Outlook

September 2003

September 2003

Agenda


About In
-
Stat/MDR

Economic Conditions

Demand Drivers & Application Segments

Regional Issues

Semiconductor Industry

September 2003

About In
-
Stat/MDR

The leading provider of research,
assessment and market forecasts of
semiconductors and advanced
communications equipment and services.


A member of the Reed Electronics Group.

September 2003

Multimedia

Wireless

Broadband

Cores of Expertise

Semiconduct
or Markets &
Technology

US Business
Segmentation
& Verticals

Projections & Outlook

Semiconductor

Consumer &
Residential
Networking

Service
Provider
Networks

Business &
Residential
Networks

September 2003

$
-

$20,000

$40,000

2001

Wireless Infrastructure

($M)

The Wireless Value Chain

Semiconductor /

September 2003

Worldwide GDP Growth

September 2003

Worldwide Electronics Market


(
US$ in Billions)

September 2003

US$ in Billions

Distribution of IT Spending in the US Market
by Size of Business, 2003

IT Spending

US Business Market

September 2003

N = 854

% of Respondents

Question:

Which factors have
significantly impacted your IT
spending in the last 12 months?

Factors Impacting IT Spending

Distribution of Responses by Size of Business

September 2003

Constrained Worldwide Carrier CapEx



In
-
Stat/MDR forecasts CapEx decline of 7% in 2003



Decline primarily due to heavy debt load and weak economy



Forecasting weak market rebound in 2004, with 2% growth

$310

$280

$205

$191

$195

$0

$50

$100

$150

$200

$250

$300

$350

2000

2001

2002

2003

2004

US$ Billions

Source: In
-
Stat/MDR, 05/03

September 2003

IP Services Growing Worldwide



Worldwide IP Services grow 40% in 2003 and 34% in 2004



Hosting (Web, Application, Storage) represents largest IP service



Highest growth IP services are VoIP and IP VPN

$0

$10

$20

$30

$40

$50

$60

2002

2003

2004

Other

Content Delivery

Unified Messaging

IP VPNs

VoIP

Hosting

US$ Billions

Source: In
-
Stat/MDR, 02/03

September 2003

Computer Market

PC units experiencing
single digit CAGR

PC ASP has dropped
to about $1,200

Most users have more
than enough power

Many users want new
features

Business replacement
cycle 2H 2003



47% of Semiconductor

consumption

September 2003

LAN Priorities 2003

September 2003

Worldwide DSL Growth Remains Strong

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2002

2003

2004

ROW (MEA, SA)

Asia Pacific

Europe

N. America

Lines in Thousands

Source: In
-
Stat/MDR, 02/03



Worldwide DSL subs grow 47% in 2003 and 37% in 2004



S. Korea has highest installed lines in Asia, but growth favors China and Japan



US still lags rest of the world in growth due to regulatory uncertainty


September 2003

Worldwide Wireless Market Update

Major demand drivers:


Mobile communications & the Internet


The combination will be the major driver for this decade.

More than $100B spent for 3G licenses. Billions more required for
infrastructure hardware.

Mobile text messaging is truly a “Killer App,” with over 100 million
messages per day being sent.


Western Europe closed 2002: 77.2% penetration, AND 7.2% annual growth!


AsiaPac has 13% penetration and 31.5% annual growth rate.

China 206.6M subscribers end 2002.



Fourth quarter growth was almost 6.7 million net new adds.

India next major growth market,



1% penetration and 91% annual growth rate. (700k new subscribers / quarter!)

September 2003

Hot Spots & WLAN



0

50

100

150

200

250

2002

2003

2004

2005

2006

2007

Locations (K) & Connects (M)

Aggregate Worldwide Deployments (K)

Worldwide Connects/Year (M
)

September 2003

(All Revenue in US$M)

2001

2002

2003

2004

2005

2006

Total WLAN Chipsets Revenue

Total All Chipsets

$229.9

$403.9

$421.7

$527.4

$575.2

$566.8

% Change

75.7%

4.4%

25.1%

9.1%

-
1.5%

Total Cellular Base Station Chipsets Revenue

Total All Chipsets

$2,587

$2,483

$2,161

$2,044

$1,698

$1,414

% Change

-
4.0%

-
13.0%

-
5.4%

-
16.9%

-
16.7%

Total Handset Chipsets Revenue

Total All Chipsets

$19,975

$19,948

$18,491

$19,169

$18,890

$18,464

% Change

-
0.1%

-
7.3%

3.7%

-
1.5%

-
2.2%

Component manufacturers continue to embrace cellular technology
and 802.11.

Intel major push via “Centrino” family, supported by $300 million
advertising spend over 3 months.

In 2000, 4 companies making WLAN chipsets; 2003, more than 35 25,
while ASPs dropped from ~$30 to ~$6.

Worldwide Wireless Chipsets

Source: In
-
Stat/MDR

September 2003

State of Consumer Equipment


Growing Opportunities


DVI/HDMI
-
enabled devices: over 200% CAGR 2002


2006


Digital Imaging: image sensor market growing over 23% per year


through 2006, with cameras in mobile phones driving the market


USB
-
enabled devices to rise 18% CAGR through 2007


Integrated DTV sets will grow 61% CAGR due to FCC mandate


PVR unit shipments to double in 2003 to 3M units, then

again double in 2004


PDAs to see 18% CAGR 2002
-
2007, strategies to grow market
include device variety, pricing, multimedia, and connectivity

September 2003

State of Consumer Equipment


Slowing/Declining Segments


DVD growth has slowed as market matures


Smart Displays slow getting off the ground in 2003


too expensive


Smart appliances, although appearing in greater numbers, will have
slow adoption due to pricing, broadband and home networking
penetration rates


Decline in maturing DBS set top box market; stability for digital
cable set top boxes


Nascent Markets


Network
-
ready DVD Players will begin to appear in late 2003,
portend a huge market for consumers with broadband Internet
services, especially those with Cable Modem or DSL service to their
networked home PC

September 2003

Consumer Product Growth

-

50

100

150

200

250

2001

2002

2003

2004

2005

2006

Video Game

Consoles

DVD Players &

Recorders

PVRs (Stand
-
Alone)

DTT STBs

IP/DSL STBs

DBS STBs

Cable STBs

M Units

Source: In
-
Stat/MDR, 6/03

September 2003

Home Networking/Digital Domicile




$
-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

2002

2003

2004

2005

2006

2007

Worldwide Home Networking Revenues by Product Segment
(US$K)


Includes: Media Networks,
Residential Gateways,
Infrastructure, NICs/LOM

September 2003

Other Markets

Automotive


Steady end product unit volumes


Increased electronic content


Only 7% of total semiconductor market


Industrial & Military


Under 10% of total semiconductor market


Declining, with some recent stabilization


Highly fragmented


September 2003

Semiconductor Markets

No new killer apps, no new $XX billion
semi markets.


1970s
-

Mainframe


1980s
-

Mini Computer


early 1990s
-

PC / Web


late 1990s
-

Mobile Phone / Communications


2000s
-

?????

Recovery will depend on a wide range of
end products.

September 2003

Regional GDP Growth

-
4%

-
2%

0%

2%

4%

6%

8%

10%

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003*

2004*

United States

European Union

Japan

Asian Tigers

Asia Developing

September 2003

Semiconductors
-

Consumption

September 2003

Regional Shifts

Americas, once first is now last as end
product manufacture moved from US (and
Mexico) to China.

Western Europe expected to decline next,
but more slowly due to social structure.

Long term SARS impact? Too soon to tell


Everything moves toward the lowest cost

September 2003

Semiconductor Revenue

September 2003

Semiconductor Unit Shipments

September 2003

Semiconductor ASP

September 2003

Since the Crash
-


Unit shipments have grown from their pre
run
-
up levels

Average Selling Price has further declined

Revenue has returned to pre 1999 levels


The primary cause of today’s
semiconductor revenue problem is
NOT demand, it is
over
-
capacity

September 2003

Capacity Outlook

Commoditization of the CMOS process

Speculative foundry fab building to capture
market share

Commoditization of the design process has
also begun
-

ODMs



DRAM revenue peaked at $40B in 1995 and
was $16B in 2002. Revenue now tracks ASP.



What happens to commodities?

September 2003

Implications for Semis overall

Demand will continue to increase, although
the rate of growth may slow.

Price will become more volatile as semi
industry becomes more commoditized and
over
-
capacity becomes more prevalent

Revenue will increase, but slowly, and with
more short term perturbations

Profitability will decline

September 2003

Semiconductor Forecast

September 2003

Summary

Worldwide economy remains uncertain, but 2H
2003 remains poised for stronger growth.

In the Electronics and Semiconductor Industries,
prices are under strong downward pressures
which is limiting revenue growth despite
respectable growth in unit shipments.

Consumer products, Handsets, and select LAN
products are showing the strongest growth.

Telecommunications infrastructure capex
remains weak through 2003 and 2004.



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