This very informative, analyst – only panel discussion (Feb 10th in Santa Clara, CA) assessed the outlook for new and growing markets throughout the semiconductor industry. While several markets were covered, this summary will focus exclusively on the hot communications related markets and products. During the meeting, analysts from FBR Capital Markets, iSuppli, Databeans and Gartner shared their perspectives and predictions on what's hot and why in several markets of interest to communications and network practitioners.
Craig Berger of FBR Capital Markets singled out smart phones and Set Top Boxes (STBs) as key semiconductor industry drivers. He said that China's 3G infrastructure build-outs would have ripple effects across the industry and accelerate in late 2010. China is expected to spend over $60B in 3G related telecom equipment over the next two years. That's certainly impressive! Craig opined that he expected India to "ramp up" 3G network production, but didn't say when (India's 3G licensed spectrum auctions have been postponed for well over one year now). In addition to 3G, Mr. Berger commented that wireless interfaces, such as WiFi, Bluetooth, and GPS, were propogating much more broadly into hand held devices that didn't have much or any IC content previously.
FBR sees a continued proliferation of smart phones, with +15% growth in 2009 and +25% expected in 2010. Handset chip content is actually increasing versus recent years. Other gadgets are expected to do well – Tablets, eBook readers, and MIDs. Chip makers that will benefit from this advanced wireless handheld trend are Qualcomm, Infineon, Broadcom, Marvell, Nvidia, Intel, and STMicro, according to Craig.
Distributed computing is another trend to watch says Mr. Berger. As broadband becomes faster and increasingly available, PCs do not need to have large amounts of on board storage, expensive operating systems and processors. Instead, they can be 'dumb terminals‘ that just interface to Internet or cloud computing based servers.
Success is created when products are specifically designed to address a particular market niche. For example, Bluetooth is really 20 different sub-markets, depending on application and usage models. Broadcom has done particularly well in these sub markets by offering a wide variety of components and combo chips that address the different requirements of the sub markets.
Mr. Berger noted four "Cool and Innovative Products for 2010:"
1. Intel’s Nehalem Quad-Core CPU on 32nm
2. Qualcomm’s Snapdragon on 45nm on a single chip includes:
- 1GHz ARM CPU
- 600MHz DSP
- 3G baseband modem
- GPS (7th Generation)
- 720p Video Decode
- 12 megapixel camera support
- Multiple audio codecs and MediaFLO TV support
3. Broadcom’s Bluetooth/WiFi/FM (BCM4329) on 65nm includes:???? 802.11n A/B/G
- Bluetooth 2.1 +EDR
- FM receiver and transmitter (transceiver)
- On chip power management unit (PMU)
4. Broadcom’s Single Chip Integrated Access Device (IAD) on 65nm combines many voice, video, data functions in 1 chip:
- ADSL2+ DSL
- IEEE 802.11n WiFi ( 2×2)
- Gigabit Ethernet switch (4 PHys)
- VoIP functionality (DECT)
- 400MHz dual core processor
Susie Inouye of Data Beans stated that the consumer electronics industry was being fueled by new media. Hot devices include: Blackbery, iPhone, Droid smart phones; eReaders, flat screen TVs, and netbooks. Her predictions were that:
- Pads/Tablets will be disruptive to eReader and Netbook Segments of the PC market
- iTunes to begin selling books
- Book Rentals/"Borrowing"
- Lower Cost Notebooks would be negative to the Netbook Market (and what about "smartbooks"?)
- Android OS to Gain Market Share
- Volume Ramp for LCD/OLED Displays
- Volume Ramp for Capacitive Touch
The most interesting presentation from a communications perspective was from Lee Ratliff, Senior Analyst for Broadband Digital Home and IPTV markets at iSuppli. His presentation was entitled, "Uniting the Digital Home" – something Cisco and Taiwanese equipment companies have been trying to do for some time. Lee started his talk with a question, "What will drive broadband data rates to the digital home?" He noted that in Japan, the average broadband residential subscriber gets 65M bits/sec – much more than the highest speeds available to U.S. home users. Lee believes the U.S. and rest of the world is headed for much higher residential broadband rates, driven by new applications and appliances that are "arriving all the time." This what will necesitate what he refered to as "High-QoS Home Networks." For the foreseeable future, Lee says those networks will be wired (they won't be wireless). Power Line, Coax (MoCA), and Phone Line all be used for media distribution to the TV, STB, DVR, PC, gadgets galore, etc. New Cat 5 (or higher grade) twisted pair has proved too expensive and difficult to install, so it won't be used.
The Market Drivers of High-QoS Home Networks include:
- IPTV- through a managed service provider network with high QoS (not the public Internet)
- Multi-Room DVR
- DBS single-wire distribution
- Consumer Electronics: Media extenders, Internet Enabled TVs (IETV), and much richer and broader VoD
The IETVs will be connected to the Internet mostly via Ethernet (we assume this to be GE rather than the 10/100 BaseT most of us use to connect our PCs to a cable or DSL modem). IEEE 802.11n may be used in some cases to connect to a home WiFi router.
Two new emerging standards of note are ITU G.hn and IEEE 1901, although Lee believes only the former has real potential to become a mass market. G.hn provides an evolution from the various wired home networking technologies like MoCA, Home PNA, and Homeplug Powerline to a new unified standard that supports cable, power line and phone line transmission.
Cable and power line are expected to be the dominant PHY layer for home networking gear till at least 2013. Coax (the MoCA standard) will dominate the North America market because of the prevalence of coax cables in homes. Power Line home transmission is expected to dominate for the rest of the world, especially Europe where it's being used now to distribute IPTV within the home. (Please contact Lee Ratliff directly – lratliff at isuppli.com – for his market projection slides).
As the home networking industry matures, the small innovative start-ups are likely to be acquired by larger companies. Such consolidation is well underway:
- Sigma Designs / CopperGate
- Atheros / Intellon
- Lantiq / Aware
- Broadcom / a power line data/video distribution company later this year?
Service Providers are the dominant channel for home networking – much greater than retail. Lee says that service providers are opting for wireline home transmission (over wireless) because it's reliable, stable, and offers high performance. He believes that WiFi will be used in rare cases. Consumers shopping in retail stores will continue buying WiFi enabled gear, because it's ubiquitous, easy, and portable. And standards confusion with G.hn and IEEE 1901 may give IEEE 802.11n "room to run" with many home CE makers using 802.11n instead of a new wireline standard. Wireline bridge products might be used, but only when WiFi fails to work throughout the digital home.
Sergis Mushell, Principal Research Analyst at Gartner Group talked about Cloud Computing's impact on the semiconductor industry. Cloud services will provide scalable, elastic IT related capabilities provided as a service to external customers using Internet technologies. But one needs to take note of the different characteristics of public and private clouds.
Intel's microprocessor architecture vs licensed ARM cores was said to be the battleground at the intersection of the mini-notebook, netbook and smart phone markets. These smaller computers would be more prevalent as cloud computing matures. Indeed, the big beneficiaries of cloud computing will be low end notebooks, smart phones and mobile network infrastructure to support all the new wireless gadgets and gizmos that will access the cloud (e.g. an eReader to download books, magazines or newspapers). Clouds will have negative impact on client storage and mainstream PCs (both desktops and laptops). Much better security will be needed across many product lines.
Data Centers represent an opportunity, because that's where the cloud servers will reside. The servers must operate at high capacity, be robust and reliable, but not have the high power consumption that results in expensive power bills and cumbersome cooling requirements. Storage security will be particularly important.
Sergis Mushell told the audience to look for opportunities in new devices that place cloud computing capabilities (via broadband wireless access) in the hands of consumers. He predicts that service providers will offer cloud services to consumers in addition to triple play or quad play services offered today.
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