DSP/Wireless Market Analysis

March revenues up sharply, but Q1 down 12 percent

DSP chip shipments in March 2007 were up 18 percent over February levels. Unfortunately, that was not enough to pull Quarterly (dollar) shipments out of the dumper. For Q1/2007, DSP shipments were down 12.1 percent, heavily influenced by a dramatic 39 percent drop in shipments to Japan. That coincides with the 29.7 percent drop in shipments to the consumer market for the quarter, as illustrated in the left chart below. But, those consumer DSPs had a dramatic 37 percent drop in average selling prices, too. We suspect that currency adjustments were partly to blame. The relatively small automotive market was the only one to show positive growth in Q1 over the previous quarter. It's now clear why we lowered our DSP shipment forecast for all of 2007 from our earlier 10 percent growth projection to a more moderate 8 percent, and even that is based on a significant market pickup in the second half.

Wireless weakness evident

Constituting almost 73 percent of the DSP market, wireless has the biggest impact on quarterly growth. Further, cellular phone DSP shipments (mostly as basebands) are the largest component of the wireless segment. As evident on the right in Figure 1, DSP shipments for cellular phones were particularly weak, even though the smaller "Other Wireless" sub-segment was down over 23 percent. That relatively small sub-segment consists mostly of two-way radios and cordless phones (which are mostly made in Japan).

Figure 1

Wireless DSP shipments in the second half should return to positive growth with the rollouts of TD-SCDMA infrastructure in China and a new breed of WCDMA cellphones in Japan (with GSM fallback). More full­featured WCDMA units for the West are anticipated, but that effect will be offset to some extent by lower chip ASPs for the cheaper (sub-$40) cellphones to China, India and the third world.

“It's now clear why we lowered our DSP shipment forecast for all of 2007 from our earlier 10 percent growth projection.”

Total semiconductor market outlook

The overall monolithic integrated circuit shipments were down 7 percent in Q1 over the previous quarter, so it's clear that the entire semiconductor industry is in one of its cyclical downturns. Our forecast growth for all ICs in 2007 is a lackluster 3.5 percent, and that also presumes resumption to normal shipments in the second half of the year.

Revised 5-year DSP forecast

Based on a general recovery of the semiconductor market and a renewed pickup of WCDMA/UMTS cellular handset shipments, we have raised our 2008 forecast to 15 percent. Table 1 shows our revised 5-year forecast.














12.0 %

Editor’s note: For Will’s latest study “DSP Chip Strategies ‘07”, please visit http://www.fwdconcepts.com/DSP07.htm.