Signs of The Time
Conference advertising switcheroo
On the eve of the upcoming CTIA Conference in Las Vegas (which took place April 1-3), I reflected on the Mobile World Congress (MWC) in February. At the previous 2007 3GSM World Congress, all of the signage plastered around the Bull Ring adjacent to the Congress (and seemingly everywhere else in town) was dominated by Motorola. This year, the extensive signage was replaced by Samsung, clearly evidence of Motorola's displacement from the number-two cell phone supplier rank. I also noted that Texas Instruments' extensive sign locations of 2007 seemed to be displaced largely by Nokia Siemens (but also a good TI customer). It'll be interesting to see if there are any new CTIA signage surprises.
Cell phone growth slowing in developed countries
My annual market study of cell phones and the chips that enable them is well underway and will be published in mid-April. Meanwhile, clear trends for this year have emerged.
For 2008, we predict unit cell phone growth in North America to be 5.8 percent, down from last year's 13.4 percent. Western Europe growth has also slowed, predicted to be only 2.8 percent compared with 4.5 percent in 2007. We believe this is due to both saturation and the slowing world economy. Korea's unit growth is forecast to be relatively flat at 1.1 percent, while Japan's is predicted to turn negative, with growth declining by 3.4 percent. Although Africa and the Middle East are predicted to grow a healthy 24 percent, that's on a very low base. Because of the high growth (and high base) of China and India, I predict the worldwide cellular handset growth to be 9.7 percent in 2008 compared to last year's 14.7 percent.
Cell phone DSP chips morph into "Special Purpose Logic"
As I speculated in our January 7, 2008 Market Bulletin, significant changes in DSP chip shipment reporting has begun in 2008, forcing us to modify estimation of total DSP silicon and DSP vendor market shares. Several companies that have previously reported monthly shipments of their products (to the World Semiconductor Trade Statistics program) as "DSP chips" now report them as ASICs under the "MOS Special Purpose Logic" category (MOS = Metal Oxide Semiconductor). Under that are sub-categories like cell phones, wireline, and computer. In short, DSP silicon is losing its identity as a separate "DSP chip" category.
For example, Agere Systems, first acquired by LSI Computer for its (DSP-based) Hard Disk Drive (HDD) controller line, has had its (DSP-based) cellular operations acquired by Infineon. Infineon has no catalog DSP chips in its portfolio and has long reported its DSP-based silicon (mostly as cell phone basebands) as ASICs. Consequently, absorbing the Agere wireless product line (previously reported as DSP chips) has resulted in zero "DSP chips" being reported by Infineon. Also, LSI Computer may report shipments of its now-substantial HDD chip line as ASICs as well. (However, LSI also retained Agere's wireless infrastructure business, another significant DSP market).
Then there is the MediaTek acquisition of Analog Devices' cellular product line. DSP shipments from that product line will no longer be included in ADI's finances, and MediaTek is likely reporting those products as ASICs, as well. The net result will likely be a diminished size of the reported "DSP Chip Market", and an increase in the DSP-based "ASIC cellular, ASIC computer, ASIC wireline Markets." However, the overall "DSP silicon" shipments will continue to increase because without DSP technology there would be no digital wireless, no digital multimedia, no VoIP, and no HDTV.
Now for the boring details
The charts below compare Cell phone DSP shipments from September through this February with those of Cell phone Special Purpose Logic shipments. At first glance, it appears that reported DSP chip shipment revenue fell a whopping 22 percent in January and 19 percent in February. Although January Special Purpose Logic shipments showed a slight drop, February shipments were up an amazing 20 percent. Only in rare cases do shipments rise and fall so dramatically over successive months, so we see this as simply transferring silicon from one category to another. Note that Special Purpose Logic Cell phone shipments are bigger, since the category includes more than just DSP silicon (like LCD drivers).
Perhaps a better way of looking at this is to examine the monthly shipment changes between the two categories. Note that in September 2007, shipments in both categories were up almost 18 percent. From December through February, it appears that Cell phone DSP silicon has morphed into Cell phone Special Purpose Logic (or "ASICs"). It is likely that the same trend applies for other DSP categories, including consumer, wireline, automotive, and others. The sands of time (and silicon) continue to change.
The most exciting product seen in Barcelona
At the Mobile World Congress, I had 28 scheduled interviews and skimmed by several times that many booths. Although I observed many improved products and even a few new wireless chipsets, the product that most impressed me was not wireless per se. Actually, it was an audio chip that I can actually call a "breakthrough" product.
The A1010 voice processor chip by Mountain View-based Audience is the first one that I've encountered that effectively demonstrated noise suppression from both stationary sources (such as repetitive noise sources like automobile highway sounds) and non-stationary noise sources (like rock music in the background or a gaggle of people talking in your airport waiting area). Based on the company's proprietary DSP engine and logic, the tiny A1010 chip provides an interface to all basebands. The basic speech processing algorithm is the secret sauce, based on intelligence of the human hearing system and can be ported to other chips.
At the Mobile World Congress, the company won the ì2008 GSMA Mobile Innovation Global Awardî in the category of Most Innovative True Mobile Start-Up. Chip luminaries Carver Mead and Forrest Baskett are on the board of directors and DSP gurus Lawrence Rabiner and Ray Kurzweil are among those on the company's advisory board. We see Audience as an early acquisition target by one of the big guys, but the company's executives insist that they are aiming for an eventual IPO, instead.
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As always, I invite your comments.
President and Principal Analyst