Strong ATM market creates chipset opportunities

May 1, 1999

Strong ATM market creates chipset opportunities

The Asynchronous Transfer Mode (ATM) silicon chip market has shown a steady upward trend in revenues and units shipped, reflecting ATM`s continued success in both the wide- and local-area network (WAN/LAN) backbones, despite what industry critics say. A new report from Cahners In-Stat Group (Newton, MA), entitled ATM Chipset Market Analysis, examines the ATM chipset market driven by the strong underlying demand for ATM equipment.

This underlying demand stems from service providers that want to provide robust, multi-tiered services. Enterprise information technology managers, says the report, have looked to ATM as a viable technology to futureproof their LAN backbones for the relentless bandwidth explosion. In-Stat`s report examines the ATM silicon chip market and how the success of the ATM market will continue to fuel growth throughout the forecast period.

According to analysts at In-Stat, the ATM chip market is expected to grow at a compound annual growth rate (CAGR) of 22% from 1998 to 2002. The market will double in five years from $140 million in 1998 to $308 million in 2002. Unit growth will make a strong showing, led by physical-layer device volumes hitting 4.6 billion in 2002.

Total units, combining physical-layer, segmentation and reassembly, and ATM switch devices, are expected to increase from nearly two million devices shipped in 1998 to more than seven million by the year 2002--a CAGR of 39%. While OC-3 (155-Mbit/sec) speeds will continue to dominate, OC-12 (622 Mbits/sec) will take an increasing portion of the market as equipment manufacturers move to fill the demand for higher speeds. By the end of 2002, OC-12 is expected to account for more than 30% of all ATM switch integrated circuits (ICs) shipped. The future ATM IC market will be characterized by increasing speeds and higher port densities, says In-Stat analysts.

The largest opportunity for ATM silicon chips will continue to be in the WAN and high-end enterprise backbones because they currently represent the only technology to offer guaranteed levels of quality and class of service for different traffic types, says In-Stat. Many providers have created all-ATM backbones that allow them to offer a variety of revenue-generating services.

In the enterprise space, other high-speed technologies such as Fast Ethernet and Gigabit Ethernet have also made headway and will continue to challenge ATM. Desktop connectivity will continue to be the domain of lower-cost alternatives like Fast Ethernet.

New features will be incorporated into the ATM IC market that will continue its evolution, coinciding with the evolution of the ATM standard. The continued success of the ATM equipment market will push ATM IC vendors to further differentiate their products to garner additional design wins.

In-Stat`s report includes forecast and market-share information for the ATM equipment market, reviews of ATM technology, and an index of ATM ICs by vendor and product type. It also analyzes the market and provides forecasts by segment and data rate.

In-Stat is offering the complete report for $2495, which includes analyst inquiry privileges on topics covered. To purchase the report or for more information, contact Linda Morganstern at (408) 345-4449, fax (408) 345-4400, or e-mail: [email protected]. u

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