Linley Group: 'Modest growth' to continue for communications silicon

OCTOBER 9, 2008 -- The firm says that despite recent economic turbulence in the United States, 2008 year-to-date sales of wired communications ASSPs have been relatively strong, and the revenue outlook for a number of product segments, including network processors and Ethernet devices, remains positive.

OCTOBER 9, 2008 -- Predicting a steady growth rate of 5 percent per year in the wired communications semiconductor market segment, The Linley Group (search for Linley Group) today released its Communications Silicon Market Forecast, 2007-2012 report. The firm says that despite recent economic turbulence in the United States, 2008 year-to-date sales of wired communications ASSPs have been relatively strong, and the revenue outlook for a number of product segments, including network processors and Ethernet devices, remains positive.

"Despite ongoing reports of doom and gloom in the U.S. economy, we believe a number of growth opportunities still exist, and the impact of the recent downturn will not be universal," said Joseph Byrne, senior analyst, for The Linley Group. "This report identifies the key products and technologies that will shape the communications silicon market over the next five years, enabling decision makers to make informed choices and better understand strategic directions in this dynamic market."

Network processors are among the fastest growing areas, having penetrated only one-third of their total addressable market to date, according to the firm. The Linley Group forecasts a compound annual growth rate (CAGR) of nearly 13 percent for this segment from 2007 to 2012.

The firm also predicts a CAGR of 10 percent over the same five-year period for Ethernet semiconductors. In dollar terms, most of the growth is expected to come from Gigabit Ethernet (GbE), accounting for more than half of all clients shipped in 2007. The fastest growing Ethernet sector is 10-Gigabit Ethernet (10GbE), with upside in both client and switching applications. Demand will be driven by both a natural migration to faster speeds, as well as the rising popularity of Fibre-Channel-over-Ethernet.

The report also predicts that the broadband market will begin to decline, with broadband subscriber numbers having peaked in 2008. Industry revenue from broadband components in 2012 is anticipated to be less than revenue in 2007. PON deployments will continue to rise, with strong growth coming from China.

The Linley Group also says that FPGAs are growing slightly faster than ASSPs/ASICs, becoming more capable and providing a less expensive alternative to these hardwired options.

The Communications Silicon Market Forecast is currently available directly from The Linley Group and is priced at $2,995 for a single-user license.

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