The worldwide communications market suffered dramatically in 2001 and 2002 as electronic systems markets overall endured what could best be described as an "industrial depression." The 2002 communications systems market was only 72 percent as large as the communications market in 2000. Still, the 2001 and 2002 computer systems market suffered even more than the communications segment, with the 2002 computer market only 68 percent as large compared with the peak year of 2000.
Growth of the comms chip market will, of course, depend a lot on a healthy communications systems industry. Overall, the total communications systems market is forecast to recover slowly and be flat in 2003, compared with a 5 percent increase for the total worldwide electronic systems market.
The comms systems market will not exceed the growth of the total electronic systems market until 2004, IC Insights said. In a dramatic turn of events, the communications systems market went from being the fastest-growing segment from 1995 through 2000 to one that is forecast to be the slowest-growing segment in the 2001 through 2006 frame.
The comms IC market fell 13 percent in 2002 after dropping 33 percent in 2001. The total comms IC market more than doubled from 1996 through 2000 but is not expected to exceed the level achieved in 2000 in the forecast period, which ends in 2006.
Even after the communications bubble burst in 2001, the market for communications ICs that year was still greater than any other year except 2000. Moreover, the 2003 communications IC market is forecast to be greater than in any "pre-bubble" year.
IC Insights does not believe that the communications IC market is "dead." Although there was still a significant amount of excess capacity in the communications infrastructure segment (i.e., wireline applications) in 2002 and the first half of 2003, IC Insights believes that new wireline capacity will again be needed beginning sometime in 2004. In the meantime, wireless applications are expected to drive a forecasted 18 percent increase in the communications IC market in 2003, just slightly better than the forecasted total IC market growth of 15 percent.
Bucking the recent trend, the ROW communications IC regional market in 2002 increased 29 percent, driven by booming Asia-Pacific cell phone production. In contrast, the 2002 Americas communications IC market dropped 36 percent. This drop was caused in large part by the continued decline of the networking infrastructure business. At only $5.2 billion, the 2002 Americas communications IC market was only one-third of its peak level ($15.9 billion), which was set in 2000. For 2003, the Americas communications IC market is forecast to increase a moderate 8 percent.