Scottsdale, Ariz. Despite increasing numbers of mobile-phone subscribers, more mobile services offered over more frequencies and the stepped-up installation of basestations, the market for semiconductor components sold into cellular basestations is set to fall over the next five years, according to market research firm In-Stat/MDR.
Basestation semiconductor revenue is forecast to drop from just under $2.3 billion in 2003 to less than $1.6 billion in 2007, a compound annual growth rate (CAGR) of - 8.8 percent, In-Stat said.
"There is no one main reason why basestation semiconductor revenue is forecast to decrease over the next five years, but rather many that, when taken together, spell decreasing revenues," said Allen Nogee, a principal analyst with In-Stat/MDR, in a statement.
"These include the long life span of cellular basestations, increased manufacturing efficiencies, the lack of exponential customer uptake of new wireless data services, increasing spectrum efficiency of cellular technologies and decreasing component prices. Add these factors, and you have a clear picture that points to problems for those companies that manufacture basestation components," Nogee added.
Of the multiple technologies covering second- and third-generation communications now on offer, deployment of wideband-CDMA basestations is growing at a good enough rate to see semiconductor revenue expanding at a CAGR of more than 16 percent, said In-Stat/MDR.
The research firm said that chip vendors pursuing W-CDMA are under more price pressure, however, because W-CDMA equipment must be very inexpensive for carriers to successfully deploy the technology.