SCOTTSDALE, Calif. -- Worldwide revenues for communications ICs will plunge 30.6% to $28.8 billion in 2001 compared to $41.5 million in 2000, and chip sales in this troubled sector will not exceed last year's record until 2004, according to a new forecast from IC Insights Inc.
Communications IC sales are expected to increase slightly by less than 3% in 2002 to $29.6 billion, said the research firm in a newsletter this week.
Like many other IC segments, communications integrated circuits have been hit hard by a slowdown in shipments to end users due to recessions and weak economic conditions around the world, said the Scottsdale-based market research firm.
Worldwide sales of communications systems--such as network routers, telecom switches, and wireless telephones--will dropped 15% in 2001 to $224 billion from $265 billion in 2000, according to IC Insights. The decline was greater than computers/office systems (-13%) and consumer products (-5%).
Reluctance by end users to upgrade existing cellular phones played a major factor in the communications IC downturn, said the research firm. Total handset shipments this year will drop 5% to 395 million units from 415 million in 2000, and cell phones will grow just 8% in 2002 to 425 million, according to IC Insights' new forecast.
The handset replacement market--existing users buying new models of phones--will account for 45% of the cell phones sold in 2001 and 76% of units sold in 2005, said the researcher firm. However, the percentage of users replacing their handsets with newer models is declining. Only 25% of last year's subscribers will replace their handsets 2001, compared to 38% in 2000 and 34% in 1999, said the IC Insights newsletter.
The average-time-to-replacement of a cell phone has increased to 48 months from 32 months in 2000. IC Insights predicts that the average cell-phone replacement rate will shorten to 38 months in 2005, but still slower than the trend in the past two years.
Flash memory sales were greatly inflated in the cell-phone explosion in the past couple of years. Flash memory shipments helped to push total MOS memory communications sales to $8.1 billion in 2000, a 119% increase from $3.7 billion in 1999. But communications memory sales are now expected to decline nearly 52% to $3.9 billion-just above the 1999 level. In fact, communications memory revenues are expected to be nearly flat-to-slightly lower in 2002, said IC Insights, which predicts that this IC segment will not exceed last year's record level for the next five years.