What a difference a year makes or, more accurately, the final few months of a year. Semiconductor analysts entered 2004 with a strong outlook for semiconductor revenue growth20-30% for many, with a reduced but still healthy forecast for 2005. However, the past 3-4 months have given these same analysts a few gray hairs. As a result, almost all have reduced their chip revenue forecast for 2005 from low double digits to just a few percent or, in some cases, zero. This reflects a view that the world economy, although continuing to rebound from the recent recession, is not recovering quite as fast as initially anticipated.
According to a Semiconductor Industry Association (SIA) forecast, slow growth in 2005 is pervasive throughout many semiconductor segments, with projected 2005 revenue changes of: -0.2% for discrete components, 12.8% for optoelectronics (one of the bright spots for 2005), 1.2% for analog, 1.7% for MOS logic, 2.3% for microprocessors, 6.9% for DSP, -14.7% for DRAM, and -1.8% for Flash memory. Keep in mind, however, this follows a very positive growth year in 2004.
That being said, all is not gloom and doom for the chip industry. Driven primarily by consumer thirst for the "latest and greatest" gadgets, several products are poised to show healthy growth in the New Year; not as great as in 2004 but still quite respectable. As well as covering a few of these, I'll also discuss some of the "wait until next year (or two or three)" product and technology candidates.
Digital Cameras and Camera Phones
According to market analyst firm In-Stat/MDR, digital still camera growth almost doubled from 2002-2003, and the firm projects a more than 30% average annual growth rate in units sold through 2008. I predicted a strong 2004 for this market last year (see What's in Store for 2004) and believe that 2005 will continue to be a good one for digital still camera vendors. As the market has matured, so have the feature sets with a typical camera now coming with 3 megapixels or more of resolution, 3x or more optical zoom (with additional digital zoom capability included), better quality lenses, and other capabilities previously found in good quality 35mm cameras.
However, there is increasing competition from another hot consumer itemthe camera phone. Enabled by CMOS sensors that are less costly than the CCD sensors embedded in the current generation of digital cameras, camera phones are taking off. Current available camera phones have peak resolutions of around 3 megapixels. However, in October Samsung announced a 5-megapixel CCD model with shutter speeds as low as 1/1000 second.
Figure 1: The Samsung SCH-S250 camera phone, with 5-megapixel resolution and built-in MP3 player, competes with many high-end digital still cameras. The phone also doubles as a camcorder.
Techno Systems Research of Japan forecasts that the global demand for digital cameras in 2005 will grow 29.5% to 64 million units, while demand for camera phones will rise 139% to 132 million units. You know camera phones have "made it" since they are now banned from certain facilities due to privacy or security reasons.
Video phones have started to appear in the U.S., but are primarily focused on the Asia and European markets (the Samsung 5-megapixel phone, for example, is currently available only in Korea), where they are much more widely used. Don't expect Americans to buy many video phones in before 2006, especially since cellular providers charge extra for sending and receiving video streams (as they do photos).
Still image and video capability place a huge strain on processor resources, battery life, and memory capacity. Enabling technology drivers for digital cameras and camera/video phones include enhanced DSPs, Flash memory, and both on-chip and system-level power-management techniques.
Music OTG (On the Go)
Digital audio players have undergone a transformation, from traditional CD players to MP3 players with songs stored on Flash memory, hard disk drives, and even CDs. Although they have been around since 1998, 2004 saw a huge increase in the popularity of these portable music machines. In a recent report, analyst firm IDC expects digital audio player revenue to hit $7B billion by the end of 2004, with more than 50% of the market owned by Apple Computer's iPods. IDC also predicts a 20% CAGR through 2008.
Market drivers for increased digital audio player sales include falling prices (iPod is getting more competition), the availability of songs from multiple legitimate sources (subscription and pay-per-download), smaller hard disk drives (HDDs), multi-GByte flash memories (you can now buy a 1 GByte USB thumb memory for about $60), and newer audio compression algorithms. A 60 GByte HDD can hold around 20K songs, but how many people really need that kind of capacity (notice I said "need," not "want")? At over 300 songs per GByte of storage, a digital audio player using a 2 GByte Flash memory is smaller, less expensive, and has a longer battery life than a player with an HDD. As large flash memory prices continue to drop in 2005, look for Flash-based players to gain in popularity for people who can suffer with 'only' around a 1000 song capacity on their audio players.
The deployment of radio-frequency identification (RFID) systems in retail establishments and warehouses will jump 47% in 2004 over 2003, according to IDC, who also expects the market for these devices to reach $2B by 2008. When an RFID tag receives a signal from a reader, the tag responds with its own unique identification number. Used primarily for inventory control, returns and recall management, distribution, and product security, RFID tags also see use in child safety, prevention of drug counterfeiting, food tracking (to quickly help locate and identify any shipments that might be contaminated), endangered animal tracking, library management, and lost pet applications. Such tags provide a relatively inexpensive and effective way to trace products from manufacture through purchase.
Few would argue with the benefits of product tracking. The problem with RFID technology is that it can be used to track people as well, without their knowledge and through clothing, purses, and wallets, raising fears about privacy violation. While the growth of RFID tags for product tracking and other non-invasive purposes will grow substantially in 2005, the technology's more controversial uses will limit their non-conventional usagethat of tracking people.
One company, Applied Digital Solutions, has developed its VeriChip producta passive, rice-grain sized tag that is implanted under the skin, via a syringe, and used for identification to prevent theft and unauthorized access to sensitive facilities. With the VeriChip ID number, medical or safety personal can tap into a secure database for an individual's personal medical records. Despite protests from civil rights organizations, the technology promises tremendous benefits for physically or mentally ill persons as a fast way to get medical information or to locate a lost individual. An implantable tag can be used to track elderly or Alzheimer patients that have wandered from a home, nursing facility or hospital. However, personal identification thorough RFID technology is still several years from widespread use and acceptance.
Despite plenty of media coverage, this is a technology whose time has not yet come. WiMAX (Worldwide Interoperability for Microwave Access) is the name given to the group of IEEE 802.16 broadband wireless communications specifications. Think of WiMAX as a wireless replacement for DSL or cable modems, much like WiFi (802.11) is a replacement for Ethernet connectivity.
802.16a was approved early in 2003 for non-line-of-sight communications in the 2-11 GHz spectrum, with up to 70 Mbps at distances up to 31 miles (WiFi has around a 100-150 foot practical limit). A newer version, 802.16e, adds mobility support and may potentially compete with some existing or evolving cell-phone technologies.
While WiMAX promises a low-cost broadband wireless roaming capability, it just isn't "ready for prime time." The 802.16 standards are still being ironed out and products won't be readily available until 2006 at the earliest and, more likely, 2007-8 with current development concentrating on cost and power reduction.
A short-range wireless-connectivity standard targeted for low-cost applications, Bluetooth was originally developed to be a PC 'cable replacement' for applications such as printer control by a desktop PC. However, developers are designing Bluetooth-enabled components and systems for a range of additional applications, such as wireless headsets for cell phones (Figure 2) and wireless photo transfer from a digital camera to a PC or printer. Market analyst firm Context expects Bluetooth mobile phone sales will increase to 720 million by 200980% of the total cell phone market.
Figure 2: This Belkin hands-free headset weighs less than an ounce and works up to 30 feet away from a Bluetooth-enabled cell phone or PDA.
Bluetooth proponents have been promising that widespread deployment of the technology is "just around the corner." For 2005, they just might be right.
Control over your video entertainmentsounds great, doesn't it? With a digital video recorder (DVR), you can record tens of hours of video programming, along with pausing, fast-forwarding and rewinding shows. Over four million DVRs were shipped in 2003, according to IDC. So why haven't the direct sales of DVRs to consumers exploded? Blame the cable and dish providers, who either supply DVRs or DVR-enabled decoder boxes or, in the case of Comcast, actually make video-on-demand (VoD) available with some of their subscription plans (including some free VoD programming for their digital customers). With DVR equipment or VoD readily available through these outside providers, most people don't feel a need to buy a DVR from their local Fry's Electronics or Good Guys. This doesn't mean that personal DVRs won't become as popular as VCRs at some point. However, don't look for DVR sales to consumers to take off in 2005.
About the Author
Jim Lipman is currently Vice President, Client Services for Cain Communications, specializing in the development and implementation of communication and marketing services programs for companies serving the semiconductor, silicon-IP, EDA, and other high-tech electronics-industry segments. Jim's experience includes chip-design R&D, marketing, marcom, consulting, technical editing, technology training, and on-line publishing of technical content for engineers. His email address is firstname.lastname@example.org