SAN JOSE, Calif. Despite the growth of MP3 player sales, the market for controller chips for these products is seeing intense price erosion as new competitors enter the fray, according to iSuppli Corp.
Global PMP/MP3 player unit shipments will rise to 268.6 million units in 2011, expanding at a compound annual growth rate (CAGR) of 13 percent from 128.7 million units in 2005, according to iSuppli. Global PMP/MP3 factory revenue will rise to $21.5 billion by 2011, growing at a CAGR of 7.4 percent from $14 billion in 2005, according to the firm.
''A few years ago, the strong growth of the PMP/MP3 player market attracted a new set of controller suppliers,'' said Chris Crotty, senior analyst for consumer electronics at iSuppli, in a statement.
''Seemingly overnight, companies such as China's Actions Semiconductor Co. Ltd. and South Korea's Telechips Inc. emerged to challenge early leaders SigmaTel Inc. and PortalPlayer Inc., which was acquired by nVidia Corp. in 2006,'' he said.
''Now, a second wave of competitors has entered the market," he noted. ''Many of these companies, such as Chipnuts, Anyka and Rockchip, are small and relatively unknown. They are joining an increasingly crowded market that also includes perennial Taiwan-based fabless suppliers as well as broad-line chip makers like Samsung, Texas Instruments, NXP, Analog Devices and Freescale,'' he said.
Actions retained the No. 1 position in the PMP/MP3 controller market in 2006 with 51 percent growth, but its overall unit share increased to only 39 percent in 2006, up from 37 percent in 2005, according to the firm.
SigmaTel and PortalPlayer continue to struggle in the face of declining share, falling to 15 percent and 12 percent in 2006, respectively. PortalPlayer was acquired by nVidia.