The semiconductor industry is changing rapidly from the days when the PC market was the primary driver. As we come out of the downturn, the promise of growth comes from communications-centered applications such as broadband to and through the home, and wireless communications anytime, anywhere. These real-time technologies, which have digital signal processing (DSP) and analog at the core, will fuel recovery.

Consumers have been drawn to applications that enhance their experience within the comfort of their homes. Not the least of these is broadband access. While penetration is still low, the potential is huge. Cable modem and digital subscriber line (DSL) usage are increasing as the benefits of high-speed Internet access become apparent.

There is also a growing need for easy-to-use home networking to distribute broadband access. This drives demand for wireless LAN products based on 802.11 technologies and the infrastructure that supports them. High-performance analog and DSP technologies are at the heart of these applications.

Consumers have begun the migration to 2.5G wireless. The first applications made available on 2.5G phones are only whetting the appetite for the richer multimedia and mobile Internet access that third-generation (3G) phones will deliver.

Both generations provide opportunities for companies that produce digital and analog solutions for handsets and infrastructure.

Consumers are also investing in DSP and analog-based home entertainment. They are drawn to the quality of digital images and enhanced sound systems in digital video disks (DVDs), Digital Light Processors and home theater audio. Further evidence of this preference is indicated by consumer demand for digital cameras and Internet audio appliances.

Business capital investment, on the whole, has been slower to come back than consumer dollars. However, the need for businesses to increase efficiency to compete is ever-present. Packet-based telephony and video systems are viewed as valuable ways to improve communications efficiency. As companies continue to look for ways to grow without inflating costs, transition from slower wired networks and analog telephony to fast, wireline Internet Protocol networks and wireless LAN is only a matter of time. Renewed investment will start a positive cycle for the DSP and analog solutions driving these technologies.

Semiconductor companies that have continued to invest in technology, despite the market slowdown, are positioning themselves well for the recovery.