Consolidation Coming in Wireless

Online staff -- Electronic News, 4/15/2005

The wireless chip market may be a booming segment, but it's getting crowded fast, according to a recent report from IC Insights.

The firm forecasts a 2004 to 2008 average annual growth rate of 23 percent and 35 percent in unit shipments, making it a major player in the total IC market.

Specifically, the 802.11 chipset portion of the wireless networking market is forecasted to grow from $680 million in 2004 to $1.5 billion in 2008, an average annual growth rate of 21 percent and representing about 50 percent of the total wireless networking chipset market. The average annual unit growth rate for 802.11 chipsets during the same period is expected to reach 32 percent, as the average selling price (ASP) falls from $17 in 2004 to $12 in 2008, IC Insights said.

Meanwhile, the Bluetooth chipset segment of the total wireless networking market is forecasted to expand from $580 million to $1.5 billion over the 2004-2008 time period. IC Insights believes that the ASP of a Bluetooth chipset in 2008 will be about one-fourth the price in 2002, allowing for wider-spread adoption. 

While the total wireless networking IC market may be flourishing, not all of the players will survive. The firm estimates that there are currently 82 suppliers of ICs for wireless network applications. Of those companies, 53 offer 802.11 ICs and 33 offer Bluetooth ICs, with some offering both. 

Although the market has room for many IC suppliers, IC Insights believes there are an excessive number of companies fighting for marketshare. Given that, there has been and will continue to be some consolidation among companies and some participants that succumb to competitive pressures, the firm said.  Such examples include RF Micro Devices buying Bluetooth chip supplier Silicon Wave and Agere System’s exit from the stand-alone 802.11 chip business.