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Product category: Communications ICs (Wired)
News Release from: Agere Systems | Subject: Telecom Division
Edited by the Electronicstalk Editorial Team on 27 July 2005

Positive signs for the semiconductor
industry

Dave Sonnier of Agere Systems Telecom Division reflects on the semiconductor industry, the year so far, and the year it will likely have had when all is said and done on 31st December 2005.

The first reflection that leaps to my mind is how we've had a generally upbeat ride during this year's first six months It's hasn't been dull and not really secure, predictable and comfortable

But it hasn't got worse.

Or at least it doesn't feel worse.

It feels better.

And that's a good thing.

So far this year predictions about the semiconductor market have been generally positive.

This year has been tough, too.

But I have the general sense, a gut feel, that more positive information has been flowing into my e-mail inbox and over my phone line during the past six months.

The cellphone, satellite radio, and storage markets have continued to confirm that consumers' appetites for ever-more-snazzy electronics devices remains real and will likely continue to drive the chip industry growth during the next several years.

High volume sales of chips, meaning above 100,000 units, are going to continue happening mainly in the consumer space.

Citing a prime example, hundreds of millions of cellphones that will continue to ship each year for many more.

Also in the consumer space, a new, intriguing market has emerged: network attached storage (NAS).

This market is all about delivering Gigabit Ethernet speeds inside a home network ten times faster than current technology.

While achieving these speeds, the technology also provides a huge boost in storage capacity in your home.

In the telecom arena, the hottest new thing is Internet Protocol TV, delivering video over copper or cable TV lines using network processors to deliver higher resolution, lower delay, and decreased jitter video signals.

The several tough years recently the telecomms industry, in particular, has endured has reason to be hopeful of better days because of real momentum, market viability, and demand for IPTV services.

I don't recall more genuine momentum and positive industry rhetoric about a telecom video technology in my 15 years in this industry.

Gigabit Ethernet, meanwhile, continues to spread its tentacles further into businesses and homes.

One key reason is Gigabit Ethernet pricing continues to move closer to pricing of Fast Ethernet.

The sensible question being asked is "why not pay a few extra dollars for ten times faster speeds?".

The marketplace is answering that question with this answer: "Yeah, good point".

Demand for Gigabit Ethernet is rapidly growing.

Gigabit Ethernet deployed in businesses will change the way they do business and how they compete because of its dramatic increase in bandwidth capability.

This technology is an undisputed strategic weapon for companies to differentiate themselves and serve their customers and businesses more effectively and economically.

So while it's easy and fashionable to take this summertime period of reflection to point out all that's problematic about the chip business, doing so doesn't help much.

Rather than focus on problems, this industry needs to zero in on how to solve such problems and accentuate the positives.

The positives are that massive layoffs are no longer polluting our e-mail in-boxes seemingly at least once a week as they seemed to be throughout 2001 and 2002.

Semiconductor companies generally are more stable than they were back then.

Other encouraging trends include the following.

Demand for semiconductors will continue for the next several years - this is not a dying industry.

Cellphone demand - a prime application for silicon chips - will continue to be strong for the next several years.

Convergence of consumer electronics devices spells opportunities for semiconductor companies to offer differentiated products.

China will continue to use a disproportionately large and growing amount of semiconductors, compared with the rest of the world, for the next several years.

And finally, consumer demand for embracing a more connected lifestyle will drive healthy demand and marketing for chips for the next several years.

Yes, this semiconductor industry remains a good place to be and has much in its future to be optimistic about.

Granted, it is largely a hypercompetitive market with fierce price competition and exceedingly fast market swings.

And it's tough to turn a profit in such a market environment.

But that makes us all motivated and attentive.

It should get our juices flowing, make us appreciate that our jobs, companies, and industry is anything but boring.

So often in this industry, such as in the press and in corporations, we dwell on the negatives.

So often we raise caustic concerns about the fact that as chip process technology shrinks to 65 nanometres and below, that it could be too expensive to manufacture chips, unless produced in huge volumes such as 100,000 or more.

It's a valid point and serious industry issue.

But we'll figure this out.

We are an industry loaded with smart people who have overcome multiple thorny problems such as this before.

We will come through in the clutch again.

We have the free will, I realise, to adopt the attitude that the second half of this year will be torturous, insanely difficult to survive.

Or we can latch on to the belief that we'll figure something out.

We'll innovate.

We'll solve the problems of today as we have those of yesterday.

Reflect, during this summertime period, on how far in a plethora of positive ways this industry has travelled, all the mountains it has conquered, all the countless chips it has designed and manufactured.

And we should feel good about where it's headed, and how we will experience promising and excitement for many years.

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