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The Joy And Sorrow Of VoIP Semiconductors |
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Written by Adam Gosling
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Thursday, 16 November 2006 |
Analysis by industry
research outfit Frost & Sullivan has estimated that the growth in
VoIP-related semiconductors sales is taking off, but there's a dark
side to the numbers as competitive and customer pressures drives down
margins at an alarming rate.
Frost & Sullivan says the global
VoIP semiconductor market earned revenues of US$256.2 million in 2005,
but it estimates this will blossom to a US$857.8 million business in
2009.
The researcher says the market is witnessing this growth
across all end-user segments with carrier infrastructure, enterprise,
and residential markets all bringing demand for the chips that drive
the new VoIP industry.
Frost & Sullivan says the drive for
high-performance, low-power and cost-effective VoIP solutions is being
attained against a back drop of carriers and service providers
looking to reduce capital and operational
expenditures while generating new revenue sources.
With service
providers increasingly seeing next generation networks as the answer to
their predicament, they are driving demand up and demanding costs be
brought down.
But there's a catch., says Frost & Sullivan. As equipment and handset manufacturers add more features in products
such as residential gateways and IP phones, integration is likely to be
a significant challenge for a semiconductor vendor.
For example, the analyst says the
integration of a large number of residential gateway products with
wireless local area network (WLAN) and VoIP capability, and in future,
integration of video functionality with gateway products is likely. The
majority of handset manufacturers have announced dual-mode cellular or
wireless fidelity (Wi-Fi) phones and such products are pressurizing the
semiconductor vendors to improve power consumption performance of their
solutions.
"An
important driver for this market is that the VoIP technology has become
mainstream in the industry and semiconductor technology has improved by
large, pushing down costs, making it an attractive and affordable
proposition," says Frost & Sullivan Research Analyst T. Govind Krishna Kumar.
"With increasing complexity of residential gateway and IP
phone products, semiconductor vendors face the challenge to deliver
high-performance and cost-effective solutions, while integrating all
these functionalities on a single chip," explains Govind.
"In
addition, to enter the customer premise equipment (CPE) gateway market,
semiconductor vendors face tremendous cost pressure."
So
while the market is there for the taking, the VoIP semiconductor
industry must find scale and technical solutions to the massive
integration job ahead of us, while finding ways to reduce design and
manufacturing costs.
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