Digital signal processing (DSP) has become a ubiquitous technology during the past two decades and is a central component in digital base stations, mobile handsets, digital cameras, audio and video players, as well as broadband modems. A programmable DSP often sits at the heart of these devices and is optimized to continuously process real-time data.

In 1982, Texas Instruments Inc. of Dallas introduced the first programmable general-purpose DSP, the TMS32010 DSP, targeting the modem and defense markets. The TMS32010 DSP experienced greater success than rival products from Bell Labs, NEC and AT&T. Motorola successfully introduced the 56000 DSP during the 1980s and Freescale continues to offer the follow-on models of that architecture.

The 2004 DSP market was worth between $7.1 billion to $7.8 billion and TI's share of that market is at least 50%, according to market research firms iSuppli and Forward Concepts. Freescale's market share is roughly one-quarter the size of TI's.

Chips for cell phone basebands (the radio portion of a cell phone) constitute TI's largest DSP market and that is poised to grow 10% to 15% in 2005 and closer to 25% in 2006 as UMTS/WCDMA finally kicks in. The two other powerhouses in DSP baseband chips for cellular are Freescale and Qualcomm, according to Will Strauss, president of Forward Concepts.

Other fast-growing opportunities for DSPs are video and image processing for such applications as personal multimedia players and security surveillance. Regionally, Asia and especially China have the fastest growth potential for DSPs.

Changes are in store for DSP providers, but the common denominator will remain innovation, says Gene Frantz, principal fellow at TI.

"With few exceptions, DSP and semiconductor companies will not be able to provide custom single-chip systems to their customers. The approaches to delivering application solutions will require significant changes in the way TI does business. Innovation is the bread and butter of our business. It is a part of our culture. So [while] innovation is driven from the top down, it's [also] a grass roots activity. By talking to the garage engineers and innovators of the next waves of technology, TI will provide [customers] the technology they need."

Frantz admits luck has played a role in TI's success. "I attribute our success to listening to customers, as well as luck. As in any expanding market, we have multiple competitors on many fronts. We serve a huge number of markets. Each market has a set of competitors. The competitors I fear most are the ones listening to customers."

DSP makers will face competition in both the low- and high-performance ends of the market.

"Contemporary microcontrollers and microprocessors include at least some minimal DSP capability, just enough to perform low-bandwidth functions like soft modems and motor control. Consequently, traditional DSPs are being challenged by microcontroller houses at the low end and by microprocessor houses at the high end. But high-end microprocessors are far too power-hungry for many DSP applications," Strauss says.

The extreme parallelism that high-density Field-Programmable Gate Arrays (FPGAs) enable for signal processing is also challenging DSP devices in high-end applications with an improving offset to the overall system power consumption, he adds.

Frantz acknowledges many of the DSP market's challenges. "The biggest obstacle is the business impact of supporting the next several IC technology nodes. We have to change the way we create and support products in the mass market as we move into an era where complete systems can be integrated on a single piece of silicon. Yet at the same time, few companies will be able to afford it."

Robert Cravotta is a technical editor for EDN.