Analog market to rise more than 10% in 2007

By Gary Grandbois, iSuppli Corp. -- Electronic News, 6/20/2007

Despite a significant slowdown in the mobile-phone market, revenue from shipments of analog integrated circuits (IC) used extensively in such handsets will rise by a double-digit percentage in 2007, iSuppli Corp.  predicts.

Wireless communications, including mobile phones, remains a major driver of analog IC sales, accounting for one-third of market revenue. Although the expansion rate for mobile-phone shipments will decline by half compared to 2006, wireless handset shipment growth of 10 percent will help drive analog growth to a higher level than the semiconductor industry as a whole. Analog sales also will be boosted by stronger growth in the PC and networking equipment segments.

Global analog IC revenue is expected to reach $47.5 billion in 2007, up 10.1 percent from 2006.

The analog IC market is divided into two segments: standard-linear ICs and application-specific analog ICs. About 25 percent of standard-linear IC revenue and about 38 percent of application-specific analog IC revenue comes from the wireless communications market.

Analog application-specific ICs for the mobile handset market experienced revenue growth of 10.6 percent in 2006, despite stronger 21 percent unit growth for mobile handsets. Both handsets and the analog application specific standard products (ASSP) that go into them have experienced substantial average selling price (ASP) declines in 2005 and 2006. The ASP decline for wireless analog ASSPs will continue into 2007, but at a lower rate.

The 10 percent handset unit growth forecast for 2007 will result in 4 percent revenue expansion for analog ASSPs used in handsets. Stronger growth for wireless networking products will help bring total wireless communications analog ASSP growth up to 5.3 percent for 2007.

Weakness in the handset upgrade market will continue through the five-year forecast period, holding the wireless communications analog ASSP compound annual growth rate (CAGR) down to 6.7 percent, a drop from the 14.3 percent CAGR of the past five years, a time when mobile handset growth surged.

Gary Grandbois is a principal analyst with with market research firm iSuppli Corp., El Segundo, Calif. This type of pricing analysis, plus an executive summary of the market’s change and direction, is available every month through iSuppli’s Component Price Tracker.