Ethernet In 2005, the Gigabit Ethernet (GE) market grew much more quickly than the overall Ethernet market, as large companies increased their deployment of Gigabit Ethernet in place of older Fast Ethernet technology. According to the new report, which is titled “Networking Silicon Market Share 2005,” revenue from GE switch chips increased 55% from 2004 and GE PHY revenue grew 30%. In contrast, the total Ethernet chip market grew only 3%, reflecting the decline in Fast Ethernet. The total market for all types of Ethernet chips was about $780 million in 2005. This growth in deployment of Gigabit Ethernet favored Broadcom.
The company holds about two-thirds of the market for GE switch
chips and a similar portion of the GE PHY market. As a result,
the company extended its lead in the overall Ethernet chip
market. Broadband With the metro and enterprise markets cooling off, broadband continues to be the biggest driver of growth in wired communications. Many developing countries are installing broadband networks, while other countries are upgrading existing networks greater bandwidth and video support. This growth is creating demand for both access infrastructure equipment (such as DSLAMs) as well as customer premises equipment (CPE). Although the DSL chip market saw significant unit growth in 2005, declining prices resulted in approximately the same revenue as in 2004. Conexant was the top vendor in the DSL market but achieved little growth. Broadcom, in contrast, nearly doubled its DSL revenue from the previous year and leaped into third position in this market. The company is also number-one in chips for cable modems, although this market is only one-third the size of the DSL chip market. Broadcom has been successful mainly in CPE products rather than in broadband infrastructure. In CPE products such as modems and gateways, the company can integrate its other technologies such as wireless LAN (802.11), voice-over-IP (VoIP), security, and Ethernet switches. Competitors such as Texas Instruments, Infineon, and Conexant are also developing highly integrated broadband processors. Passive optical networking (PON) is a small but rapidly
growing broadband alternative. Although the revenue
from PON chips
more than doubled in 2005 from the previous year,
the total was still
only $80 million, less than 6% of the total broadband
chip market. Processors The report combines general-purpose communications processors, such as Freescale’s PowerQuicc, with application-specific communications processors, which typically integrate a standard interface such as DSL or WLAN. Although Freescale has historically been the leading vendor of communications processors, Broadcom for the first time surpassed Freescale in this segment, driven by strong growth in its DSL and WLAN processors. The network-processor market grew only 7.5% in 2005, much less than expected, and remains less than $200 million. In this situation, many vendors are losing share as they lose focus on this market. Exceptions include Wintegra, a startup that is the leading vendor of NPUs for access equipment; Agere, which successfully launched a line of NPUs for access equipment, challenging Wintegra; and Bay Microsystems, a startup that is the leading vendor of high-end NPUs. The data shows that the companies that are leaders in large but high-growth markets—such as DSL and Gigabit Ethernet—generate the most revenue growth. But within a few years, growth in these segments will slow or even stop. Emerging technologies such as VDSL, PON, and 10G Ethernet will become the new growth drivers. Companies that achieve a strong position in these emerging markets will be in position for rapid growth in the coming years.
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