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Communications Semiconductor Market Forecast 2012–2017

Published December 2013

Authors: Bob Wheeler, Jag Bolaria and Linley Gwennap

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Market Research From The Industry Experts

Sales of semiconductors for wired-communications applications have labored under uneven economic conditions. Although the enterprise market remains soft as companies defer investment in networking gear, data centers are driving demand for high-speed equipment. Broadband is a mixed bag as DSL deployments slow but China plows forward with FTTx. Investment in cellular infrastructure, particularly LTE, is driving a recovery in optical-transport ICs and other complementary wireline technology.

Meanwhile, the supply base, once populated by a mixture of startups, midsized companies, and a few big companies has become increasingly concentrated, With more technologies under its roof, the typical chip supplier is better able to integrate system functions into a single chip to lower system cost (and concomitantly lower industry revenue). With fewer competitors, the supplier is also more likely to avoid the ruinous price wars that plagued product markets such as DSL. How all these factors come into play affects our outlook for communications semiconductors. Companies seeking to understand these dynamics will benefit from the perspective of the leading group of communications semiconductor analysts.

"Communications Semiconductor Market Forecast 2012–2017" provides the detailed market information needed to sort out the complexities of this market. With this report, chip vendors, investors, and OEMs will readily see how big the mature product markets are and how fast the emerging categories are growing.

Wired-communications semiconductor product categories covered in the report include network processors, 10 Gigabit PHYs by technology (10GBase-T, 10GBase-KR, SFP+ optical, SFP+ direct-attach), 40 and 100 Gigabit Ethernet components, PON and VDSL transceivers, network search engines, and optical-transport ICs. Also included are forecasts for interconnect chips, CPU IP, FPGAs, and embedded microprocessors—including multicore processors.

The report includes a brief text summary providing analysis of the data and a set of tables for more than a dozen categories of wired-communications semiconductors. The single-user license includes a brief printed document with summary analysis of the data and is packaged with a non-printing PDF that provides market-forecast tables for more than a dozen product categories. The corporate license includes the printed summary as well as a PDF that permits additional copies to be printed. For easier data reuse, the corporate-license edition is packaged with a Microsoft Excel workbook containing all of the data.

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As the leading vendor of analysis for communications silicon, The Linley Group has the expertise to develop a high-quality set of market estimates. Our analyst team applies its extensive experience and network of industry contacts to deliver the quantitative information you need to make informed business decisions.

Whether you are looking for a well-established vendor to source from, a vendor to partner with, or a rising company to invest in, this report will cut your research time and save you money. Order "Communications Semiconductor Market Forecast" today.

This report is written for:

  • Product managers and executives seeking to identify product markets in which to invest or divest.
  • Strategic sourcing professionals and engineers at OEMs seeking information about pricing and other chip-market trends.
  • Investors and financial analysts seeking data to support investment decisions.
  • Public relations professionals seeking to communicate the growth opportunities of their clients.

The Linley Group has developed forecasts of communications ASSPs for wired applications, embedded microprocessors, and FPGAs using infor­mation gathered in its market-share process, from public financials and other public sources, and from reviewing carrier and enterprise spending trends. Wireless coverage appears in a separate report: Mobile Semi­conductor Market Share Forecast 2012–2017.

As 2013 comes to a close, the communications-semiconductor market has stabilized following an unprecedented two-year decline during 2011 and 2012. Although 2012 was down at the top level, results were mixed across different market segments. The broadband segment grew thanks to strong sales of customer premises equipment (CPE), whereas most carrier-infrastructure segments declined. Overall Ethernet revenue fell owing largely to soft enterprise spending, but adoption of 10G Ethernet in data centers prevented a steeper drop. Overall, communications equip­ment consumed $10.6 billion in ASSPs, processors, and FPGAs in 2012.

Revenue from communications ASSPs will be down again in 2013, but only by a small amount. We expect 2014 will be about flat with 2013. With expectations for enterprise spending already modest, the biggest risk to our 2014 outlook is a slowdown in carriers’ wireline-infrastructure spend­ing. Although carrier capex appears strong, we have noted results in spe­cific equipment segments can show little correlation with overall capex. The bright spot in 2014 should once again be spending on data centers, the growth of which is driven by cloud computing and companies such as Google, Microsoft, Amazon, and Facebook.

Beyond 2014, we expect carrier and data-center spending to slow. Service providers will increasingly focus on wireless-access networks and the transport infrastructure to support those, whereas wireline-access spend­ing will languish. China will begin 4G deployments in 2014 and should continue spending heavily on cellular networks through 2015. Wireless operators that have completed initial LTE build-outs will shift their investments to small cells, which will help meet data-capacity demands.

To prosper in this environment, vendors must target growing product categories. Two of the hottest areas in our forecast are home networking and switches for PCI Express and RapidIO. Network processors, network search engines, and optical transport ICs will also show good growth over the forecast period. These categories, however, declined in 2011 and 2012 from their 2010 peaks. Thus, near-term growth in these categories represents a rebound as consumption of carrier equipment has stabilized.

Many of the trends affecting communications ASSPs also influ­ence sales of embedded pro­cessors. Communications is the largest application for embedded processors and has a mixed outlook. A significant portion of processor sales is for use in base stations, and shipments of macro base stations are expected to decline through the forecast period. On the other hand, we expect embedded-processor revenue from switches, routers, and security equipment will grow substantially. Thus, wireless infra­struc­ture creates a drag on overall revenue from communications appli­cations.

FPGAs, like embedded pro­cessors, are a mature category with broad ap­plications, but they are capturing additional share of the total semicon­ductor market as their capabilities increase. As these chips support more gates and integrate more functions, they become better able to substitute for ASICs and ASSPs in production systems. New products integrating high-performance CPUs may displace embedded processors in designs using both an FPGA and a pro­cessor.

Complementing our comprehensive market-share report, this document provides investors, product-marketing staff, and execu­tives with insight into the state of the communications IC market and key trends. Extending our ongoing coverage of the industry, it outlines both our quantitative estimates and the important assumptions behind them so that readers can better integrate our forecasts with other information they may have.

List of Figures
List of Tables
About the Authors
About the Publisher
Executive Summary
1 Introduction
Product Categorization and Report Organization
Forecast Methodology
Analysis Overview
Embedded Processors and FPGAs
2 Processors
Network Processors
NPU Forecast Assumptions
NPU Forecast Accelerators
NPU Forecast Inhibitors
Embedded Microprocessors
Embedded-Microprocessor Forecast Assumptions
Embedded-Microprocessor Forecast Accelerators
Embedded-Microprocessor Forecast Inhibitors
Embedded Processors for Communications Assumptions
Embedded Processors for Communications Accelerators
Embedded Processors for Communications Inhibitors
Multicore-Processor Assumptions
Multicore-Processor Accelerators
Multicore-Processor Inhibitors
Server Microprocessors
Server-Microprocessor Forecast Assumptions
Server-Microprocessor Forecast Accelerators
Server-Microprocessor Forecast Inhibitors
32-Bit CPU IP
CPU-Core Forecast Assumptions
CPU-Core Forecast Accelerators
CPU-Core Forecast Inhibitors
3 Ethernet
ASSPs for Ethernet Switching
10GbE Switch Forecast Assumptions
10GbE Switch Forecast Accelerators
10GbE Switch Forecast Inhibitors
40-Gigabit and 100-Gigabit Ethernet Forecast Assumptions
40-Gigabit and 100-Gigabit Ethernet Accelerators/Inhibitors
ASSPs for Ethernet Adapters
10GbE Client Forecast Assumptions
10GbE Client Forecast Accelerators
10GbE Client Forecast Inhibitors
10 Gigabit Ethernet PHYs
10GbE PHY Forecast Assumptions
10GBase-T PHY Forecast Accelerators and Inhibitors
4 Broadband
Broadband CPE ICs
Broadband Infrastructure (CO) ICs
Broadband IC Forecast Assumptions
Broadband IC Forecast Accelerators
Broadband IC Forecast Inhibitors
5 Other Networking ASSPs
ASSPs for Transport Networks
Transport-Network ASSP Forecast Assumptions
Transport-Network ASSP Forecast Accelerators
Transport-Network ASSP Forecast Inhibitors
Network Search Engines
Search Engine Forecast Assumptions
Search Engine Forecast Accelerators
Search Engine Forecast Inhibitors
PCI Express and RapidIO Bridges and Switches
PCI Express, PCI, and RapidIO Forecast Assumptions
PCI Express, PCI, and RapidIO Forecast Accelerators
PCI Express, PCI, and RapidIO Forecast Inhibitors
Home-Networking and Access ASSPs
Home-Networking and Access ASSP Forecast Assumptions
Home-Networking and Access ASSP Accelerators
Home-Networking and Access ASSP Inhibitors
Other Wired Communications ASSPs
FPGAs
FPGA Forecast Assumptions
FPGA Forecast Accelerators
FPGA Forecast Inhibitors
6 Conclusions
Figure 1-1. Taxonomy of wired-communications ASSPs.
Figure 1-2. Industry revenue of wired-communications ASSPs by product category, 2012–2017.
Figure 1-3. Industry revenue of select general-purpose semiconductors, 2012–2017.
Figure 2-1. Industry shipments of network-processor ASSPs, 2012–2017.
Figure 2-2. Industry revenue and ASP of network-processor ASSPs, 2012–2017.
Figure 2-3. Industry revenue of embedded microprocessors by application, 2012–2017.
Figure 2-4. Industry revenue of embedded microprocessors by communications sub-application, 2012–2017.
Figure 2-5. Industry shipments of multicore processors, 2012–2017.
Figure 2-6. Industry revenue and ASP of multicore processors, 2012–2017.
Figure 2-7. Industry revenue of server microprocessors by market segment, 2012–2017.
Figure 2-8. Industry shipments of 32-bit CPU cores by application category, 2012–2017.
Figure 2-9. Combined industry licensing and royalty revenue of 32-bit CPU cores, 2012–2017.
Figure 3-1. Industry revenue of Ethernet ASSPs by speed, 2012–2017.
Figure 3-2. Industry shipments of Ethernet-switch ports by speed, 2012–2017.
Figure 3-3. Industry revenue of ASSPs for Ethernet switching by speed, 2012–2017.
Figure 3-4. Industry port-shipments of ASSPs for Ethernet adapters by speed, 2012–2017.
Figure 3-5. Industry revenue and ASP of ASSPs for Ethernet adapters by speed, 2012–2017.
Figure 3-6. Industry shipments of 10GbE PHYs, 2012–2017.
Figure 3-7. Industry revenue and ASP of discrete 10GBase-T PHYs, 2012–2017.
Figure 4-1. Industry port-shipments of ASSPs for broadband CPE by technology, 2012–2017.
Figure 4-2. Industry revenue and ASP of ASSPs for broadband CPE by technology, 2012–
2017.
Figure 4-3. Industry port shipments of ASSPs for broadband infrastructure by technology, 2012–2017.
Figure 4-4. Industry revenue and ASP of ASSPs for broadband infrastructure by technology, 2012–2017.
Figure 5-1. Industry revenue of ASSPs for transport networks (Sonet/SDH, OTN), 2012–2017.
Figure 5-2. Industry shipments and revenue of network-search-engine ASSPs, 2012–2017.
Figure 5-3. Industry revenue of PCI Express, PCI, and RapidIO bridges and switches, 2012–
2017.
Figure 5-4. Industry revenue from home networking and access ASSPs, 2012–2017.
Figure 5-5. Industry revenue of other wired-communications ASSPs, 2012–2017.
Figure 5-6. Industry revenue of FPGAs for communications and all other applications, 2012–
2017.
Table 1-1. Industry revenue of wired-communications ASSPs by product category, 2012–2017.
Table 1-2. Industry revenue of select general-purpose semiconductors, 2012–2017.
Table 2-1. Industry revenue and shipments of network-processor ASSPs, 2012–2017.
Table 2-2. Industry revenue of embedded microprocessors by application, 2012–2017.
Table 2-3. Industry revenue of embedded microprocessors by communications sub-application, 2012–2017.
Table 2-4. Industry revenue and shipments of multicore processors, 2012–2017.
Table 2-5. Industry revenue of server microprocessors by market segment, 2012–2017.
Table 2-6. Industry shipments of 32-bit CPU cores by application category, 2012–2017.
Table 2-7. Combined industry licensing and royalty revenue of 32-bit CPU cores, 2012–2017.
Table 3-1. Industry revenue of Ethernet ASSPs by speed, 2012–2017.
Table 3-2. Industry shipments of Ethernet-switch ports by speed, 2012–2017.
Table 3-3. Industry average ASSP cost per port for Ethernet-switches by speed, 2012–2017.
Table 3-4. Industry revenue of Ethernet-switch ports by speed, 2012–2017.
Table 3-5. Industry port-shipments of ASSPs for Ethernet adapters (MAC and MAC-PHY ICs) by speed, 2012–2017.
Table 3-6. Industry ASP Ethernet-adapter ASSPs by speed, 2012–2017.
Table 3-7. Industry revenue of Ethernet-adapter ASSPs by speed, 2012–2017.
Table 3-8. Industry shipments of 10GbE ports by PHY, 2012–2017.
Table 3-9. Industry revenue and ASP of discrete 10GBase-T PHYs, 2012–2017.
Table 4-1. Industry port-shipments of ASSPs for broadband CPE, by technology, 2012–2017.
Table 4-2. Industry ASP of ASSPs for broadband CPE by technology, 2012–2017.
Table 4-3. Industry revenue of ASSPs for broadband CPE by technology, 2012–2017.
Table 4-4. Industry port-shipments of ASSPs for broadband infrastructure by technology, 2012–2017.
Table 4-5. Industry ASP of ASSPs for broadband infrastructure by technology, 2012–2017.
Table 4-6. Industry revenue of ASSPs for broadband infrastructure by technology, 2012–2017.
Table 5-1. Industry revenue of ASSPs for transport networks (Sonet/SDH, OTN), 2012–2017.
Table 5-2. Industry shipments and revenue of network-search-engine ASSPs, 2012–2017.
Table 5-3. Industry revenue of PCI Express, PCI, and RapidIO bridges and switches, 2012–
2017.
Table 5-4. Industry revenue from home networking and access ASSPs, 2012–2017.
Table 5-5. Industry revenue of other wired-communications ASSPs, 2012–2017.
Table 5-6. Industry revenue of FPGAs for communications and all other applications, 2012–
2017.