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Communications Semiconductor Market Forecast 2013–2018

Published November 2014

Authors: Bob Wheeler, Jag Bolaria and Linley Gwennap

Single License: $3,995 (single copy, one user)
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Market Research From The Industry Experts

Sales of communications ASSPs have labored under uneven global economic conditions. Just as mature economies, including the U.S., are improving, China’s growth is slowing. Still, China’s GDP is expected to grow at three times the rate of the U.S. GDP. The improving outlook for the U.S. economy has reduced uncertainty, which should alleviate the deferral of investments and reduced consumption of the past several years. In addition, semiconductor inventories remain relatively low, which should prevent an inventory-correction cycle in the near term.

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. 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 2013–2018" 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.

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, cable modems, network search engines, home-networking chips, and optical-transport ICs. Also included are forecasts for interconnect chips, CPU IP, FPGAs, embedded microprocessors, and integrated base-station processors used in small cells.

The report includes a brief text summary providing analysis of the data and a set of tables for more than a dozen categories of 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 spending and technology trends. This report also includes our forecasts for server processors and, new to this edition, integrated base-station processors. The latter category is a new class of chips that combines CPUs and DSPs and serves both traditional macro base stations and small cells. A separate report, Mobile Semiconductor Market Share Forecast, provides forecasts for processors and wireless chips used in mobile clients such as smartphones and tablets.

As 2014 comes to a close, the communications-semiconductor market remains weak after an unprecedented three-year decline from 2011 to 2013. Although 2013 was down at the top level, results were mixed across different market segments. The two largest segments, Ethernet and broadband, were down only slightly. In both cases, revenue growth from new technologies largely offset declines in legacy technologies. The aggregate of other segments declined due primarily to legacy technologies in terminal decline. Overall, communications equipment consumed $10.5 billion in ASSPs, processors, and FPGAs in 2013.

We expect overall ASSP revenue for 2014 will be down slightly compared with 2013. Although most segments should be flat or will grow modestly, legacy technologies continue to create a drag on growth. Bright spots include broadband, optical transport, and PCIe/RapidIO. In broadband, GPON CPE chips are experiencing strong growth due to deployments in China. Deployments of LTE in China are driving the growing demand for OTN in that country. Finally, PCI Express switch chips are growing due primarily to storage applications. Our flat top line for Ethernet masks underlying weakness in enterprise spending offset by continued growth in data centers driven by cloud-service providers such as Google and Microsoft.

Beyond 2014, we expect carrier spending to slow. Service providers will increasingly focus on wireless-access networks and the transport infrastructure to support those, whereas wireline-access spending will stagnate. China began 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 subsegments. In 2013, we saw the market share of chip vendors that have invested in new technologies outperform that of vendors milking legacy products.

Two of the hottest areas in our forecast domain are home networking and switches for PCI Express. 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, the 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 ap-plications, 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/Inhibitors
Integrated Base-Station Processors
Integrated Base-Station-Processor Forecast Assumptions
Integrated Base-Station-Processor Forecast Accelerators
Integrated Base-Station-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
10G, 25G, and 40G Ethernet Adapter Forecast Assumptions
10G, 25G, and 40G Ethernet Adapter Forecast Accelerators
10G, 25G, and 40G Ethernet Adapter Forecast Inhibitors
10 Gigabit Ethernet PHYs
10GbE PHY Forecast Assumptions
10GbE 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 Forecast Accelerators
Home-Networking and Access ASSP Forecast 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, 2013–2018.
Figure 1-3. Industry revenue of select general-purpose semiconductors, 2013–2018.
Figure 2-1. Industry shipments of NPU ASSPs, 2013–2018.
Figure 2-2. Industry revenue and ASP of NPU ASSPs, 2013–2018.
Figure 2-3. Industry revenue of embedded microprocessors by application, 2013–2018.
Figure 2-4. Industry revenue of embedded microprocessors by communications sub-application, 2013–2018.
Figure 2-5. Industry revenue of multicore processors, 2013–2018.
Figure 2-6. Industry revenue of integrated base-station processors by cell size, 2013–2018.
Figure 2-7. Industry revenue of server microprocessors by market segment, 2013–2018.
Figure 2-8. Industry shipments of 32-bit CPU cores by application category, 2013–2018.
Figure 2-9. Combined industry licensing and royalty revenue of 32-bit CPU cores, 2013–2018.
Figure 3-1. Industry revenue of Ethernet ASSPs by speed, 2013–2018.
Figure 3-2. Industry shipments of Ethernet-switch ports by speed, 2013–2018.
Figure 3-3. Industry revenue of ASSPs for Ethernet switching by speed, 2013–2018.
Figure 3-4. Industry port-shipments of ASSPs for Ethernet adapters by speed, 2013–2018.
Figure 3-5. Industry revenue of ASSPs for Ethernet adapters by speed, 2013–2018.
Figure 3-6. Industry shipments of 10GbE PHYs, 2013–2018.
Figure 3-7. Industry revenue and ASP of discrete 10GBase-T PHYs, 2013–2018.
Figure 4-1. Industry port-shipments of ASSPs for broadband CPE by technology, 2013–2018.
Figure 4-2. Industry revenue of ASSPs for broadband CPE by technology, 2013–2018.
Figure 4-3. Industry port-shipments of ASSPs for broadband infrastructure by technology, 2013–2018.
Figure 4-4. Industry revenue of ASSPs for broadband infrastructure by technology, 2013–2018.
Figure 5-1. Industry revenue of ASSPs for transport networks (Sonet/SDH, OTN), 2013–2018.
Figure 5-2. Industry shipments and revenue of network-search-engine ASSPs, 2013–2018.
Figure 5-3. Industry revenue of PCI Express and RapidIO bridges and switches, 2013–2018.
Figure 5-4. Industry revenue from home networking and access ASSPs, 2013–2018.
Figure 5-5. Industry revenue of other wired-communications ASSPs, 2013–2018.
Figure 5-6. Industry revenue of FPGAs for communications and all other applications, 2013–2018.
Table 1-1. Industry revenue of wired-communications ASSPs by product category, 2013–2018.
Table 1-2. Industry revenue of select general-purpose semiconductors, 2013–2018.
Table 2-1. Industry revenue and shipments of NPU ASSPs, 2013–2018.
Table 2-2. Industry revenue of embedded microprocessors by application, 2013–2018.
Table 2-3. Industry revenue of embedded microprocessors by communications sub-application, 2013–2018.
Table 2-4. Industry revenue of multicore processors, 2013–2018.
Table 2-5. Industry revenue of integrated base-station processors by cell size, 2013–2018.
Table 2-6. Industry revenue of server microprocessors by market segment, 2013–2018.
Table 2-7. Industry shipments of 32-bit CPU cores by application category, 2013–2018.
Table 2-8. Combined industry licensing and royalty revenue of 32-bit CPU cores, 2013–2018.
Table 3-1. Industry revenue of Ethernet ASSPs by speed, 2013–2018.
Table 3-2. Industry shipments of Ethernet-switch ports by speed, 2013–2018.
Table 3-3. Industry average ASSP cost per port for Ethernet-switches by speed, 2013–2018.
Table 3-4. Industry revenue of Ethernet-switch ports by speed, 2013–2018.
Table 3-5. Industry port-shipments of ASSPs for Ethernet adapters (MAC and MAC-PHY ICs) by speed, 2013–2018.
Table 3-6. Industry ASP of Ethernet-adapter ASSPs by speed, 2013–2018.
Table 3-7. Industry revenue of Ethernet-adapter ASSPs by speed, 2013–2018.
Table 3-8. Industry shipments of 10GbE ports by PHY, 2013–2018.
Table 3-9. Industry revenue and ASP of discrete 10GBase-T PHYs, 2013–2018.
Table 4-1. Industry port-shipments of ASSPs for broadband CPE, by technology, 2013–2018.
Table 4-2. Industry ASP of ASSPs for broadband CPE by technology, 2013–2018.
Table 4-3. Industry revenue of ASSPs for broadband CPE by technology, 2013–2018.
Table 4-4. Industry port-shipments of ASSPs for broadband infrastructure by technology, 2013–2018.
Table 4-5. Industry ASP of ASSPs for broadband infrastructure by technology, 2013–2018.
Table 4-6. Industry revenue of ASSPs for broadband infrastructure by technology, 2013–2018.
Table 5-1. Industry revenue of ASSPs for transport networks (Sonet/SDH, OTN), 2013–2018.
Table 5-2. Industry shipments and revenue of network-search-engine ASSPs, 2013–2018.
Table 5-3. Industry revenue of PCI Express and RapidIO bridges and switches, 2013–2018.
Table 5-4. Industry revenue from home networking and access ASSPs, 2013–2018.
Table 5-5. Industry revenue of other wired-communications ASSPs, 2013–2018.
Table 5-6. Industry revenue of FPGAs for communications and all other applications, 2013–2018.