The worldwide semiconductor market for T/E, SONET/SDH, and ATM traffic will increase at a modest compound annual growth rate (CAGR) of 2.2% and reach $1.15 billion by 2011, due to increased demand for equipment within the access, metro, and core networks. The need for T/E, SONET/SDH, and ATM interfaces will be driven by two major factors that exist with carriers today:

• The need to upgrade existing equipment to support existing services (notably in the 2007-2008 time period)
• The need to install new equipment that can support existing services and transition customers to emerging services, specifically bundled services containing voice, data, video, and, in the future, wireless

IDC's Word of Advice to Semiconductor Vendors

• Continued investment in SONET/SDH silicon will be important because these interfaces remain vital to future proofing a carrier's network (from both a core and access perspective).
• Investment in continued production for T/E silicon should be much smaller as the forecast period progresses. However, T/E connections remain relevant, specifically in the access segment.
• Any further development in ATM would not be recommended because the market for ATM interfaces will sharply decline during the forecast period.

Learn More
To learn more, check out IDC's latest forecast, Worldwide T/E, SONET/SDH, and ATM Semiconductor 2007–2011 Forecast (Doc # 205939).

Worldwide DRAM Market to Experience Healthy Increase in 2007, Followed by Softer Growth Rate Through 2011

2007 Forecast
In 2007, IDC forecasts the worldwide DRAM market revenue to increase at a healthy rate of 18% and reach $39 billion. While DRAM supply will grow evenly throughout the year, Vista will gradually begin to drive demand by the end of the year. The current balance between supply and demand will turn to slight oversupply in 1Q07, and the market will see another minor correction in 2Q07. The market will recover and balance again in 2H07.

Longer Term Predictions
IDC forecasts that the DRAM market will increase at a compound annual growth rate (CAGR) of 10.7% over the 2007-2011 period, and represent $54.7 billion in revenue in 2011.While the Windows Vista operating system will have a modest impact on demand during 2007–2009, the supply from new fabs will cause a market correction in 2008. Mobile applications and new digital consumer devices like DTVs and Blu-ray DVD players will gradually increase their influence on non-PC device DRAM consumption and will contribute to overall market recovery at the end of the forecast years.

For an In-depth Forecast Analysis
To gain an in-depth understanding of both the short-term and long-term DRAM market by unit and bit demand, interface (DDR, RDRAM, XDR, and SDRAM), and revenue, read IDC's Worldwide DRAM Demand and Supply 3Q06-4Q07 and 2007-2011 Forecast and Analysis (Doc # 205638).

Severe Price Competition Between Intel and AMD in 4Q06

The PC processor market in the fourth quarter of 2006 was dominated by severe price competition between the two major vendors. While Intel's overall average selling price (ASP) increased 5.8% to $129.15 in 4Q06, AMD's overall ASP decreased 12.7% to $75.82.

Reasons for Price Shift

• Intel stated that the rise in its ASP was due to a richer mix of higher-end processors in all three form factor segments (desktop, mobile, and x86 server) and more mobile processors as a percentage of total unit shipments.
• IDC believes that AMD's decrease was due to severe overall price competition led by competition in the x86 server segment.

Market Share Results
AMD gained share in the desktop and mobile form factor segments and overall, which indicates that the company was largely successful in sustaining its share gains from the past year by not backing down to Intel's price competition. Intel gained share back in the x86 server segment.

Find out More
Learn more about the worldwide vendor market share results for PC processor vendors during the fourth calendar quarter of 2006 in Worldwide PC Processor 4Q06 Vendor Shares (Doc # 205456)

2006, a Solid Year for the Dedicated Foundry Semiconductor Market According to IDC's Preliminary Analysis

2006 was a solid year for the dedicated foundry semiconductor market, which grew by 22% at $18.9 billion, IDC's preliminary analysis reveals. Despite the surge in growth, a strong inventory build in 1H06 resulted in an inventory correction among foundry customers. This year, IDC expects the sector will grow at about the same pace as last year, despite the slowdown and pricing volatility forecasted for 1H07.

How Did the Top 5 Foundries Do in 2006

• TSMC held on to slightly over half of the market by growing its base of customers in every major technology node.
• UMC slipped 1.3% in market share, even though it began to increase 90nm technology shipments by winning back 130nm customers it had lost.
• Chartered regained its number 3 position with the company's solid advancement of 90nm technology and a healthier customer mix.
• SMIC and Dongbu Electronics rounded out the top 5.

Learn More
Read IDC's Dedicated Foundry Industry Outpaces the Growth of the Semiconductor Market (Doc # 205492) to get a preliminary analysis of the foundry semiconductor market results for 2006. A full market analysis will be available in IDC's upcoming competitive analysis and market share study of the foundry semiconductor market.

"While service providers are upgrading their networks to accommodate higher amounts of bandwidth with newer, more cost-effective technologies, the reality is that there is still the need to support traditional WAN interfaces - T/E, SONET/SDH, and ATM. As these providers face a three to five year period for completing this network upgrade, they must also continue to support existing services until the promise of "quad-play" is fulfilled. The market for traditional WAN interfaces is actually expected to continue to grow between 2007 and 2011, albeit at a 2.2% CAGR. Still, it does show that the need to support these interfaces will remain for some time to come." - Aileen Arcilla Senior Research Analyst for IDC's Semiconductors: Networking, Broadband, and Storage Systems

LSI Enables New Video Distribution Applications with Industry's First Single-Chip Multi-Format HD Transcoder
"In today's broadcast market you'll find IPTV network operators standardizing on the bandwidth efficient H.264 format and satellite TV service operators migrating their delivery infrastructure to H.264," said IdaRose Sylvester, senior analyst for IDC. "A significant challenge is the lack of HD and SD content available in the H.264 format. Companies that offer solutions to transcode widely available and easily accessible MPEG-2 content into H.264 format in real-time are helping make high quality television viewing a reality."
SYS-CON Media
April 17, 2007

Gigabit Passive Optical Network Solution From Freescale Enables Triple Play At The Speed Of Light
“Over the next few years, GPON technology will become a viable solution for increasing bandwidth in today's access networks, especially as carriers address the increasing demand for video as a key element of their ‘triple play’ services,” said Aileen Arcilla, senior research analyst at IDC.
Fiber Optics Online
April 10, 2007

Matsushita's Platform For Success
An engineer's vision of using the same microprocessors and software to power a slew of Panasonic devices is transforming the Japanese electronics giant
"When you buy a TV, set-top box, or DVD player, it's a couple pieces of plastic or metal slapped together over a board covered with some kind of chip," says IDC semiconductor analyst IdaRose Sylvester. "In theory, any time you're reusing or leveraging intellectual property from one product to another you're saving yourself a lot time and money,"
BusinessWeek
March 28, 2007

Intel and AMD Take Chip Fight to China
The growing importance of the Chinese market isn't all good news for the two chipmakers. Chinese may be buying more computers, but they're also very price-conscious, and that's putting downward pressure on prices for both Intel and AMD, says Shane Rau, an IDC analyst who follows the semiconductor industry. "We are experiencing price erosion," he says. … That's a reflection of smaller budgets in China. "A unit out of China is the same as out of the U.S.," Rau explains. "But if you look at the value of the chips inside the units being sold, it's not proportional. The value of the chips inside a Chinese PC is less."
BusinessWeek
March 26, 2007

IDC Briefing at InterOp
May 23, 2007
Las Vegas, NV

Asia/Pacific Semiconductors
• Taiwan Semiconductor 2006-2011 Forecast and Analysis - Doc # 206471 - IDC Presentation
• Final 2006 Earnings of Foundries SMIC and Chartered Semiconductor Indicate Direction for Chinese Foundries and Advanced Technologies Campaign - Doc # 205479
• Dedicated Foundry Industry Outpaces the Growth of the Semiconductor Market - Doc # 205492

Semiconductors: Consumer Devices
• Entropic Finds Magic in Digital Home Connectivity - Doc # 206460
• TI: A Minor Market Adjustment or Time for a Strategy Change? - Doc # 206200
• SanDisk and Hynix Finally Come to Terms - Doc # 206163
• Worldwide NAND Flash Demand and Supply 4Q06-4Q07 and 2007-2011 Update - Doc # 206151
• Options in Wireless High-Definition Video Connectivity - Doc # 205859
• Video: Killer App or Dead Weight? What Video Means to the Consumer Semiconductor Market in 2007 - Doc # 205339 - IDC Presentation

Semiconductors: Networking, Broadband and Storage Systems
• Worldwide T/E, SONET/SDH, and ATM Semiconductor 2007-2011 Forecast - Doc # 205939

Semiconductors: Personal Computing
• Worldwide DRAM and NAND Flash Memory Trends - Doc # 206197 - IDC Presentation
• Worldwide DRAM Demand and Supply 4Q06-4Q07 and 2007-2011 Update - Doc # 206153
• Worldwide DRAM Demand and Supply 3Q06-4Q07 and 2007-2011 Forecast and Analysis - Doc # 205638
• Worldwide x86 PC Core Logic Chipset 4Q06 Vendor Shares - Doc # 205723
• Worldwide PC Processor 4Q06 Vendor Shares - Doc # 205456

Semiconductors: Wireless
• Worldwide Mobile Phone Semiconductor 2007-2011 Forecast - Doc # 206376
• Nokia Picks Infineon SoC for Low-End Phones - Doc # 205597
• NXP Buys Silicon Labs' RF Product Lines for $285 Million - Doc # 205583
• Mobile Phone Semiconductor Trends: Market Growth Through Multimedia Processing - Doc # 205255 - IDC Presentation
• Worldwide Cellular Basestation Semiconductor 2005 Vendor Shares - Doc # 205117

Contact Anne-Sophie Dankens at 508-935-4313 or adankens@idc.com

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