They think it’s all over

Given current indications, the worst may be over for handset semiconductor manufacturers, according to Cahners In-Stat Group.

However, the high-tech market research firm reports that even though the market is indeed on the road to recovery with total worldwide handset semiconductor revenue set to increase from $14.6 billion in 2001 to $21.7 billion in 2002, recovery will not occur overnight.

According to Allen Nogee, Senior Analyst with In-Stat’s Wireless Component Technology Group, ‘2001 has been a tough one for semiconductor manufacturers in general and handset semiconductor manufacturers in particular.’

‘At the beginning of the year, component manufacturers were optimistic of increased demand, but that quickly became tempered when a slowing worldwide economy dampened consumer demand for new handsets.’

By the end of Q1 2001, the glut of both handsets and handset components was growing, and more and more carriers were delaying their 3G-rollout plans.

‘Gluts of both handsets and components still exist, but large reductions in production have helped to ease the oversupply problem. By the latter half of the year, production and demand should be in check, and 2002 looks like it should be a better year than 2001,’ says Nogee.

In-Stat has also found that while 2001 won’t be remembered as a record setting year in terms of handset semiconductor revenue, it won’t be remembered for any major handset innovations either. Manufacturers are withholding major investments in 2G products, and are instead focusing on their 2.5G, and 3G offerings. However, with delays in deployments of these services by carriers, development of these future products has slowed as well.

In the far east, the Korean market will represent a bright spot for handsets as demand there is growing as opposed to other regions where it is currently negative, and China’s ever increasing population will provide a substantial market for wireless products.

The report price is $3,495.

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