Overall market for consumer device semiconductors declines in 2008, but pockets of growth persist

SAN MATEO, USA: The difficult macroeconomic environment in 2008 resulted in lower personal income growth and a sharp drop in personal consumer consumption. This had a direct impact on the consumer electronics market and the semiconductor suppliers to that market.

According to IDC, the worldwide semiconductor market for consumer devices declined 2.6 percent from $44 billion in 2007 to $42.9 billion in 2008.

Despite the overall downturn, pockets of growth could be found within specific application areas. The digital TV and set top box semiconductor markets grew 7.2 percent and 10.6 percent, respectively.

In contrast, semiconductor revenues for DVD players/recorders declined 1.7 percent year over year, while the semiconductor markets for portable media players and video game systems declined by 10.5 percent and 11 percent, respectively.

A new IDC study provides detailed analysis of five leading application areas for consumer device semiconductors: digital TV (DTV) (including digital CRT, LCD, plasma display, and rear projection TVs), set-top boxes (STB), DVD players (including recorders and Blue-ray systems), video game systems (including consoles and portable systems), and portable media players (PMP) (including flash and HDD based PMPs).

Also included is an "Other" category, which includes: digital still cameras, digital video cameras, digital photo frames, personal navigation devices (PNDs) and GPS, digital home audio products, HD receivers, consumer projectors, white goods/home appliances, and other miscellaneous consumer products.

With five major and a number of smaller application areas, the market for consumer semiconductors is competitive and diverse. The fragmented nature of the market provides the opportunities for many large and small suppliers, with the top 20 companies accounting for less than two thirds of the total consumer semiconductor market.

Toshiba had the largest share of the total market with a 10.2 percent share based on revenues followed by Samsung Electronics with an 8.5 percent share. Renesas earned the third largest market share at 4.9 percent, while ST Microelectronics and NEC Electronics rounded out the top five suppliers with 4.6 percent and 3.9 percent market share, respectively.

Worldwide Consumer Semiconductor Revenues and Market Share by Application Area (revenues in US$ millions)Source: IDC

"The market for consumer semiconductors is at a critical point. While consolidation is occurring at both the product and IC levels, new competitors are emerging that have an advantage at providing low-cost goods and can serve the needs of OEMs focused on developing markets," said Michael J. Palma, senior research analyst, Consumer Device Semiconductors. "Semiconductor firms need to focus on and align their businesses to address future opportunities in the consumer space."

Looking forward, IDC expects the consumer device semiconductor market to continue to decline by more than 13 percent in 2009, followed by a modest gain of 1 percent in 2010.

Further market growth will be inhibited by a number of factors, including the consolidation of features into smart phones and other devices and integration reducing the number integrated circuits (ICs) in devices. With consumer spending likely to remain depressed, market revenues are not likely to return to pre-recession levels until after 2013.

"When the economy rebounds, the trend toward home entertainment and connected mobile devices will present a growth opportunity for semiconductor players in the consumer device space," says Ajit Deosthali, research manager, Consumer Device Semiconductors.