USA & INDIA: The recent wireless/DSP bulletin from Forward Concepts has highlighted an improved shipments of DSP and RISC chips for cell phones as well as DSP shipments for wireless infrastructure.

On being quizzed about this improvement in shipments of DSP and RISC chips for cellphones, Will Strauss, President & Principal Analyst, Forward Concepts, said new cellular subscribers in China and India are continuing to grow, even as Europe and the US are reaching saturation.

"Since most people here have cellphones, the market is mostly driven by replacement devices. In the US, handsets are subsidized by the carriers under a subscription plan that ties the subscriber to a handset for two years," he says.

An interesting point in the wireless/DSP bulletin is the fact that although DSP shipments for wireless infrastructure were down 14 percent in May compared to April, it was still 30 percent higher than May of 2007.

What are the reasons for this peculiar trend? Citing that the reasons were not yet clear, Strauss adds: "In infrastructure, more so than for cellphones, quarterly shipments are all that matter. We'll have better calibration when June shipments are reported at the end of July."

Going forward, how are DSPs likely to perform? It is to be noted that DSP chips, as devices with that specific nomenclature, are becoming a decreasing percentage of the DSP silicon market. That's because DSPs as cores are becoming just part of SoCs in everything multimedia, in VoIP, in cellphones, etc.

Similarly, RISCs, like DSPs, are simply part of the SoCs, and often in lock step with DSP. That's because every cellphone chip has at least one DSP core and one RISC core inside.

Another point to be noted is that automotive, wired communications and storage (disk drive controllers) sectors have seen a slowdown. Strauss clarifies: "The automotive market has seen a drastic slowdown because of high fuel prices. Telecom companies are slow to invest in infrastructure as wireless is taking over their traditional wireline market. Disk drive controller prices are akin to those of DRAM memory, subject to big swings in selling prices, lowering revenue even when production is strong."

Mobile Internet devices or MIDs are devices people are looking forward to. The MID market doesn't begin until late in Q3 2008.

Finally, the key question: what's the industry outlook likely to be for the rest of the year? Strauss says: "The global semiconductor industry is also subject to world economic changes. The outlook is for minimal world economic growth in 2008, mostly because of high oil prices and the weak US dollar. We are forecasting only 3.8 percent revenue growth in worldwide IC shipments for 2008, down from its traditional annual growth rate of about 7 percent."

Collision course ahead?
On another note, the IC Insights reported that current spending plans by IC manufacturers worldwide will lower total semiconductor capital expenditures by 18 percent to $49.7 billion in 2008 from $60.3 billion in 2007, according to new data collected by IC Insights.

A growing number of large IC firms are now outsourcing more products to foundries. Also, major pure-play wafer foundries are aiming to increase their profitability by controlling capital spending. As such, IC Insights believes that the IC industry continues on a "collision course" with respect to supply, demand, and average selling prices or ASPs!