Lower profits ahead for wireless components

BOSTON, USA: The Strategy Analytics RF & Wireless Component Strategies service has released, "Lower Profits Ahead for RF as Global Economy Stutters," which notes a slow decline in the profitability of RF component suppliers over the past two years, which will in all probability continue through 2008.

This report examines the collective financial performance of approximately 49 suppliers of radio components for wireless applications, and attributes the slow decline in profits to maturing wireless markets, increasing component complexity and more rapid commoditization at the low end. The report also examines the effects of tighter credit, inflation and the devaluation of the dollar on the outlook for 2008.

"It is difficult to predict the precise effect of global economic conditions on component suppliers," admits Christopher Taylor, Director of the Strategy Analytics RF & Wireless Components market research service. "However, the recent trend toward lower profits in the RF sector is clear, and tighter credit in the global financial markets coupled with lower spending by US consumers, will do nothing to counter the trend."

Stephen Entwistle, VP of the Strategy Analytics Strategic Technologies Practice, adds that "We believe that profits will decline by about one percent of sales for RF component suppliers this year. This small decline will affect the viability of financially weaker suppliers and start-ups, but should leave top performers in terms of profits-to-sales like Qualcomm, MediaTek and Hittite unharmed."