As Wireless Handsets Get Smaller and Smarter, Semiconductor Revenues Grow.

Business Editors/High-Tech Writers

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Aug. 9, 2000

Overall semiconductor revenue from wireless handsets will grow at a compounded annual growth rate (CAGR) of 40 percent through 2004, translating into a total revenue of over $53 billion, according to Cahners In-Stat Group.

The high-tech market research firm finds that semiconductor revenue growth will be attributed to several trends that are currently emerging in the cellular/PCS handset market, trends that will eventually point to more growth, more products, and more opportunities for innovation.

"These days, wireless customers are becoming increasingly demanding," according to Allen Nogee, a senior analyst with In-Stat's Wireless Service. "Consumers want smaller phones and are willing to pay a price premium for them. Several have recently broken the four ounce barrier, something thought impossible just a few years ago."

Consumers are also demanding more functionality. Nogee noted that many phones are now WAP enabled, allowing millions to use mobile phones as Internet access devices.

"Data will play a much greater role and some phones will even incorporate PDA type functionality. Some already contain built-in FM radios and MP3 players and in the future, will have the ability to download audio and video files off the Internet."

Customers also need their phones to work wherever they travel, requiring a multi-mode and multi-band phone. Semiconductor manufacturers have done a good job of supporting analog on their digital TDMA and CDMA phones, but future phones will need to support multiple digital standards.

As a result of these trends, phones will require much more memory, greater processing power, and greater connectivity options such as Bluetooth. They may also need bigger displays and more user-friendly keyboards, and thus will require bigger form factors, parlaying into excellent opportunities for component manufacturers.

In-Stat believes, however, that these trends also indicate that the future will entail some challenges. While past handsets have generally contained roughly the same type of components, future handset content will be much more diverse, opening the way for new players in the market, and according to Nogee, "Making the handset component market a very interesting one, to say the least."

In-Stat has also found the following:

-- This year analog phones account for about 10 percent of new

phone sales, by 2004 that number will be down to about

1 percent. Sales of GSM phones will continue to grow and lead

other technologies until 2003, when GPRS & EDGE phones will

take the leader position. CDMA phone sales will also increase,

accounting for over 44 percent of all phones sold in 2004.

-- Battery life on phones is increasing. A few years ago, cell

phone batteries couldn't run in standby for more than 12

hours. Today, standby time on many phones exceeds a week.

Component manufacturers have helped battery life with their

pursuit of ever smaller process geometries.

The report "The Handset Revolution - Five Year Worldwide Cellular/PCS Semiconductor Forecast" (No. WT0002HS) provides an analysis and semiconductor market forecast through the year 2004. The scope of the report covers all major technologies from 1G analog phones though 3G W-CDMA and cdma2000 phones.

To purchase this report or for more information, please call Matt Woods at 617/630-2139; [e-mail] or visit http://www.instat.com/catalog/cat-wt.htm - wt0002hs. The report price is $3,995 USD.

Cahners In-Stat Group (http://www.instat.com) covers the full spectrum of digital communications research from vendor to end-user, providing the analysis and perspective that allows technology vendors and service providers worldwide to make more informed business decisions.