DSL, Cable Modem and PON Chip Sales to Grow Steadily as VoIP and IP Video Services Drive Equipment Upgrades, IDC Finds.

FRAMINGHAM, Mass. -- The battle for broadband access into the home continues to heat up as higher bandwidth chip technology innovations ultimately enable service providers to deliver "triple-play" service plans. IDC believes the addition of VoIP and high-definition video services will remain a top priority for many carriers and cable providers worldwide. Increased competition from several fast-moving CLECs, large cellular carriers, and specialized VoIP and IP video service providers, coupled with the desire to increase annual revenues per user (ARPU), will drive further equipment replacement and expansion. In this environment, IDC predicts that the worldwide DSL, cable modem, and PON semiconductor market will pass the $2 billion mark by 2009.

"The ability to support faster speeds over 20 Mbps, improved quality of service features, and increased security will fuel demand for a new breed of chip products that will be at the heart of next-generation broadband designs," said Sean Lavey, a program manager in IDC's Semiconductor research group. "More highly integrated copper-based DSL and cable modem chips, along with lower cost and more standardized fiber-based PON chips and optical modules, will drive a healthy round of OEM development as service providers plan upgrades to their infrastructure over the next few years."

Two recently released IDC studies further explore demand trends and discuss major semiconductor supplier strategies within the DSL, cable modem, and PON equipment markets. The following key findings are presented in these studies:

--For DSL, adoption of higher-speed ADSL2+ technology will continue to drive most carriers' new deployment, while the upcoming VDSL2 standard will drive healthy upgrades in shorter copper loop environments.

--For cable modems, MSOs will continue to aggressively add VoIP capability within their designs as improving DOCSIS standards help them compete with faster next generation DSL products.

--For PON, Japan currently drives most deployment activity and will be the largest volume opportunity to chase in the near term. However, certain carriers in the United States, Korea, China, and Taiwan will also start larger field trials in 2005 that will lead to more mainstream deployments beyond 2006.

--PON will replace DSL completely in fiber to the home (FTTH) environments, while in others it will be used as a backhaul technology to offer fiber extension to remote DSL terminal infrastructure.

--Although broadband technology has started to reach subscriber saturation points in some well-established markets, emerging countries such as China and India are still showing significant upside opportunities.

IDC's study, Worldwide DSL and Cable Modem Semiconductor 2005-2009 Forecast (Doc #33111), examines all major semiconductor products going into DSL CPE and CO equipment as well as cable modem CPE. A top-line forecast for 2004-2009 is shown with revenue splits by DSL standards such as ADSL2+ and upcoming VDSL2.

The IDC study, Worldwide PON Semiconductor 2005-2009 Forecast and Analysis (Doc #33169), examines semiconductors shipping into PON equipment markets including optical line terminal (OLT) systems, and optical networking termination (ONT) systems. A top-line forecast for application-specific semiconductor products is provided for 2005-2009 segmented by product type (OLT versus ONT/ONU), region and PON standards (IEEE-defined EPON and ITU-defined BPON and GPON). Analysis on the OEMs and semiconductor suppliers is also included in the study.

To purchase this document, call IDC's Sales hotline at 508-988-7988 or email [e-mail].

For more information on IDC Semiconductors research programs, contact Anne-Sophie Dankens at 508-935-4313, or [e-mail].

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