Electronics Production | August 07, 2007

Digital Television Chip Market to Double by 2011

Booming sales of Digital Televisions (DTVs) during the coming years will yield huge opportunities for semiconductor suppliers, with revenue from shipments of chips for this segment expected to double from 2006 to 2011, iSuppli Corp. predicts.
semiconductor market revenue will rise to $14.2 billion in 2011, expanding from $7.1 billion in 2006. Total semiconductor revenue includes the chips on DTV audio/video boards as well as those in other segments of the televisions, including the input/output circuitry, the drivers, audio and the power supply. It also encompasses voltage regulators, LCD drivers, backlight inverters, Plasma Display Panel (PDP) drivers and the Digital Light Processing (DLP), LCD and Liquid Crystal on Silicon (LCoS) chips for Rear-Projection Televisions (RPTVs).

The figure presents iSuppli's forecast of global DTV semiconductor revenue.

“The growth of the DTV chip market parallels the expansion of the digital television market itself," said Shyam Nagrani, principal analyst for display electronics at iSuppli. “Global DTV shipments will rise to 230 million units by 2011, nearly three times the 77.4 million in 2006."

There are many reasons for this huge market gain. Beyond consumer preferences for flat-panel TVs, which are inherently digital, there are a series of upcoming government-mandated transitions from analog to digital television—starting with the United States. On February 17, 2009, all U.S. analog broadcasts will be turned off. Europe, Japan, Korea and other nations have their own looming dates for the analog cut off and transition to DTV sets, with most countries converting to fully digital transmissions by 2015.

“Consumer interest in DTV is being stimulated by the very attractive form factors of flat-panel TVs—and even more so by major price declines," Nagrani said.

The two main components of DTVs—glass and semiconductors—are experiencing rapid
decreases in prices. Declines in glass prices are expected to continue, especially for the larger-sized LCD panels 40 inches and bigger. This is due to expanding production capacities at new advanced-generation fabs, which can build the larger panels more economically.

LCD panel prices have declined by more than 35 percent during each of the past two years. Price
declines will not be so substantial in the years to come, but they have brought the price of flat-panel DTVs into an affordable range for a large number of consumers. The fall in semiconductor prices is due to greater chip integration and economies of scale resulting from the rapidly growing volumes.

When compared with the traditional analog content that the world is accustomed to, image quality for digital content is significantly improved. High-Definition (HD) content, along with digital interfaces like HDMI, already is available from many sources, including cable and satellite. Such content also is starting to become available in optical storage solutions, with the arrival of the next-generation DVD formats: HD-DVD and BluRay.

Camcorders, some of the new digital cameras, game consoles and even Personal Media Players
are starting to support HD resolutions.

The next-generation DVD-player market will grow to more than 37 million units in 2011, up from a very small 100,000 units in 2006. Camcorders are quickly moving to 100 percent HD penetration. Digital still cameras also will move to HD, although their high-definition penetration rate will not rise as quickly as for the camcorders.

All of these factors are causing a snowball effect on the DTV set and DTV chip markets, making them some of the most promising segments of the consumer electronics markets for the foreseeable future. For semiconductor suppliers, the next few years will be a period of rapidly rising sales—and opportunity—in the DTV market.
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