Semiconductor revenues fall short of forecast

The revenues for semiconductors in India during 2006 have fallen short of the forecast of India Semiconductor Association (ISA) ô Frost & Sullivan study by 41 per cent.

The ISA-Frost & Sullivan semiconductor market report had forecast the revenues in the Indian total market to touch $3.8 billion and the total available market (TAM) revenues to touch $1.62 billion. However, the report update in 2007 estimated the actual revenues at $2.69 billion (total market revenues) and $1.26 billion (TAM).

The report update, released at the ISA Vision Summit 2008 on Monday, attributes the shortfall in revenues to the sharp decline in various semiconductors Average Selling Price (ASPs) in different end-user product categories.

"Globally, each growth cycle of semiconductor industry is driven by a few product categories. These products record sales in high volumes and technology breakthroughs. The semiconductor ASPs of these product categories plummet with increasing consumption and supply supplemented by technology advancement, thus affecting the industry revenues," said ISA President Poornima Shenoy.

The decline has been the sharpest in mobile handsets, where the Electronics Bill of Materials (eBoM) per unit fell from $25.7 to $11.

"Given the significant volumes generated by this market, the 43 per cent ASPs decline impact the revenues," she added.

This apart, a decline in the prices of discrete and memory products reduced the contribution of colour TVs towards semiconductor's total available market revenues. The CorDECT (wireless in local loop standard) market, which was anticipated to generate high volumes of 650,000 lines, but realised only 30,000 lines in 2006, thereby impacting revenues.

The study update also noted that the eBoM for modems witnessed a sharp decline from $20.75 to $4.9 per unit in the past two years. "Monitors, a key volume driver in the IT and office automation segments, experienced a decline in its eBoM from $7.85 to $5.75 per unit," Shenoy stated.

The engine management systems (EMS) market growth weakened as the overall vehicle market growth did not sustain the momentum. "The decline in eBoM per unit of EMS from $21 to $14.8 also contributed to the lower revenue realisation," she said.