Multimedia, Portable Audio-Media Processor IC Industry to Consolidate

Functional integration in the portable media player and multimedia processor system-on-chip (SoC) markets will fundamentally change the value proposition for today’s integrated circuit (IC) vendors, according to Gartner, Inc.

Multimedia processor and portable audio/media processor integration has evolved from highly differentiated performance-based solutions to commodity application-specific standard products (ASSPs) with massive average selling price (ASP) erosion. Integration of features and functions will lead to competition for fewer, more-integrated IC sockets.

For example, with the advent of digital video recorder (DVR) and set-top box solutions, the industry has already seen significant integration. These solutions once comprised unique and expensive sets of chips, but integration has transformed them into commodity SoC devices that primarily compete on price. The release of HD-DVD and Blu-ray Disk formats will allow for massive integration of all these features into one single SoC device.

“The stage is set for a shakedown in the multimedia processor market,” said John Barber, research director for Gartner’s worldwide semiconductor research group. “Players in the set-top box, DVD recorder and home gateway markets will converge to compete, but the market will not be large enough to support the success of all vendors. As a result, there will be significant attrition in this area that will leave two or three Tier 1 merchant IC vendors, along with two or three vertical vendors.”

Functional integration will continue to provide clear benefits to the consumer — more features, better performance, lower costs and lower power use. However, this move toward integration is also creating significant challenges for IC vendors, which are competing for fewer, more-integrated ASSP sockets.

“IC vendors must make critical decisions in the next few years about which markets they should compete in or drop out of, as fewer strategic opportunities present themselves in both the portable media and multimedia processor markets,” Mr. Barber said.

Mr. Barber will provide additional analysis during the one-day briefing “Semiconductor Market Outlook: The Impact of Consumerization,” which is being held December 8 in San Jose, California. Gartner analysts will examine the latest semiconductor forecast, the new features that will drive growth in consumer electronics, the outlook for NAND flash, challenges and advances in the SoC market, as well as the demand in the semiconductor memory market.

Comprehensive research on the SoC market is available in the recently announced System-on-Chip (SoC) Worldwide service. SoC is the key technology driving smaller, faster, cheaper electronic systems, and is highly valued by users of semiconductors as they strive to add value to their products. The Gartner Dataquest System-on-Chip Worldwide service examines the entire SoC food chain including: chip design, intellectual property (IP), packaging, silicon foundry and device trends by key end-application market. The service includes analysis of ASIC/ASSP/FPGA vendor strategies, market share statistics and detailed five-year forecasts.

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