NEWSLETTER JANUARY 2003

Back to double-digit growth for Microelectronics

After the market slowdowns in 2002 and 2001, analysts are predicting a better 2003 for semiconductor manufacturers and again improvements in 2004. Most analysts see a return to a moderate double-digit growth in 2003. The average long-term growth rate ? in the range of +15% for the last 40 years ? is possibly to stabilise at a lower level, reflecting the more mature status that the semiconductor industry is likely to reach soon.

There will be continuing challenges in the personal computer (PC) area, but the mobile phone market in North America and Western Europe will replace conventional models by high-featured devices, and areas such as East Europe and much of Asia Pacific offer good opportunities for further market penetration. In addition, fast Internet access, like ADSL, provides a solid growth segment, while wireless access within buildings or homes like Bluetooth and WLAN offer strong opportunities for the semiconductor manufacturers. Consumer electronics are also set to grow with a range of new entertainment facilities in the home and on the move.

US analyst IDC forecasts a number of significant milestones in 2003: by the end of the year it foresees more than 600 million PCs and 1.5 billion mobile phones installed worldwide, with more than 700 million Internet users, 250 million mobile Internet users and over 80 million broadband households globally. This could mean on-line messaging approaching 40 billion emails a day to more than 1 billion email addresses ? not necessarily an aid to company productivity.

Analyst Gartner Dataquest is equally positive, predicting moderate increases in demand for silicon wafers in the second half of 2003 and a further improvement in 2004, driven by a recovery in device demand and the start up of 300-mm fabs. Much of this growth is going to come in the area of system-on-chip (SoC) solutions being developed in Europe through a series of MEDEA+ technology and application initiatives.

As the January US Consumer Electronics Show in Las Vegas finished and the build up started for the CeBIT show in Hanover in March, there is increased focus in the market place on the convergence of broadcasting and communications in consumer devices. In a keynote speech in Las Vegas, the Chief Operating Officer of a large Far East company predicted the rebirth of the TV as an always on, connected device allowing people to access a wide range of broadcast and on-demand film and music content.

At the same time, the concept of smart portable gadgets using ?smart personal object technology? (SPOT) in watch form is being demonstrated, offering news, weather forecasts and other information on the move. Also presented is a portable multimedia player with small screen and a hard drive to store photos, video and music.

Both approaches are reflected in the MEDEA+ programme. MEDEA+ projects are not only developing SoC solutions for the type of TVs mentioned above, capable of handling a wide range of inputs, but also the new storage devices essential for holding many hours of high bandwidth material. And members of the relevant MEDEA+ consortia are also heavily involved in standardisation efforts, ensuring that Europe is having a major influence on the new markets globally. MEDEA+ partners are also developing essential supporting technologies in the form of devices for wireless local area networks, XDSL and other Internet access devices.