Digital signal processor prices will fall as demand weakens
By James Carbone -- Purchasing, 2/12/2009 2:00:00 AM
Despite fairly significant demand declines, prices for digital signal processors (DSP) will drop only about 1.3% this year, according to researcher Forward Concepts.
While the researcher forecasts the overall DSP market will shrink by about 15%, or $1 billion, to $5.6 billion in 2009 as unit demand drops by about 12%, average DSP prices will only decline 6¢ from $4.71 to $4.65.
"DSPs have an ever-increasing amount of memory on board which ameliorates the price decline," says Will Strauss, president of Forward Concepts in Tempe, Ariz. "DSPs give more bang for the buck." For example, Strauss says a DSP shipping this year compared to last year is probably on a smaller geometry, which means a higher clock rate, more processing power and lower power consumption.
While prices may not decline as much as buyers would like, it is "clearly a buyer's market in 2009," say Strauss. "Cash is king in this market. No one wants to carry inventory."
Another reason prices won't fall that much could be that semiconductor manufacturers have cut back production in an effort to reduce supply and inventories. Some suppliers are "vacationing their fabs," essentially shutting down production for up to a month, says Strauss.
Another trend that may contribute to the overall decline in the size of the DSP market is the reclassification of DSPs as other devices. For example, in some cases, what used to be considered DSPs are being reclassified as system on chip (SoC), microcontrollers or application specific integrated circuits.
"For example Texas Instruments, known as the DSP leader, has reclassified its C2000 line, which is used in motor control," says Strauss. "It has been moved into its microcontroller product line and taken out of the DSP classification."
Consumer electronics is another area where DSPs are being reclassified. For example, digital TVs all have DSPs in them, but Sony doesn't call them DSPs, Strauss points out. "They call them video chips of some sort. MPEG encoders and encoders have DSP engines in them," says Strauss. "Manufacturers are going by the nomenclature of what the part does, but DSP is at the core." Such chips may have more circuitry on them than an off-the shelf DSP and carry a higher price tag.
DSP suppliers acknowledge 2009 will be a tough year in the DSP business, the long-term outlook for DSP demand is healthy because they are being used in more emerging applications that have a lot of growth potential.
"Video and image processing are big growth areas for DSPs," says Leon Adams, worldwide catalog DSP marketing manager for Dallas-based Texas Instruments. "We see video applications expanding, a lot of it in infrastructure, security, entertainment and overall communications," he says.
Video telephony and the medical equipment market will also drive demand for DSPs in the long-term, says Adams, as diagnostic equipment becomes more sophisticated.
Tony Carolo, product manager for DSPs for Analog Devices in Norwood, Mass., agrees that consumer electronics will be a driver of future DSP growth because there is a lot of design work involving DSPs in consumer electronics equipment.
"For instance, we are seeing a lot of demand from voice recognition systems where voice recognition is in the controlling application," Carolo says.
So a voice command would trigger a certain song to play on a music player or a call to someone on a car phone. He says more equipment will have a DSP "dedicated to voice recognition."
He adds video game systems will be a growth opportunity for DSPs, as it is "one of the immunized markets to this whole recession," he says. Why? Well in a recession, video games are a cheap mode of entertainment.
Buyers can expect more lower-power DSPs to be developed because of increased demand from portable and battery-operated consumer electronics and medical equipment, says Adams. The lower the power of a DSP, the longer the battery life of the equipment.
Strauss agrees with suppliers that the DSP market will show higher levels of growth in the long-term. He forecasts 5-6% compound annual growth through 2012, saying DSPs are integral to so much electronics equipment.
"Without DSPs, either as a core or a discrete chip, there is no multimedia," says Strauss. "There is no iPhone or iPod. There is no digital music. There is no digital wireless or voice over IP (Internet protocol). After PCs, DSP is the biggest technology driver," he says.
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