Digital processors: More functionality at a lower price
By James Carbone -- Purchasing, 2/12/1998
The single chip, programmable-digital-signal-processor (DSP) market will grow from $3.2 billion to $8.2 billion in 2001 as prices continue to decline, while functionality increases. The chip, a staple in communications and computers equipment, will find new applications in everything from automobiles to washing machines.DSPs are specialized microprocessors that process large amounts of analog signals and convert them into digital. They are used in modems, wireless communication equipment, hard disk drives, set-top boxes, industrial controls, navigation systems, automobiles, and white goods. DSPs will be used more in consumer goods, and their use will continue to grow in communications and computer equipment.
"Two thirds of DSP sales are in communications," says Tony Massimini, an analyst with Semico Research. "That includes modems, routers, cell phones, anything involving communications. Twenty percent goes into computers and computer peripherals, including hard drives. The rest is automotive, industrial, and military applications. "I don't see this changing much," says Massimini. "I think communications will account for two thirds or more of the major market for DSPs and DSP capability."
For many high-tech equipment manufacturers, DSPs are an enabling technology. Example: modems. Modems' speed has been able to increase from 2,400 bits per second to 56,000 because of faster high-performance DSPs.
DSP manufacturers such as Texas Instruments, Analog Devices, and Lucent Technologies are continuing to improve the performance of DSPs. When TI introduced the first DSP in 1982, the IC performance was 5 million instructions per second (MIPS). Today DSP performance is 1,600 MIPS. And while performance continues to increase, the cost declines. DSPs that cost several hundreds of dollars in 1992 can be purchased for about $5.
TI, which has about 40% DSP market share, says that advanced DSPs will enable modems to deliver 6 megabytes per second over ordinary lines compared to 56 kilobytes per second today. They also will allow pocket-sized devices to carry video telephone, satellite television, and fully imaged documents to remote locations.
But communication equipment and computers won't be the only equipment that will use more DSPs, says Joyce Putscher, an analyst with market researcher In-Stat. DSPs are finding applications in a wide variety of equipment. Anything with motor control like washing machines, dish washers, and dryers are candidates to use DSPs. More DSPs will be used by automobile manufacturers in navigation systems, and digital cordless phones will be important consumers of DSPs.
Prices keep falling
"Any application that converts an analog signal to digital in some form is using some type of DSP. Any new function that needs that is going to use a standalone or a custom DSP approach," she says.
One reason that DSPs are becoming more ubiquitous in equipment is that the price has fallen to levels that make them more attractive to cost-conscious consumer-goods manufacturers. "DSP selling prices have been dropping dramatically since 1995," says Massimini. "The average was $13.00. Now it's down to $9.00. Lower prices drive up volume demand." He says the price decline is due to improved manufacturing, better yields, and competition.
The lower pricing trend will not end anytime soon. Evidence: In January, Lucent Technologies released its DSP 1609, targeting consumer communications equipment such as digital answering machines, cordless telephones, and set-top boxes. The low-power DSP, which has 100 MIPs performance, is priced $4.95 in 10,000-unit quantities. Lucent says it can offer such a low price because it is using 0.3 micron process and an efficient layout.
Such aggressive pricing will mean DSPs will be used in more equipment, but much of that growth will remain in the communications sector. Digital cellular telephones will be a big growth area.
"Just as we have seen the big push from analog to digital, we'll see the push from discrete cellular telephones to more of a wireless data device that has Internet access, the ability to access maps, and stock-market portfolios," says Sharon Phillips, marketing manager for TI's wireless division. "That will be the next big wave." She says the Nokia 9000 is a personal digital assistant that is also a cellular phone. It uses a TI DSP. "DSPs are necessary in these devices because they have the power, processing, and speed to handle all that data.
She says with DSPs for wireless applications, the trend will be lower power consumption and an increase in MIPs. There will also be a push in the market for lower prices.
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