Impact of DTV on IC Market Tracked

The introduction of DTVs into the consumer market created a pitched battle in the semiconductor industry, according to a report from Research and Markets in Dublin, Ireland. The switch to digital flat-panels spawned a demand for chips to handle demodulation, MPEG-2, video processing, HDMI, audio frequency and sometimes more. Chip makers vied with one another to squeeze the various processes on a single chip, a technique known as “System on a Chip,” or SoC. The more functions on the chip, the cheaper the device becomes.

According to the report description, the SoC biz ramped up the competition among chip makers. As of 2006, the price of an SoC excluding the tuner chip was around $40 or $50. By early 2007, it was down to $20. Late the same year, similar chips went for $15. The price plunge took a few chip makers with it.

Genisis Microchip of Santa Clara, Calif., suffered losses last year and was taken over by STMicroelectronics of Geneva, Switzerland. Pixelworks of Tualatin, Ore.; Micronas of Zurich and AMD/ATI of Sunnyvale, Calif., suffered, and Trident, a Santa Clara, Calif., chip maker for Sony and Samsung, is expected to feel some pain going forward. The company reported a net loss of $227,000 on net revenues of $55.3 million for its third fiscal quarter of 2008, ending March 31. Trident logged $5.6 million in net income on $60.6 million in net revenues during the same quarter one year ago.

“Our third quarter results reflect the challenges we face in an increasingly competitive market environment as we continue to evolve our product portfolio to include SoC solutions,” said Trident CEO Sylvia D. Summers in the company“s 3Q report.