Galaxy Z Flip 4 Preorder Quest 2: Still the Best Student Internet Discounts Best 55-Inch TV Galaxy Z Fold 4 Preorder Nintendo Switch OLED Review Foldable iPhone? 41% Off 43-Inch Amazon Fire TV
Want CNET to notify you of price drops and the latest stories?
No, thank you

Communications chips stabilizing

For communications chip companies, 2001 was the worst year ever, but the picture is starting to look up slightly, as phone chip and gigabit Ethernet chip sales gain traction.

For communications chip companies, 2001 was the worst year ever, but the picture is starting to look up slightly.

The communications chip market contracted by 38 percent in 2001 in terms of revenue, a slide caused by economic slowdown, decreased spending and excess inventory, according to a report from consulting firm Gartner. And, except for a few emerging areas such as Bluetooth, nearly every segment saw revenue contract. Among the 20 largest companies, only Qualcomm experienced revenue growth.

"It was the hardest hit in the semi sector in the worst year for semiconductors in history," said Joseph Byrne, communications semiconductor analyst for Gartner.

But the recovery has arguably already begun, Byrne noted. Cell phone chip sales started to pick up in the second half of 2001 while gigabit Ethernet chip sales are also picking up. The market will likely remain flat in 2002 compared with 2001, but it will be growing as the year goes on, driven in part by gigabit sales and wireless demand.

Agere Systems retained the top spot in the overall market for communications semiconductors and optical components, with sales of $2.8 billion, a 38.9 percent decline from revenue of $4.5 billion in 2000.

Intel, meanwhile, rose from the No. 4 spot to the No. 2 spot in the overall communications market, with sales falling only 22 percent from $3.5 billion to $2.7 billion.

"They did less badly than other companies," Byrne said.

Excluding optical components, Intel leapfrogged past Texas Instruments and Motorola to capture the No. 1 spot in the traditional communications chip market. Byrne, though, noted that approximately 60 percent of Intel's revenue in the traditional communications market came from flash memory for communications devices.

Similarly, STMicroelectronics rose from No. 9 to No. 5 in the total market and jumped from No. 7 to No. 4 in the traditional communications market.

Motorola was one of the largest decliners. The company saw overall revenue shrink 45.2 percent, from $4.1 billion in 2000 to $2.2 billion in 2001. In the total market, Motorola dropped from the No. 2 spot to No. 4, while it fell from the top spot in the communications-only market to the third spot. TI held steady as the third-largest manufacturer in the overall market and the second-largest in the traditional communications market.

JDS Uniphase, meanwhile, became the largest maker of optical components with revenue of $1.9 billion. Its revenue shrank only 20.8 percent, while former leader Nortel Networks saw its optical revenue shrink 78.7 percent.