IDC Projects Worldwide LAN Semiconductor Market Will Reach $3.3 Billion in 2003

MOUNTAIN VIEW, Calif. – November 2, 1999 — According to a newly published report from International Data Corporation (IDC), semiconductor revenues within local area networking (LAN) equipment segments, which include routers, switches, and network interface cards (NICs), will grow 14.8% from 1998. Increased competitive price pressures combined with significant chip integration will continue to influence the future of the LAN semiconductor market. IDC reports the total market will reach $2.6 billion in 1999 and then slowly level off in growth, posting $3.3 billion in revenues in 2003, a 5.1% compound annual growth rate through the forecast period. In particular, Fast Ethernet switch chips will become the primary driver, accounting for 50.7% of total LAN semiconductor revenues in 2003.

"Adoption of lower-cost standard products (ASSPs) over customized in-house silicon designs (ASICs), especially in the segments of layer-2 and layer-3+ LAN switching, will remain a key issue for networking OEMs to examine in the future," said Sean Lavey, research analyst for IDC's Semiconductor research program. "The push to produce more intelligent LAN systems to spark the convergence of data, voice, and video traffic remains at an all-time high as OEMs scramble to produce more cost-effective solutions within shorter time-to-market windows. IDC believes the increased competition and resulting price erosion affecting the LAN market will continue to expand the value-added role of merchant silicon suppliers in both low-end and high-end equipment segments."

In the end, IDC believes the penetration of semiconductor standard products will become a major force in the industry as several key chip technologies integrate into one another along with higher layer networking functionality.

Worldwide LAN Semiconductor Market Review and Forecast, 1997-2003 (IDC #B20732) provides a top-line forecast for all major semiconductor product categories, including ASSP/ASICs (i.e., transceivers, controllers, repeater chipsets, and switch chipsets), MPUs, FPGAs/PLDs, memories, and other components. In addition, the report provides comprehensive analysis on present and future equipment architectures through primary and secondary research, which includes IDC's LAN equipment forecasts, formal surveys, semiconductor and system vendor discussions, and IDC's bill-of-materials equipment tear-down research.

To order a copy of the report, contact Sue Beauregard at 1-800-343-4952, ext. 4774 or at sbeauregard@idc.com. IDC's Web site (http://www.idc.com) contains additional company information and recent news releases and offers full-text searching of the latest available research.

About IDC

IDC delivers dependable, relevant, and high-impact data and insight on information technology to help organizations make sound business and technology decisions. IDC forecasts worldwide IT markets and technology trends and analyzes IT products and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC is committed to providing global research with local content through more than 500 analysts in 42 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of International Data Group, the world's leading IT media, research, and exposition company.

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