Gartner Says Increased Integration of Multimedia and Portable Audio/Media Processors Will Result in Consolidation Within the IC Industry

New Gartner Dataquest Service Provides Comprehensive Research of System-on-Chip (SoC) Market

STAMFORD, Conn., December 4, 2006 — Functional integration in the portable media player and multimedia processor system-on-chip (SoC) markets will fundamentally change the value proposition for todays integrated circuit (IC) vendors, according to Gartner, Inc. Multimedia processor and portable audio/media processor integration has evolved from highly differentiated performance-based solutions to commodity application-specific standard products (ASSPs) with massive average selling price (ASP) erosion. Integration of features and functions will lead to competition for fewer, more-integrated IC sockets. For example, with the advent of digital video recorder (DVR) and set-top box solutions, the industry has already seen significant integration. These solutions once comprised unique and expensive sets of chips, but integration has transformed them into commodity SoC devices that primarily compete on price. The release of HD-DVD and Blu-ray Disk formats will allow for massive integration of all these features into one single SoC device. The stage is set for a shakedown in the multimedia processor market, said John Barber, research director for Gartners worldwide semiconductor research group. Players in the set-top box, DVD recorder and home gateway markets will converge to compete, but the market will not be large enough to support the success of all vendors. As a result, there will be significant attrition in this area that will leave two or three Tier 1 merchant IC vendors, along with two or three vertical vendors. Functional integration will continue to provide clear benefits to the consumer  more features, better performance, lower costs and lower power use. However, this move toward integration is also creating significant challenges for IC vendors, which are competing for fewer, more-integrated ASSP sockets. IC vendors must make critical decisions in the next few years about which markets they should compete in or drop out of, as fewer strategic opportunities present themselves in both the portable media and multimedia processor markets, Mr. Barber said. Mr. Barber will provide additional analysis during the one-day briefing Semiconductor Market Outlook: The Impact of Consumerization, which is being held December 8 in San Jose, California. Gartner analysts will examine the latest semiconductor forecast, the new features that will drive growth in consumer electronics, the outlook for NAND flash, challenges and advances in the SoC market, as well as the demand in the semiconductor memory market. Additional information is available at http://www.gartner.com/2_events/local_briefings/asset_161058_176.jsp. Comprehensive research on the SoC market is available in the recently announced System-on-Chip (SoC) Worldwide service. SoC is the key technology driving smaller, faster, cheaper electronic systems, and is highly valued by users of semiconductors as they strive to add value to their products. The Gartner Dataquest System-on-Chip Worldwide service examines the entire SoC food chain including: chip design, intellectual property (IP), packaging, silicon foundry and device trends by key end-application market. The service includes analysis of ASIC/ASSP/FPGA vendor strategies, market share statistics and detailed five-year forecasts. This service provides clients with direct access to experienced Gartner analysts who provide insights and advice on market dynamics, industry events and competitive issues. All reports, market statistics and forecast documents are electronically delivered via www.gartner.com. For more information on this product contact Alexandra Whitehead at alexandra.whitehead@gartner.com. Additional information on Gartners semiconductor research is available at http://www.gartner.com/it/products/research/markets/markets.jsp#semiconductors.

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Christy Pettey
Gartner
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christy.pettey@gartner.com


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Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the indispensable partner to 60,000 clients in 10,000 distinct organizations. Through the resources of Gartner Research, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,000 associates, including 1,200 research analysts and consultants in 80 countries. For more information, visit www.gartner.com.