Demand for Wireless Chip Sets White Hot

Booming sales of notebook PCs and cutting edge wireless devices will be the force behind a surging demand for Wi-Fi chipsets in the next year

A booming notebook PC market and a slew of new wireless consumer devices will contribute to the surging demand for Wi-Fi chipsets this year, according to analyst company In-Stat.

In a research note issued last week, In-Stat said that Wi-Fi is taking hold in a growing number of device categories, particularly notebook PCs which was Wi-Fi's main growth segment in 2006.

According to In-Stat, over 84 million notebook PCs with embedded Wi-Fi capability were shipped worldwide in 2006, a 33 percent increase over the previous year. That number will grow even further, with 110 million notebook PCs expected to be shipped by the end of this year.

In-Stat attributed the rise in notebook PC shipments to falling prices and improved performance and power. Budget notebook PCs under US$500, ultramobile PCs and devices that are shipping under the One Laptop Per Child (OLPC) program, are expected to move several millions of these devices over the next few years, In-Stat added.

Strong sales of handheld wireless gaming devices have also contributed to the positive outlook for Wi-Fi chipsets. According to In-Stat, over 30 million Nintendo DS and Sony Playstation Portable (PSP) devices were shipped in 2006.

The analyst house also noted Nintendo and Sony's capitalization on Wi-Fi by enabling online game play and other applications through Wi-Fi networking.

Microsoft's Zune music player is also expected to spearhead the inclusion of Wi-Fi capability in portable media players (PMP), a market which includes portable digital audio players. By the end of this year, 190 million PMP devices are expected to be sold, up from 170 million last year.

In-Stat noted that while Microsoft is not expected to take significant share in this market segment, which is heavily dominated by Apple, Microsoft's move is expected to drive other PMP vendors to include Wi-Fi in their products. Apple, for instance, is set to release a Wi-Fi-enabled iPod in the second half of this year. In-Stat, however, expects just over 5 percent of PMP shipments in 2007 to be Wi-Fi-enabled.

The integration of Wi-Fi with Bluetooth onto a single chipset could also significantly help to drive Wi-Fi's uptake in cellphones, according to In-Stat.

The analyst house noted that chipset makers Marvell, Broadcom and TI have already announced one-chip Wi-Fi/Bluetooth chipsets, while TI and NXP, both market leaders in the Bluetooth chipset market for handsets, have been offering single-chip Wi-Fi and single-chip Bluetooth together as a package for the last few years.

With dual-mode Wi-Fi/cellular handset shipments expected to reach almost 27 million in 2007--up from 6 million last year--integrated Bluetooth and Wi-Fi chipsets will help to bolster Wi-Fi uptake in cellphones, In-Stat said.

Although home wireless access points (AP) based on the draft 802.11n Wi-Fi standard only made up a little over 2 percent of total shipments of Wi-Fi routers, gateways and home access points in 2006, In-Stat expects this percentage to increase to about 15 percent of total home AP device shipments this year.

The analyst company attributed this to the wider availability of sub-US$100 draft 802.11n wireless routers this year, driven by the release of scaled-down 802.11n chipsets by chipset makers.

Other analysts, however, have called for consumers to stay off draft 802.11n products to avoid performing firmware updates when the wireless standard is finalized in 2008 at the earliest.

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