3G to boost chip revenues

3G to boost chip revenues

Summary: Projections show 3G gaining ground after 2003

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Research firm IDC offered some hope to the troubled communications chip industry -- the semiconductors that power mobile phone handsets and other portable devices -- predicting that next-generation technologies will help the sector grow from $17bn (£11.5bn) in 1999 to more than $38bn (£26bn) by 2004.

Communications chip shares fell Tuesday as new economic indicators showed the US economy continuing to slow. "What's really worrying these stocks is that the bottom for these fundamentals is still a way off," said Shannon Reid, manager of Evergreen Select Strategic Growth Fund.

Chipmaker Broadcom recently cut its revenue targets to reflect slowing demand.

IDC said the current 2G generation of handsets will continue to dominate semiconductor revenues for the next few years, with 3G hardware beginning to take off after 2003. "3G handsets... are gaining momentum and will have a stronger impact beyond 2003, especially as new features drive more logic and memory content to support higher bandwidth communications and multimedia computing," said Michael Nguyen, analyst for IDC's semiconductor program, in a statement.

GSM currently accounts for more than half of all communications chip revenues, but after 2002 IDC expects CDMA, TDMA and 3G to gain share. By 2004 these standards will account for more than 43 percent of the market.

Reuters contributed to this report.

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