DSP prices will fall in 2008

Prices for digital signal processors will drop in 2008, but not as much as in 2007 because of rising demand

By Jim Carbone -- Purchasing, 1/9/2008 10:36:00 AM

Electronics buyers can expect prices for digital signal processors (DSP) to fall by about 7% in 2008, after plunging 14% in 2007 because of oversupply, according to researcher IC Insights.

Last year, DSP manufacturers moved to smaller process geometries in chip production resulting in more chips per wafer. But in 2008, DSP unit demand will grow by about 18% compared to 10% in 2007. At the same time, DSP suppliers are not adding much capacity so there will be less price erosion in 2008.

As a result of strong unit demand and less price erosion, the global DSP market will grow 10% to $8.7 billion, says IC Insights. In 2007, the DSP market declined 5% to $7.9 billion.

The DSP market will be driven by the cell phone industry, including handsets and base stations, automotive systems and consumer electronics. Cell phone base stations tend to use more sophisticated DSPs costing $17 on average while handsets, consumer electronics and automotive system use more commodity DSPs that cost in the $4-5 range.

Also see:  Microprocessor demand to grow 4% this year