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VoIP semiconductor market could see uptick with new VoIP spend

The cost saving proposition offered by voice over Internet protocol (VoIP) technology is the key to the growth of semiconductor opportunities in VoIP applications. The current economic slowdown has softened the demand for VoIP equipment and related semiconductors, making it increasingly important for semiconductor vendors to be able to differentiate their products and remain price competitive.

New analysis from Frost & Sullivan, Global Assessment of Semiconductor Opportunity in VoIP Applications, finds that the market earned revenues of over $522.4 million in 2008, and estimates this to reach $657.3 million in 2012. The end-user segments covered in this research service are carrier infrastructure, enterprise, and consumer.

"The long-term cost savings associated with the adoption of VoIP is sustaining the demand for semiconductors in these applications," says Frost & Sullivan Research Analyst Jayalakshmi Janakiraman. "Although businesses are adopting aggressive cost-cutting methods during the current economic downturn and are being deterred by the significant installation costs involved in VoIP deployment, the associated cost saving benefits will encourage them to plan for migration."

VoIP adoption allows reduction in enterprises' phone bills and cost savings linked with a single client network infrastructure. Although businesses understand the long-term benefits of VoIP adoption, they are likely to postpone their equipment purchases in the current economic environment. This slackening of demand for VoIP equipment is anticipated to have a negative impact on the sales of associated semiconductor devices. Greenfield deployments of VoIP are expected to continue, albeit at lower levels.

Semiconductor manufacturers should provide solutions with value-added features at attractive price points, easing the migration to VoIP. Providing features that enable voice quality improvements, higher flexibility and integration, and complete software solutions will help vendors to differentiate their solutions from those of competitors.

"Semiconductor vendors are responding with system-on-a-chip (SoC) solutions that incorporate a host of capabilities while simultaneously lowering the cost of the design," concludes Jayalakshmi.

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