Manufacturers of semiconductors used in consumer electronics equipment must merge or die in the next five years, iSuppli says.
The research firm predicts growing development costs for application-specific semiconductors will spark a raft of consolidation among leading players, and drive second- and third-tier manufacturers out of the market entirely.
Competition in the sector is already fierce, it noted, with only Toshiba holding a market share over 10%.
Analyst Jordan Selburn said a high-value consumer electronics contract “could make $100 million [€71.1 million] or more during the life of the device.”
Broadcom’s $316 million acquisition of 4G chip maker Beeceem earlier this week lends credence to iSuppli’s prediction.
However, the research firm says all players are set to benefit from a resurgence in consumer electronic equipment sales in 2010, forecasting chip sales will grow 27.7% to $57.2 billion, reversing a 15.7% decline in 2009.
Latest figures from the Semiconductor Industry Association predict total semiconductor sales will hit $290.5 billion in 2010, up 28.4% on 2009.