Chip mergers likely as costs rise

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.