RF Semiconductor Segment Faces Mixed Market Ahead

While Wall Street recalculates the semiconductor industry's growth curve, one growing segment must be analyzed closely for an accurate reading. According to Allied Business Intelligence (ABI), the RF semiconductor industry, once thought to be one of the most attractive segments, may also suffer from recent downturns in the semiconductor industry.

Though the IC portion of the RF semiconductor market is growing rapidly, concerns have arisen over the profitability of these operations. ABI expects a shakeout of players in the RF semiconductor segment, as the handset business becomes increasingly price driven.

Concerns have also arisen regarding the infrastructure side of the wireless business. Although gains made in the wireless infrastructure market over the past several years will continue to grow from a volume perspective, competition and price erosion will hurt profits.

Despite potential problems, ABI still sees a strong future for some RF semiconductor manufacturers. The research agency says that smaller semiconductor houses may fair the best in the future if they can adapt to the changing marketplace.

"We see opportunities in mid- to lower-volume and high value production, especially in the high-power RF semiconductor segment," says Tim Archdeacon, president of ABI.

According to ABI, two high-power RF markets that will show the strongest success are LMDS (Local Multipoint Distribution Service) and collision avoidance.

"LMDS and automotive collision warning systems are taking the lead," Archdeacon says. "But a great deal of technological development remains to be seen."