EBN (12/18/2002 1:26 PM EST)

Driven by strong growth in the SOHO/retail market segment and broader global demand for 802.11x based wireless local area network (WLAN) solutions, shipments of chipsets are set to hit 23 to 25 million units this year, up from 7.9 million in 2001, according to Allied Business Intelligence, Oyster Bay, N.Y. The market research firm says that between 2002 and 2007 Wi-Fi chipset shipments are set to grow at a CAGR of 43%. Hence by 2007 shipments will reach 147.5 million chipsets, with revenues of $1.13 billion, it added.

"There is a very elastic relationship between pricing and demand in the wireless LAN market, and every step down in prices brings the industry closer to unlocking new opportunities and applications," said John Chang, ABI Senior Analyst.

"There is fierce competitive innovation in this market and it is critical for market participants to commit significant resources if they hope to compete successfully against the likes of Intersil and Intel, whose Calexico dual-band 802.11a/b offering will ship in 2003."

By 2004 revenue from dual-band chipsets will exceed those from 802.11g and 802.11b, it said. The market entry of Taiwanese IC players in 2003 will further pressure 802.11b pricing. The 802.11b market will have legs beyond 2004, but chipsets will increasingly be targeted for embedded implementations particularly in very battery-constrained devices such as PDAs and eventually mobile handsets, according to the company.

802.11g will have a significant impact in the SOHO/retail market and will comprise 18% of IC shipments in 2003, much of it backend-loaded, the firm predicted.