Telecommunications Ringing Up Sales

Gaynell Terrell

The semiconductor industry, beset by a slump in sales during the past three years but now well into recovery, has found itself a beneficiary of the explosive growth in global telecommunications.

Fred Zieber, president of Pathfinder Research, predicted that sales of semiconductor chips to the communications industry could total $35 billion in 1999. That's a small but significant slice of semiconductor industry revenues, estimated at $140 billion this year.

Photonics suppliers who watch the computer industry for signs of semiconductor resurgence may find the telecommunications industry is a better signal of activity.
"The PC market is doing better this year than people expected, but the telecommunications and data communications market ... is just exploding," Zieber said.

The demand for semiconductor components stems from the need for speedy and efficient connectors, switchers, routers and servers that can make a fiber optic network sing.

"Telecommunications is really driving a lot of our growth. It seems to be the highest growth segment of what we're doing right now," said Brent Dietz, public relations manager for Intersil Corp. in Palm Bay, Fla., formerly Harris Semiconductor. Intersil makes subscriber-line interface circuits, data converters and power units for Internet telephones.

Other semiconductor companies are focused solely on the telecommunications market, including Sycamore Networks Inc. of Chelmsford, Mass., and Maker Communications Inc. of Framingham, Mass.

Roman Kichorowsky, spokesman for Maker, said his company predicted that telecommunications equipment operators could save time and money by buying programmable chips instead of designing their own. Programmable chips allow equipment makers to combine the flexibility of software with the speed of hardware.

Telecommunications analyst John Metz of Sterling Research in Sterling, Mass., said the area of programmable chips alone could generate annual sales of $1 billion by 2003.

Programmable silicon chips will eventually be incorporated at some level into nearly all communications hardware, he said.