Through 2001 the Bluetooth semiconductor market began to develop into the most competitive segment of the overall Bluetooth industry according to market researchers, Frost & Sullivan. With many of the early developers moving to production of their second generation solutions and production preparing to ramp up into high volumes, competition began to intensify, driving strong performance from the market.
The increased competition and higher volume production saw chipset pricing fall dramatically to an average of around US$15 in 2001, down from over US$25 the previous year. Supplier reliability also improved in 2001, with limited evidence of the chipset shortages reported in 2000.
These improvements saw chipset shipments increase over 900% on 2000 performance. Frost & Sullivan estimates that 9.23million chipset solutions were shipped in 2001, generating revenues in excess of US$138 million.
2001 saw several advances in short-range Bluetooth silicon technologies, most of the main players demonstrating chipsets featuring smaller footprints, chip counts and power consumption. Whilst the two chip architecture (baseband and RF) was the most popular solution type, single chip CMOS architectures saw a significant growth in popularity.
A further major development was the emergence of the RF only architecture. This type of solution is geared towards the cellular phone market and embeds the Bluetooth protocol stack on to the host baseband, eliminating the need for a separate Bluetooth baseband. Although this type of solution requires further technological development it has the potential to further drive down development and integration costs. This trend resulted in individual RF chip shipments being slightly higher than individual baseband shipments in 2001.
Although the single chip architecture is still widely regarded as the most important solution for the long-term future of Bluetooth, it is now clear that there is no one 'fits all' architecture that suits all applications.
The Bluetooth Special Interest Group and its working groups have made significant progress in opening up new profiles to support new applications, as well as approving future increases in the data rate. This situation combined with multitude of solutions available from different manufacturers is an important facilitator of the overall Bluetooth industry, with solutions configurable to almost every possible application.
In 2001 the largest application channel for Bluetooth chipsets was the cellular phone market, with the add-on products following closely behind. Research indicates that the cellular phone market will remain the largest channel for the next five years, whilst the add-on channel will decline in importance as integration into the host device increased.
Outside of the core Bluetooth application areas of cellular and computing devices a number of more innovative applications are attracting attention from semiconductor developers.
Human interface device (HID) applications (keyboard, mouse, games controllers) and desktop peripherals such as printers and digital cameras are all seen as potential high volume areas for market development. Improvements in the robustness of chipsets to condition such as heat and light is allowing further investigation in automotive and industrial environments.
A thriving environment of supporting products and services has emerged around the main semiconductor market, with design services, protocol software vendors and intellectual property developers all making major contributions to the growth of the market. It is through these organisations that the diversity of applications is being driven, with much of the new application and profile development coming through these areas. The module market is also growing rapidly providing developers with easy to integrate subsystems, crucial to those application areas where wireless technologies have so far had limited penetration.
As competition within the semiconductor industry has increased so a consolidation has occurred with the number of active players reducing throughout 2001. Frost & Sullivan expects this trend to continue into 2002 until the market it is reduced to less than ten players.
The outlook for Bluetooth semiconductors is extremely positive. Strong growth expected over the next five years and compared with the 9.23million chipsets shipped in 2001 over 971million chipsets a year will be shipping by 2006.
Frost & Sullivan Bluetooth semiconductor update 2002:Global forecasted chipset market shipments and revenues
Published in Embedded Systems (Europe) May 2002