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FORWARD CONCEPTS' DSP MARKET BULLETIN

Tempe, Arizona, USA 4/7/00

DSP February chip shipments, recently announced by WSTS (World Semiconductor Trade Statistics) jumped 56.9% over February of the previous year to the $460 million level. This was an 18.5% monthl.y growth over the January 2000 DSP shipments. February's growth was 3.5 times the growth of February 1999 over February 1998, portending a very healthy year for DSPs. February was not a fluke, since January's 34.5% growth over January of 1999 was 2 times the growth of January 1999 over January 1998.

Note that overall semiconductor growth for February over that of the previous year was a healthy 33.4%, although month-to-month growth was flat. DSP continues to outpace the overall semiconductor industry and Forward Concepts is revising its year 2000 forecast upward to 40%--to the $6.1 billion level. This is revised from our previous 32% projection.

DSP Chip Shipments

(worldwide)

Source: Forward Concepts

	'99	'00	'01	'02	'03	'04	CAGR
$Billions:	$4.4	$6.1	$8.2	$10.9	$14.5	$19.2	34.4%

Digital wireless continues to fuel the majority of DSP market growth. ADSL is finally becoming a hot market for DSP technology, now that the phone companies realize that they were being trashed by cable modems in broadband to the home. Traditional hard disk drive controllers continue to be a billion-dollar-plus market, but one with only moderate revenue growth as higher integration brings the total silicon cost down.

Analog modems remain a growth market only in the remote access server (RAS) market, where banks of modems are employed by Internet service providers (ISPs) and similar trunking gateways to the Internet . Client (end-user) modems are increasingly becoming host-based modems as Pentiums and PowerPCs move past the 600 MHz level, allowing the DSP data pump function to be executed on the host, with only a moderate degradation to PC operating speed.

The Internet Audio download market, led by MP3 is becoming a fast-growing market for DSP chips, and the technology is finding its way into a number of other markets, including cellular phones and DVD players. [Our new market study "Internet Audio--Beyond MP3" will be announced next Monday.]

A new, exciting long-term DSP growth market is for Internet Telephony. The year 2000 will witness strong growth the fledgling Internet Telephony market, including voice over IP (VoIP), voice over ATM (VoATM), voice over frame relay (VoFR) and fax over IP (FoIP). It's clear that there will be dozens of startups, IPOs, acquisitions and mergers in the Internet Telephony world this year: in chips, software, systems and services, and DSP is a pivotal component of this market. [We'll announce more on this when we publish our new study on the VoIP market for DSPs in another two weeks or so. Monitor our website for upcoming announcements: www.forwardconcepts.com .

Contact: Forward Concepts, Tempe, Will Strauss, 480-968-3759