DisplaySearch Reports TV Video Processor IC Shipments Up 28% Q/Q and 22% Y/Y in Q3'07 on Rapid Growth of TV Shipments in Europe and Asia

AUSTIN, TEXAS — According to DisplaySearch, the worldwide leader in display market research and consulting, Q3’07, video processor, MPEG video processor and de-interlace/scalar unit shipments were up 28% Q/Q and 22% Y/Y reflecting strong fundamental growth as consumers make the shift to Digital TVs from analog TVs. Overall Video Processor revenues increased by 16% Q/Q due to increased unit shipments for back-to-school and to build inventory in anticipation of the traditionally strong holiday quarter. Revenues were pressured by ASP margin declines that were neutralized by increasing volume shipments and smaller ASP declines in quarterly TV OEM pricing renegotiations with their IC suppliers.

According to Vish Nayak, Vice President of Display Electronics at DisplaySearch, “Revenue for TV IC manufacturers was exceptionally strong in the quarter driven by a need for TV retailers to build sufficient inventory to meet anticipated consumer demand in 2H’07 driven by consumers acceptance and upgrade to DTVs and a need driven transition to buy into newer display technologies incorporated into flat panel DTVs like LCD and Plasma TVs.” Nayak added, “Further revenue and unit gains would be difficult in Q4’07, given the strong results exhibited in Q3’07. The build up of inventory shipped by IC suppliers in Q3’07 to TV OEMs will be depleted by actual sales of DTVs during the all important shopping period between Black Friday and Christmas. The overall outlook for 2H’07 DTV IC shipments is very positive with an aggressive shift continuing toward flat panel TV purchases, as consumers continue looking forward to replacing their old legacy analog TVs with DTVs during the upcoming peak holiday and football seasons.”

Total revenue in Q3’07 increased to $346M with merchant IC providers included in 88.3% of all digital TVs shipped during the quarter. This resulted in revenue growth of 16% Q/Q. Continued unit shipment growth is expected through 2007 and subsequent years in the IC market, as DTVs make further in-roads in the worldwide TV market and as TV broadcasters transition to digital-only terrestrial TV broadcast transmissions on a worldwide basis.

Q3’07 highlights include

• Trident Micro Systems was still the overall DTV Market share leader with an overall 21.7% share of the DTV Total Video Processor market for Q3’07 and exhibited a small 2% unit growth Q/Q due to slower than expected ramp up of their new SOC solutions that incorporate advanced ME/MC circuitry and 120 Hz technology into a single IC, which is targeted towards design wins at the top four DTV brands. This slow ramp was the primary cause of a market share loss from 27.2% in the previous quarter.
• Mediatek continued to take market share from other TV IC suppliers, displacing Genesis as #2 on a unit basis on strong shipments to Chinese TV OEMs and shipments to retail house brands that used Mediatek’s DTV IC solutions. Mediatek had 17.1% of the market for video processors shipped in Digital TVs with a 94% Q/Q growth in unit shipments.
• Genesis increased its overall market share to 13.6% on increased DTV shipments and showed an improvement over the previous quarter’s 13.1% overall market share. Although overshadowed by Mediatek’s strong Q/Q percentage unit shipment growth, Genesis saw unit shipments of 3.9M units, a growth of 32% Q/Q. It consolidated on a single DTV SOC platform called Douglas and moved to utilize its Chapin assets into Douglas for the future as a cost cutting strategy.
• IC suppliers are turning their attention to the fast growing Europe market for DVB-T. The DVB-T TV market is forecasted to be 9.4M units in 2007 and is expected to be 23.8M units by 2011. STMicroelectronics led the Q3’07 IC market with stand-alone MPEG2 processors shipping into DVB-T TVs.
• AMD/ATI led the MPEG-2 video processor market with 2.1M units shipped in Q3’07. The merged AMD/ATI company is still consolidating its overall Multimedia/Video Processing/ DTV products portfolio as the company looks at its entire product portfolio to rationalize costs and competitive margin pressures for their DTV product line in comparison with game handheld IC unit sales and increased game console royalties.
• Zoran was #2 in the MPEG-2 video processor market with 1.7M units shipped on a worldwide basis and exhibited a strong growth of 86% Q/Q in unit shipments and a 41% revenue growth Q/Q. This growth was led by demand from Zoran’s European DVB-T customers and tremendous success in the Chinese cable TV market while positioning for future growth with new design wins at Fujitsu’s and Mitsubishi’s DTV divisions.

As shown in Table 1 below, Trident leads the IC supplier market with a 21.7% share, with Mediatek nipping at its heels. Mediatek saw the fastest growth of the top five IC suppliers with 94% Q/Q unit shipment growth. The report has detailed market share data for the top 11 IC suppliers in this segment for the last five quarters.

Table 1: Q3’07 Top Five TV IC Set Supplier Market Share

DisplaySearch revealed these results in its Q4’07 Quarterly TV Electronics Report. The latest report introduces coverage of the 120 Hz shipments and rolling forecasts for eight quarters. It also forecasts 1080p/720p semiconductor differential pricing for TVs. Forecasts for compression and network connectivity standards that are supported by video processors incorporated in today’s latest DTV models are included, as well as a look into future functional integration trends in DTV Silicon.

The Quarterly TV Electronics Report provides actual shipments and forecasts of revenues, units, and average selling prices (ASPs) for video processors, de-interlacing/scalar, and MPEG2-based HD video processors. The Quarterly TV Electronics Report is delivered in PowerPoint format. It shows market share of IC suppliers, design wins, schematics, shipments and forecasts for the TV electronics market. Financial analysts benefit from knowing potential upside for each IC company covered in the report. IC companies and brands benefit from knowledge of competitors’ relationships with IC suppliers. For more information on the Quarterly TV Electronics Report, contact Arie Braun at 512-687-1505 or arie@displaysearch.com.

“Next Generation Display Connectivity Trends and Video Processing Methods” will be a featured session at the 10th Annual US FPD Conference to be held in March 2008 at the Hilton La Jolla Torrey Pines, San Diego, California.