Despite trying times in the last 12 months for both handset component manufacturers and handset manufacturers alike, signs of returning growth are starting to appear, according to In-Stat/MDR (http://www.instat.com).

The high-tech market research firm reports that with 2.5G and 3G already in operation, long-term prospects for growth look good, and new technologies appear promising. By 2006, semiconductor revenue is forecast to top $20 billion, as new subscriber growth continues and the more expensive components and features in 2.5G & 3G handsets become more pervasive.

"2001 was a tough year for semiconductor manufacturers. With terrorist fears, rising unemployment and a slowing economy on consumers' minds, many were not in the mood to try out the latest in cellular technology," said Allen Nogee, a senior analyst with In-Stat/MDR.

"Despite a slow start this year, things seem to be improving as the economy and stock markets are starting to show some forms of life, and carriers worldwide are in the process of deploying GPRS and CDMA2000, prompting consumer interest in the next generation of handsets."

Currently, indications are that the worst is over, but recovery will not occur overnight. Gluts of certain types of handsets and components still exist, but large reductions in production have helped to ease the oversupply problem.

In-Stat/MDR has also found that:

• Total worldwide handset semiconductor revenue is forecast to be flat this year compared to last, at approximately $14.35 billion each year. While the total number of handsets produced is expected to increase slightly this year, a drop in prices will counteract any revenue increases.
  
• From 2001 to 2006, the compound average revenue growth from handset semiconductor components will average only a little over 7 percent per year, with the greatest growth occurring in the area of handset add-on semiconductor components.
  
• Despite the fact that the handset semiconductor industry won't be growing at a large rate the next few years, the cellular handset industry will still be undergoing major changes which affect semiconductor content including: the introduction of color LCDs in the United States and Europe, the up-take of cameras in Asia and elsewhere, continued development of the disposable cellular handset, the appearance of more PDA style handsets, the arrival of Bluetooth, stabilization of handset size, the slowing of battery life gains, and the pervasiveness of multi-mode and multi-band phones.

The report, "Handset Semiconductors -- Five Year Forecast And The Forces Behind Them" (#IN020276WT), analyzes the trends and technology in cellular handsets, and translates this into what it will all mean for semiconductor manufacturers. Forecasts in this report include component chipset units, average selling prices, and handset revenue for a wide variety of handset semiconductors.

Five-year semiconductor forecasts are also broken out by air-interface technology. To purchase this report or for more information, please visit http://www.instat.com/catalog/cat-wt.htm or contact Erin McKeighan; emckeighan@instat.com at 480/609-4551. The report is priced at $3,795.