March 30, 2006 – For the first time ever, the optoelectronics market is expected to surpass the discrete semiconductor segment this year to become the second largest market segment in the semiconductor industry behind ICs, according to a new report from IC Insights Inc., Scottsdale, AZ.

Sales of optoelectronics devices are seen rising 11% this year to $16.5 billion, vs. just a 2% increase in discretes to $15.6 billion, after a 3% decline in 2005.

Looking out to 2010, IC Insights projects optoelectronics sales will surge to $31.8 billion in 2010, thanks to strong demand for image sensors used in digital cameras and cell phones — CCD and CMOS image sensors are forecast to grow at a 24% CAGR rate this decade in terms of sales, and 37% in terms of unit shipments. Toward the end of the decade, demand is expected to climb for solid-state lighting applications for white light-emitting diodes (LEDs), to replace conventional fluorescent tubes and incandescent light bulbs. Meanwhile, discrete semiconductors are seen growing at a much slower rate to just $19.6 billion.

Optoelectronics, sensor/actuators, and discrete semiconductors (OSD) made up 15% of the $227.5 billion semiconductor sales in 2005. IC Insights projects a 13% CAGR for all three combined segments from 2005-2010, slightly outpacing the much larger IC segment’s 11% CAGR during the period. The firm notes that several major IC suppliers also participate in one or more of the OSD segments, and are increasingly relying on that business to drive future growth.