IP Phone ICs are becoming increasingly integrated and specialized, with three port Ethernet switches, integrated PHYs, and security processors becoming increasingly common. Cellular/WLAN functionality will be bundled with IP Phone ICs in the near future. IP Phone IC revenues will grow from $15.6 million in 2002 to $49.6 million in 2007, for a 26.0% CAGR.

CPE VoIP gateway ICs are, currently, used most in "two-box" deployments in residential IP Telephony, with a separate Analog Terminal Adapter (ATA) attached to a broadband modem. While there are many good reasons for this model, over the forecast period, a "one-box" model, with VoIP integrated directly into a Residential Gateway (RG) will become the prime form factor for residential deployments. Overall, CPE VoIP gateway revenues are expected to rise from $21.1 million in 2002 to $55.1 million in 2007, for a 21.2% CAGR.

The infrastructure VoIP gateway (commonly referred to as a "media gateway") market experienced a steep decline in 2001 and most of 2002, due to dramatically lowered telecom capex spending. However, this market has picked up, particularly in the Asia-Pac region, and is now experiencing solid growth. Consequently, the market for infrastructure VoIP gateway ICs will rise from $18.2 million in 2002 to $36.4 million in 2007, for a 14.8% CAGR.

Texas Instruments (TI) currently dominates the VoIP IC market, representing roughly 80.0% of the total shipment volume for each of the three key segments.