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Smartphones redefine cell phone chip market

Posted: 27 Feb 2013 ?? ?Print Version ?Bookmark and Share

Keywords:smartphone? core IC? baseband? Qualcomm?

According to IHS, the competitive arena of the cell phone core IC business has changed in the past five years, with Qualcomm and Samsung capitalizing on the rise of smartphones and 4G. In the market for application-specific mobile handset core ICs such as baseband and radio-frequency semiconductors, Qualcomm led the pack with 31 per cent market revenue share, noted the market research firm.

The San Diego-based chip maker has held the top position since 2007 and even enlarged its lead by eight percentage points during the period. Electronics was the No. 2 vendor after Qualcomm, with a 21 per cent share, after not even ranking in in the Top 10 in 2007.

Together, the two companies accounted for more than half of the total market, with the next eight vendors in the Top 10 accounting for another 34 percentage points of share. The other vendors among the leaders were, in descending order, MediaTek, Intel, Skyworks, Texas Instruments, ST-Ericsson, Renesas, Spreadtrum and Broadcom. The Top 10 enjoyed a collective 86 per cent share of the market.

"As smartphones and the next-generation wireless standard known as 4G Long Term Evolution (LTE) have gained popularity, the corresponding influences from both forces have created paradigm shifts that transformed competition in the mobile handset core IC market," said Brad Shaffer, analyst for consumer & communications at IHS. "The arrival of Apple Inc.'s iPhone five years ago changed the game and paved the way for the current market rankings. This change is dramatically illustrated by looking at the major differences in the cell phone core IC rankings from 2007 to 2012. The companies that benefited from the shift in market orientation rose to domination while others that were caught between changing market environments were left in limbo."

Of the companies that did not even rank back in 2007, Samsung has climbed the quickest, landing in the runner-up spot, driven by its presence in the applications processor space. Also among those making the jump from outside the Top 10 is Intel, in fourth position at the end of last year after acquiring Infineon's wireless division. It remains to be seen how successful Intel will be in utilising the acquisition, finalized in 2011, in order to increase the breadth of its mobile product offering and increase the likelihood of winning design slots for those mobile products. Intel is also starting to see some signs of life with the Atom processor and its inclusion in handsets from Motorola along with other original equipment manufacturers.

Two other vendors also broke into the ranks of the Top 10 in 2012.

In ninth place, Spreadtrum expanded its digital baseband IC revenue by more than 370 per cent within the five-year period. Broadcom likewise expanded revenue by a similar dizzying magnitude to land at No. 10thanks to baseband IC revenue finally gaining traction by ramping design wins since 2011 at Samsung.

While Qualcomm increased its lead at the top from 2007 to 2012, Texas Instruments fell from second to sixth placedown from a 20 per cent share to four per cent. TI's proprietary OMAP product line of chips for portable and mobile multimedia applications has not taken off as quickly as expected, and the company as a result could not offset its planned exit from baseband products.

Another vendor near the top in 2007 that experienced a decrease in market share was ST-Ericsson, shrinking two per cent to a four per cent market share.

The structure of the mobile handset core IC market will continue to shift, particularly as LTE becomes more widespread.

Baseband chips, already accounting for more than half the revenue of the total handset core IC space, will maintain their pre-eminence in determining the market-share gains and losses of industry vendors moving forward, IHS added. Nonetheless, the future will also be driven by the ability of any given IC supplier to provide platform solutions that optimise the system-level design of all of the ICs, making up the handset's core chip architecture.

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