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February 26, 2013

Baseband Chips Imply Future Importance, Qualcomm and Samsung Now Represent Over Half of Cell Phone Chip Market: IHS Study

By Ed Silverstein, TMCnet Contributor

Qualcomm and Samsung (News - Alert) now represent more than half of the cell phone chip market, according to a new study.

IHS iSuppli reports Qualcomm saw 31 percent of the market revenue share during 2012. Samsung was in second place with a 21-percent share.

There are some interesting facts about the two companies. Together, they have 52 percent of market revenue share. Also, Qualcomm has been in the number one position since 2007. It increased its percent by 8 percentage points during the several-year stretch.

Samsung didn’t even rank in the Top 10 in 2007.

IHS iSuppli, viewing the market trends, said in a recent statement that the cell phone core integrated circuit (IC) business was “completely transformed over the past five years, with Qualcomm Inc. and Samsung capitalizing on the rise of smartphones and 4G.”

After Qualcomm and Samsung, the next eight vendors in the Top 10 list represent another 34 percent of market share. The other vendors are: MediaTek, Intel, Skyworks, Texas Instruments, ST-Ericsson, Renesas, Spreadtrum and Broadcom (News - Alert).

In total, the Top 10 companies saw 86 percent market share.

“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,” Brad Shaffer, an analyst at IHS iSuppli, said in the statement. “The arrival of Apple, Inc.’s iPhone (News - Alert) 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,” he added.

Much like Samsung, Intel wasn’t even in the Top 10 a few years ago. It is now in fourth place, recently acquiring Infineon’s wireless division for $1.4 billion, TMCnet said. Intel is “starting to see some signs of life with the Atom processor and its inclusion in handsets from Motorola (News - Alert) along with other original equipment manufacturers,” IHS added.

It is also noteworthy that Spreadtrum and Broadcom made the Top 10 list in 2012 – after not being included in the list at all. Spreadtrum was in ninth place. In five years, it increased digital baseband IC revenue by more than 370 percent.

Broadcom was in 10th place, and also increased baseband IC revenue.

Over a few years, ST-Ericsson saw lower market share on the list, declining 2 percent to see a 4-percent market share. Also, Texas Instruments dropped from second to sixth place on the list. That represents once being at 20 percent market share to having 4 percent share.

In fact, in 2007 Qualcomm took the number one spot from Texas Instruments in mobile baseband chip market, according to an earlier study by Strategy Analytics (News - Alert), cited by TMCnet.

As far as the future goes, IHS holds that baseband chips are important. They represent more than half of the revenue of the handset core IC sector, and “will maintain their pre-eminence in determining the market-share gains and losses of industry vendors moving forward,” IHS predicts.

The firm is also watching for any IC supplier which can provide solutions to “optimize the system-level design of all of the ICs, making up the handset’s core chip architecture.”

Edited by Braden Becker
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