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Connectivity ICs Critical for Growth in Handsets

SINGAPORE — The total revenue delivered by handset semiconductor shipments is forecast to increase approximately 5.5% this year, says ABI Research, and the trend is expected to continue through the next three years, resulting in a total estimated revenue growth of 12% in 2013.

Industry Analyst Celia Bo notes, “The increasing shipment rates of handset processors and connectivity chips are the major engines driving handset semiconductor market growth.”

Qualcomm, MediaTek, and TI are the top players in the overall handset chipset market, accounting for approximately 80% of all shipments. Qualcomm maintains a leading market position, especially in the high-end smartphone segment. With a powerful IP library and an almost full range of technologies, the firm looks likely to maintain its position at the top of the market for years to come.

The majority of MediaTek’s shipments are 2.5G and 2.75G chipsets for the company’s low-cost solution. MediaTek is set to continue gaining a greater share of the low- to mid-priced chipset market. TI has been gradually stepping out of the 2.5G and 2.75G chipset market since the end of 2008, with shipments expected to decline in 2010 and virtually cease in 2012.

“Connectivity chips will play a critical role in driving handset semiconductor market growth in the next five years,” adds ABI Research principal analyst Peter Cooney. “The total revenue from handset Bluetooth, GPS, and Wi-Fi chipsets is forecast to grow more than 15% this year, and estimated to hit US$3.5 billion in 2015.”

Bluetooth has the highest attach rate compared to other connectivity chips: its average penetration rate is expected to be 55% in 2010. The penetration rate of GPS is expected to be 23% this year, and will keep increasing in the next five years to reach 45% in 2015. The revenue increase from Wi-Fi chips will be the highest among the three connectivity chips over the next five years, estimated to reach US$1.4 billion in 2015, a 14% CAGR between 2010 and 2015.

ABI Research’s Mobile Device Semiconductors Market Data provides a breakdown analysis of the major semiconductor components used in mobile handsets, segmented by ASP, revenue and air-interface technology.

ABI Research

5 comments on “Connectivity ICs Critical for Growth in Handsets

  1. elctrnx_lyf
    November 25, 2010

    The complete momentum of the market is shifting toward 3G and LTE mobile chipsets and the major players like Quallcom, TI are totally concentrating in this segment. But mediatek has completely exploited the still a big market of 2.5G since the majority of the devloping nations and emerging markets have a huge consumption of the 2.5G GSM handsets. We might also see medium range firms like Mediatek will try to supply more solutions into this market while the big giants take care of the advanced 3G and LTE mobile chipsets.

  2. kumar1863
    November 25, 2010

    Communication is always one of main areas for investments. The users always looks for portability, efficient and easiest way for communication. By looking at the records we can say much more is coming in next few years.

  3. saranyatil
    November 26, 2010

    Each one is upgrading their phones to a smartphones for the only reason being their smartness is their performance. these phones come handy with lot of apps user friendly etc. hence there is going to be a great growth in these sectors. in a span of time all the users will be using 3G wide across in all countries this will automatically increase shipping and growth by 2012.

  4. eemom
    November 26, 2010

    This market has been dominated by only a couple of suppliers.  The competitive nature of this market dictates lower profit magins in a fast evolving and ever changing technology.  This has excluded a variety of semiconductor companies from being able to effectively compete in the processor market.  I would not be surprise though to see more competition emerge in the connectivity chips market due to the attractive nature of the potential growth.

  5. t.alex
    December 3, 2010

    Competition is still fierce for mobile connectivity ICs, especially when there is a need for more lower power solutions. With multiple radio interface required in the system (3G, wifi, bluetooth, etc.) portable devices cannot sustain long hours. Applications like ebook reader may require to operate for weeks or even months without recharging. 

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