This report tracks mobile semiconductors that totaled $31.7 billion in 2012 revenue; we forecast this total to grow to $43.9 billion in 2017. This total includes cellular baseband processors and their associated RF and power-management chips, application processors (AP), mobile Wi-Fi chips, mobile Bluetooth chips, GPS chips, NFC chips, and combo connectivity chips. Baseband processors, including those with an integrated AP, comprise the largest segment of this market, generating $19.2 billion in 2012 alone.
Changes in the shipments of wireless handsets, smartphones, tablet computers, and other mobile devices have a large effect on the sales of these mobile chips. In 2013, Samsung, LG, and Lenovo are gaining share in both smartphones and overall handsets, whereas Nokia, HTC, and RIM continue to decline. Nokia’s pending acquisition by Microsoft will greatly change that company’s handset strategy. These changes, along with supplier changes at several leading vendors, help some chip suppliers and hurt others.
The market is also being roiled by vendor transitions. After TI and CSR exited the smartphone market in 2012, the past year has seen Renesas and ST-Ericsson withdraw. MediaTek and Spreadtrum have released strong new smartphone products, and RDA Microelectronics has emerged as a low-end baseband supplier. These changes put new opportunities into play and remove others from the table.
Qualcomm is gaining share in baseband processors because of the ongoing shift from GSM (which it does not supply) to UMTS (where it is a leader). We expect its unit shipments to rise from 616 million in 2012 to 734 million in 2013, maintaining its leading market share. Qualcomm’s average selling price (ASP) is rising because of its dominance in LTE, which serves the top end of the market. Over the next few years, however, we expect this ASP to fall as competitors enter the LTE market.
MediaTek is shifting its focus from 2G basic phones to 3G smartphones. In just two years, the company has become the second leading vendor of smartphone processors, trailing only Qualcomm. It also ranks second in 3G baseband shipments. This shift is boosting MediaTek’s ASP from $4.37 in 2012 to a projected $5.47 in 2013, helping the company gain share on a revenue basis. Given that most smartphone growth will be at the low end, we forecast continued strong growth for MediaTek through 2017.
The most significant trend in application processors is the integration of the AP into the cellular baseband (AP+BB). In 2012, AP+BB shipments exceeded standalone AP shipments for the first time, and this gap will continue to widen, with AP+BB comprising 68% of all application processors in 2017. Still, the standalone AP market will see a compound annual growth rate (CAGR) of 6.5% from 2012 to 2017 to reach 743 million units, mostly going into tablets and iPhones.
In 2013, the top AP vendor is Qualcomm, with 29.3% projected share. MediaTek ranks second with 220 million processors. This total is actually surpassed by internal consumption of application processors, mainly by Apple, which totals 18.5% of all AP chips. When considering only standalone AP chips, Samsung is the leader with its Exynos processor, but Qualcomm is climbing the charts with wins in the Nexus 7 and Kindle HDX tablets. We also rank Allwinner and Rockchip in the top five in this category, on the basis of their shipments into low-cost tablets and similar devices. These Taiwanese vendors rank much lower, however, on a revenue basis.
Like the AP, Wi-Fi is now being absorbed into the baseband processor. We forecast that baseband-integrated Wi-Fi will rise from 8% of all Wi-Fi chips in 2013 to 56% in 2017. Qualcomm’s integrated solution is gaining traction, and now MediaTek and Spreadtrum have introduced similar products. As a result of this shift, shipments of traditional Wi-Fi combo chips will have just 2.3% CAGR during the forecast period.
This shift is bad news for Broadcom, which ships 56% of all mobile Wi‑Fi chips in 2013 but only 6% of baseband processors. We forecast its Wi-Fi share to fall during this transition, reaching 39.3% in 2017. Overall Wi-Fi growth, however, will help the company maintain a positive CAGR in unit shipments, although its ASP will decline. Qualcomm, MediaTek, and other processor vendors will gain Wi-Fi share because of this integration trend.
Smartphones and tablets now consume 89% of all mobile connectivity chips, causing connectivity vendors to focus on combo chips that supply as many of the main functions (Wi-Fi, GPS, Bluetooth, and FM) as possible. Three-way combos (Wi-Fi, Bluetooth, and FM) are the most common option today, with a shift to four-way combos coming in 2014. As standalone connectivity chips disappear, the market share for Bluetooth and GPS chips is becoming quite similar to that of Wi-Fi chips.
NFC deployment is rising despite its omission in the iPhone 5s. Samsung offers it in most of its high-end devices, including the Galaxy S4. We estimate the NFC attach rate at 11% of all handsets in 2013, rising to 53% in 2017. This growth will drive shipments of mobile NFC chips to 1.46 billion units in that year, according to our forecast. Most of these chips, however, will be either combo chips or cellular basebands that integrate the NFC function. The current leaders in NFC chip shipments, NXP and Inside Secure, will not benefit from this trend because they lack the technologies required to create integrated solutions. In fact, Broadcom will become the market leader in 2014, with familiar faces such as Qualcomm and MediaTek also gaining