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Handset semiconductor market revenues shoot up 15%

According to ABI Research’s “Mobile Device Semiconductors Market Data” report, 2010 saw the global handset semiconductor market achieve an estimated revenue jump of about 15% compared to 2009, on a shipment growth of 13%.

According to ABI Research practice director Peter Cooney, “Consistent demand for smartphones has become the major driver behind semiconductor market growth. In view of the return on investment (ROI) and the technological barriers to entry, many semiconductor vendors are contemplating merger and acquisition strategies to align their technologies for the future.”

 Between the end of 2008 and the end of 2009, smartphone shipments grew about 19%, while growth over the course of 2010 surged a further 71%. That rising smartphone demand resulted in a YoY revenue growth of 34% for application processors. Among connectivity chipsets, Wi-Fi grew 62% in the same period. The top ten application processor suppliers, including Qualcomm, TI, Samsung, Apple, and Marvell, together accounted for some 85% of all revenues for the segment in 2010.

Baseband processor revenue grew approximately 11% in 2010; the top four suppliers, Qualcomm, MediaTek, TI and ST-Ericsson together earned 82% of the total. Qualcomm led the global handset baseband market in CDMA and W-CDMA segments, while MediaTek took the top position in GSM/GPRS/EDGE and TD-SCDMA segments.

Competition in handset semiconductor markets has become more intense, leading to increased M&A activity. Intel completed its acquisition of Infineon's wireless solutions business in 1Q2011. Broadcom acquired Beceem in November 2010, marking a return to the leading edge of the processor technology market. In January 2011 Qualcomm announced its intention to acquire Atheros; and Samsung announced M&A plans at CES, a sign of what’s to come in the aggressively competitive world of the mobile handset.

Cooney concludes, “The total revenue delivered by handset semiconductors is set to continue growing over the next five years, driven primarily by the growing numbers of ICs supporting multiple functions in the next generations of smartphones.”
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