Connectivity ICs critical for growth in handset semiconductor markets

SINGAPORE: The total revenue delivered by handset semiconductor shipments is forecast to increase approximately 5.5 percent 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 percent 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 percent 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 percent this year, and estimated to hit $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 percent in 2010. The penetration rate of GPS is expected to be 23 percent 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 S$1.4 billion in 2015, a 14 percent CAGR between 2010 and 2015.