ABI Research put out 3 new reports last week that provide interesting market data for the Wireless industry. The first regarding mobile devices pointed out that mobile device semiconductors were one of the few bright spots in a chipset market that stalled in 2011. Revenue from chipsets designed for mobile devices increased by more than 20% to $35 billion, while the total semiconductor market limped out of 2011 with just 2% year-on-year growth.
Shipments of mobile devices such as smartphones, media tablets, and e-book readers are growing fast and are driving growth for a range of semiconductor components including modems, applications processors, wireless connectivity ICs, MEMS sensors, and audio ICs. Platform ICs (including modems, applications processors, RF components, and PMUs) account for the bulk of overall revenues, but are becoming an increasingly competitive section of the market.
Suppliers including Qualcomm, ST-Ericsson, MediaTek, Intel, Texas Instruments, Broadcom, Marvell, and Renesas Mobile have positioned themselves as platform solution suppliers and the top 10 suppliers now account for more than 75% of total revenues and their dominance will continue to build as niche suppliers are acquired or muscled out of the market. Growth and opportunities will be more prevalent within wireless connectivity ICs (Bluetooth, Wi-Fi, GPS, NFC, etc.) as well as MEMS sensors and audio. Growth across the three segments will top a 30% CAGR from 2011 to 2016.
Working up the food chain to handsets, another report noted that global handset shipments will increase 29% from 1.7 billion in 2012 to 2.2 billion in 2016. The key driver of this growth will come from the smartphone segment, which is forecast to become larger than the ultra-low cost, low-cost, and feature phone segments combined by 2016. The total shipments of non-smartphones will grow 1.08 billion in 2012 to 1.09 billion in 2016 while smartphone shipments will grow from 643 million to 1.1 billion over the same period.
OEMs that have had historic success addressing the low-cost handset segments will be under tremendous pressure to shift their portfolio to smartphones. Considering that they currently serve consumers with low disposable incomes, these OEMs will need to deliver smartphones that are price competitive to low-cost handsets.
Low-cost OEMs that are shifting to smartphones, such as Huawei and ZTE, will be a key driving factor for the growth and innovation in the sub-$150 smartphone segment. Low-cost smartphones are forecast to grow from 45 million shipments in 2012 to 170 million in 2016. The analyst noted that either you have a successful smartphone strategy or you will have to steal market share to grow!
Getting to the system level, a third report indicated that a change in cellular network paradigms are driving a shift in the architecture of base stations from traditional macrocells to distributed base stations and toward the growing use of small cell base stations. The primary drivers for this transition are the increasing data traffic demand and the OPEX and CAPEX cost savings inherent in deploying small cell equipment.
Operators will initially deploy small cell equipment as in fills on the pico and microcell layers, but will quickly transition to deploying them as a fundamental part of a network rollout. In fact, the number of LTE small cells sold (127,000) will surpass the number of LTE macrocells, forecast at 113,000, as early as 2014. However, LTE base station revenues will continue to be dominated by macro base station revenue with small cell revenue of $1.09 billion representing only 5.2% of the total revenue of $20.86 billion in 2014 and growing to $4.44 billion or 23.9% of the total $18.60 billion LTE base station market by 2016.
Equipment manufacturers have been quick to respond to this shift in RAN architecture. Ericsson acquired BelAir networks as part of its “HetNet” initiative, Nokia Siemens Networks announced Flexi Zone, Alcatel-Lucent continues to expand its lightRadio™ portfolio and Huawei has announced its AtomCell products.
Their analyst noted that this mobile broadband-driven data storm is stretching traditional macrocell network capacity to the limit and driving the move to heterogeneous networks. Likewise, semiconductor suppliers are also positioning themselves to participate in this market with TI, Freescale, Cavium, Mindspeed, and DesignArt among the manufacturers offering new base station-on-a-chip SoCs.