Strategy Analytics, the global research and consulting company, today released, “Will Consolidation of Handset FEM Suppliers Imitate Infrastructure RF Subsystems?,” a report that argues that the base of suppliers of front-end power amplifier (PA) and filter modules for handsets will undergo consolidation over the next six years, with perhaps only six firms remaining.

Author Chris Taylor, director of the RF and Wireless Component service of Strategy Analytics, compares the situation to the one that faced suppliers of power amplifier and filter subsystems for cellular base stations a few years ago. According to Taylor, “Increased competition and higher product development costs pushed gross margins to record lows in 2001, triggering a wave of mergers and acquisitions. Today only two significant suppliers remain, Powerwave and Andrew.”

Taylor adds, “In handsets, suppliers of PAs and front-end modules have developed a variety of technologies to segment the market and maintain share. However, competition and the dominance of two customers (Nokia and Motorola) continue to put pressure on suppliers, several of which have recently dropped out of the market. The good news is that profits should improve somewhat as the number of suppliers declines.”