Slowing sales of smartphones and lower selling prices for low-end processors will depress growth rates for the makers of mobile processors during the remainder of this year, according to Strategy Analytics. The firm recently reported that the global smartphone applications processor market grew roughly 50% year-on-year to $3.6 billion in the first quarter. Senior analyst Sravan Kundojjala says the rest of the year will be strong, but not as strong as the first quarter.
“We expect the apps processor market growth to slow down in the second half of the year,” said Kundojjala. “Provisionally we estimate that the smartphone apps processor market registered almost 37% year-on-year growth in revenue terms in 2Q13. The Q-on-Q growth rate is likely to come down further in 2H13.”
The market for low-end smartphones in emerging markets is exploding, and Strategy Analytics says that Taiwan’s MediaTak and China’s Spreadtrum are growing rapidly as suppliers of processors for these handsets. MediaTek was one of the three leading suppliers of smartphone microprocessors in Q1, along with Qualcomm and Apple.
Qualcomm dominated with a 49% market share in Q1 based on revenue. The company’s multi-core chips command higher selling prices than do chips for more basic phones. “Qualcomm’s LTE Snapdragon chips will help maintain its share for the rest of the year, despite increasing competition from MediaTek, Spreadtrum and Broadcom,” said Kundojjala. “Provisionally we estimate Qualcomm to finish the year 2013 with 45-50% revenue share.”
But when it comes to shipment volumes, the lower-end suppliers are gaining fast. MediaTek and Spreadtrum together shipped an estimated 25% of smartphone applications processors during the first quarter.
China, of course, is the biggest smartphone market, and Qualcomm and Broadcom are both investing heavily in applications processors aimed directly at the Chinese manufacturers. Both companies have focused on integrating their processors with other chipsets, including LTE modems and Wi-Fi/Bluetooth connectivity chipsets, as this speeds time-to-market for OEMs. According to Strategy Analytics, roughly 60% of the smartphone applications processors shipped in Q1 were integrated processors.
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