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Despite 15% revenue growth and 13% unit growth for smartphones in 2010, the smartphone IC business moves towards commoditisation and consolidation like Intel-Infineon; Broadcom-Beceem; Qualcomm-Atheros.
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, says ABI Research.
In baseband processors, Qualcomm, MediaTek, TI and ST-Ericsson together earned 82% of the total broadband processor market which grew 11% in 2010.
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.
However the market is not producing huge revenue or profit growth. Qualcomm grew 12% last year in a 30%+ industry growth year, and MediaTek grew only 3%..
ST-Ericsson continues to sink like a stone – reporting Q1 sales and profits at its lowest levels yet. Q1 2011 sales of $444 million were down on Q4 2010 sales of $577 million and on Q1 2010 sales of $606 million. The Q1 2011 loss was $149 million compared to the Q4 2010 loss of $119 million and the Q1 2010 loss of $114 million.
This is not a comfortable sector to be in.
Absolutely spot on, cheese, there’s always 12 guys each investing to get 10% of the market.
And consolidating the commoditisers is a fools’ errand – so very suitable for the PE guys.
Couldn’t agree more. Making chips for rapidly commoditizing businesses is no fun (bottom-line wise). The phone business is struggling to avoid commoditization and has some/limited success so far. A few other (similar high-tech) businesses are past their primes – DVD, STB come to mind. TV will join the bandwagon soon… the sad thing is that a whole lot of technical accomplishments have gone into making these products, but there are one too many players and soon the markets implode – David’s favorite PE guys will step in and “consolidate” the survivors and focus on profitability etc etc. But life goes on..the smart engineers will find new toys to play with, new markets to invent etc… now isn’t that the reason to call this a “cyclic” industry?
The figures come from ABI research, Robert. I think Qualcomm’s licensing income/chip-set sales split is 30-70. In Q1 2011 Qualcomm reported revenue of $3.88bn suggesting chip sales of $2.25bn.
I’m not sure where you got these QCOM figures from. I’d suggest you check their latest Q results. Additionally you will need to understand the difference between QCT (chip business)and QTL(license business). From memory, the chip business grew at over 30% y-o-y for the last Q. That is actually amazing growth given the vicious competition happening in this sector. (see MTK and STE).
Actually the QCOM chip growth boarders on the unbelievable!
Quarter revenue of over $2B?
Exactly how many chipsets did they ship?