Qualcomm takes top slot as handset chip sales surge

Sales of semiconductors for wireless products rose at a faster pace than the overall chip market in 2007, according to iSuppli, as they rode the momentum of demand for mobile handsets, and saw the number one and two suppliers swap places.

The global wireless semiconductor market generated $29.5bn in revenue in 2007, up 7.6 per cent from $27.4bn in 2006. These figures consist of revenue from sales of application-specific semiconductors excluding memory for wireless applications, including mobile handsets, wireless infrastructure equipment, wireless LANs and connectivity products.

In contrast, the global market for all kinds of semiconductors grew by only 3.3 per cent during the same period.

Worldwide mobile handset shipments amounted to 1.15 billion units in 2007, rising by a robust 16.1 per cent from 990 million in 2006. This helped keep the wireless semiconductor market on a high growth track in 2007, with six of the top-ten suppliers achieving double-digit increases in revenue for the year.

“iSuppli in mid 2007 reported that Qualcomm had usurped Texas Instruments as the world’s leading supplier of semiconductors for wireless applications during the initial three months of 2007, the first time this had occurred on a quarterly basis,” said Francis Sideco, senior analyst, responsible for wireless communications at iSuppli. “Qualcomm held onto the lead for the entire year of 2007.”

Qualcomm’s revenue in this segment rose by 24.1 per cent. The company shrugged off its legal woes and benefited from strong demand for its EV-DO and W-CDMA/HSPA chips. Company market share rose to 19.1 per cent in 2007, up from 16.5 per cent in 2006.

Texas Instruments’ performance in 2007 was not as strong as Qualcomm’s, with the company’s share declining to 16.7 percent, down from 19.4 per cent in 2006. Company revenue declined by 7.7 per cent in 2007.

“Texas Instruments’ results were influenced by a confluence of events in 2007 especially occurrences in the market for high-end 3G semiconductors,” Sideco said. “The year 2007 brought a market slowdown in Western Europe, where Texas Instruments’ customers have a large presence. This, combined with Ericsson Mobile Platform’s rising use of STMicroelectronics parts in some of its 3G digital baseband platforms, conspired to diminish Texas Instruments’ market share in 2007,” Sideco said.

STMicroelectronics surged to the number-three ranking in 2007, up from fifth in 2006, due to a 14.4 per cent rise in revenue. The company’s strong performance was due in part to the previously mentioned usage of its 3G digital baseband chips by EMP.

Infineon posted an impressive 54.3 per cent increase in revenue, allowing it to move to number four in 2007, up from number eight in 2006.

iSuppli’s 2007 rankings illustrate the consolidation of market demand among the top semiconductor suppliers. The wireless semiconductor market is structuring itself to match the concentration of market share among the Top-5 mobile handset OEMs.

“Scale is sine qua non to compete in today’s wireless semiconductor market,” Sideco said. “Chip suppliers need at least $1bn in revenue to even sit at the wireless table. However, scale goes beyond revenue and extends into having sufficient resources to support a broad and cutting-edge product portfolio, which must include single chip and reference platform solutions.”

Wireless semiconductor suppliers with annual revenue greater than $1bn increased their collective share of the market to 62 per cent in 2007, up from 51 per cent in 2006. Sideco projects this trend will continue in 2008.

Image: Qualcomm benefited most from growth in handset sales

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