Abstract

MIC Perspective

Low- and Mid-priced Smartphone IC Market Competition Intensifying

In the Smartphone market, it is observed that branded vendors have begun developing their own IC solutions for product differentiation such that Apple develops their own application processor; other than memory ICs, Samsung also owns their own application processor and LTE baseband IC technologies; Huawei also has control over the development of both application processor and baseband IC technologies through its IC subsidiary HiSilicon.

Apple and Samsung are the top two Smartphone vendors, with their combined share reaching nearly 40% in 2011; Huawei's market share stood at around 4% in 2011 and is expected to see an uptrend. The room for development for those baseband IC and application processor suppliers have been eroded by the abovementioned branded vendors which have dominant market positions and own-developed key IC solutions.

It is also observed that Samsung and Huawei's IC solutions are mainly for use on their high-end products. Meanwhile, Apple's iPhone also aims at the high-end market. Mobile phone application IC suppliers feel more pressure from the high-end market segment where major branded vendors tend to have their own IC solutions. Therefore, the importance of low- and mid-priced Smartphone market is expected to become more prominent. This has urged a lot of international corresponding suppliers into developing products in the low- and mid-priced market segments and/or the low-priced market alone. Consequently, the competition among Taiwanese IC solution suppliers which used to focus on the low-priced market segment is expected to become fiercer.

Global IC Solution Suppliers Aim to Uplift Competitive Edge with Local Demand Fulfillment and Collaborative Alliances

Global baseband IC suppliers in the low- and mid-priced Smartphone segments have their own competitiveness in product development such as intergrated ICs and connectiveity ICs and in customer management (such as tie- ups with Chinese companies and provision of reference boards/designs).

With an aim to further boost their competitiveness,there are two core areas that global bastband IC  suppliers may focus on. First, identify regional market demand. Global consumers are able to communicate with each other through internet access by means of mobile phones. However, there are still some differences in regional demand. For example, Spreadtrum launched a dual-mode dual-standby baseband IC to tap demand of regional consumers who normally have more than one phone number. As a result, Spreadtrum have obtained a lot of feature phone customers. With the market demand shifting to Smartphones, it is observed there are differences in consumer preferences for online access, content and/or services around the world. Therefore, should baseband IC suppliers be able to provide appropriate platform solutions (including hardware and software), their chances of gaining wide acceptance are relatively high compared to their competitors.

Second, seek collaborative partners. In order to outperform others in the competitive Smartphone market, baseband IC suppliers have been actively developing comprehensive platforms and/or solutions (comprising of chipsets, operating systems, and software solutions) to help their customers accelerate product time to market. However, baseband IC suppliers may be not capable of providing a comprehensive solution alone. For example, Qualcomm's QRD solution still has to collaborate with other companies such as ThunderSoft, an Android core technology and turnkey solution provider. In other words, it seems baseband IC suppliers have seen the collaboration and/or alliance as a major strategy to help them improve the solution comprehensiveness and mange resource allocations more efficiently.?

Appendix

Research Scope

This report covers major Taiwanese IC suppliers companies manufacturing mobile phones in China. Output from companies inclusive of baseband ICs (including also baseband-integrated application processors), RF transceivers, integrated connectivity ICs supporting Wi-Fi/Bluetooth/GPS as well as mobile TV receivers.

Glossary of Terms

List of Companies