Smartphones, tablets drive mobile CPU growth

Smartphones, tablets drive mobile CPU growth

Business news |
By eeNews Europe

Recent analyst estimates forecast that smartphone shipments will swell to 750 million in 2016, with 300 million tablets, 100 million e-readers and 91 million handheld game consoles also expected to ship that year.

For comparative purposes, market research firm IDC has said it expects total smartphone sales in 2011 to reach 472 million globally, while tablets are predicted to ship 53.5 million by year’s end. A recent report by E-Ink also predicted the number of E-book reader sales in 2011 would reach between 20-25 million units.

Given the robust growth projections, analyst Jon Peddie of John Peddie Research expects the market for processors continues to grow exponentially.

“The processors powering these [mobile] devices will be truly amazing, consuming remarkably little power, built in the latest nanometer technology, and delivering unbelievable performance and functionality,” wrote Peddie in his latest report on mobile devices and the semiconductors within them.

The report also predicts that more than 2 billion mobile processors will be shipped in 2016, to quench the seemingly insatiable thirst for handheld devices. Combined, smartphones and tablets will account for more than 50 percent of the mobile processors shipped that year, according to Peddie’s forecast.

Integrated circuits are, of course, an integral part of the mobile handset semiconductor market, especially with the increasing demands users are placing on their handsets for more computer-like productivity and multi-functionality.

Peddie isn’t the only analyst predicting such spectacular growth. Another recent study from In-Stat says it expects the mobile market for merchant processing to grow at a 22.3 percent compound annual growth rate through 2013, with the highest total unit growth from handheld applications like smartphones and tablets.

As a result, the estimated value of the processing, graphics/multimedia and baseband functions will also increase at double-digit growth rates, with processors garnering the highest value at $33.1 billion, according to analyst estimates.

“More than16 processor companies and four IP suppliers will be chasing this market, compared to the four or five processor companies chasing the PC market,” said Peddie, whose report asks whether consolidation in the mobile processor market may be imminent.

“What’s interesting is how various semiconductor companies have reacted to this market and how it’s changing the whole dynamics of the industry,” added analyst Jack Gold of Gold Associates, noting that just 3 years ago it would have been downright bizarre to imagine Intel threatened by ARM and its chip alliance, including the likes of Qualcomm, Nvidia and Texas Instruments, or the fact that AMD would be a complete non-player in the mobile market.

The battle could eventually cross platform lines if Intel ever manages to crack the mobile nut with its upcoming lower powered x86 processors, but currently ARM Holdings plc’s architecture still dominates the handheld space and doesn’t look remotely close to relinquishing its crown any time soon.

Nvidia, said Gold, has also surprised the market, transforming itself in just a short time from graphics chip supplier “to one of the primary high end mobile device suppliers in the industry.”

Market dynamics on pricing has changed as well, Gold posited, explaining that Intel and AMD could still sell $200-$300 chips, but relatively few compared to the massive number of mobile ships in the $20-$50 range.

“The volume will be huge and the margins will be lower, but the overall revenues will be massive,” he said.

As long as consumers continue to push for mobile video, music, advanced gaming, imaging, videoconferencing and television in the palm of their hand, however, Moore’s Law will continue to drive transistor characteristics to smaller design geometries and transistor densities to new highs, which may prove tough for some semiconductor firms to keep up with.

That isn’t to say there won’t be a market for lower end mobile devices, however, with Peddie predicting even feature phones will continue to see major growth, with some 869 million units predicted to ship in 2016.

“Although all of the devices will share some functionality and capabilities, no single device will kill any of the others … at least immediately,” said Peddie concluding that every device would “have a different form, primary function, and price.”

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