As Motorola Inc.’s growth sharply contracted between 2006 and 2007, four Chinese handset vendors were among the fastest growing in the business, although at markedly lower volumes.
The finding is one of many disparate conclusions drawn in a new study from Forward Concepts that examined the global handset and related semiconductor market for 2006 and 2007, the last two full years for which data is available.
In fact, Chinese vendor Haier – the fastest-growing vendor during that period – gained the No. 10 spot in global volume rankings last year, according to an unrelated IDC study. The other fast-growing Chinese handset vendors were ZTE Corp., Huawei and Amoi-Xia; ZTE and Huawei also have begun to make inroads into the U.S. market, where Motorola’s share is declining dramatically.
“The cellphone continues to be the physical and market magnet pulling in the functionality of digital cameras, PDAs, MP3 players, GPS navigators, Bluetooth, FM radio, mobile TV, cordless phones, smart cards and even fingerprint sensors, and is quickly becoming the dominant market for all these functions,” said the report’s author, Carter Horney.
The upshot for chip vendors:
“Qualcomm [Inc.] and Texas Instruments [Inc.] continue to dominate the cellphone chip market but, with new peripherals being added, there are opportunities for other vendors to target new chip types to get their piece of the market,” said Will Strauss, principal at Forward Concepts.
Getting smarter
Specifically, the advent of smartphones is driving the market for single chip-based, peripheral functions such as Wi-Fi, Bluetooth, GPS and FM radio, offering opportunities for small chip vendors, the study concluded.
Two other new battlegrounds for chip vendors are emerging: the study found that a global proliferation of mobile TV standards will drive demand for a multi-standard, single-chip TV receiver – which Qualcomm is already shipping, despite its devotion to its own MediaFLO technology, Strauss said.
“Qualcomm is taking no chances,” the analyst added.
Also, the growth in touchscreens driven by the iPhone is creating demand for touchscreen controller chips, a demand being answered by as many as eight vendors, including Texas Instruments, Broadcom Corp., NXP Semiconductors, Analog Devices and others, the analyst said.
International growth
Forward Concepts has adjusted its projection for annual, global handset volume growth slightly upward to 10%, Strauss said, based on the data gathered in its report, “Cellular Handset and Chip Markets, ’08.” That matches Nokia Corp.’s own projection, confirmed during its last quarterly earnings report in April.
The North American market for handset shipment volumes has cooled considerably to less than 8% growth this year, down by half from last year’s 16%, Strauss said. Meanwhile, European growth will drop to less than 4%, while Japan’s growth rate will go negative. China and India remain the drivers of global volumes, but the highest growth rates will take place in Africa and the Middle East – the world’s last, largely unexploited markets.
In terms of subscriber growth, the fastest market is Vietnam, which is growing faster than 80% annually, followed by Peru, India and Egypt, the study found.
The story there? Rapid subscriber growth rates in these countries reflect an economic development narrative. Subscribers in developing economies have found ways to make money using mobile voice and data, Strauss said.
Meanwhile, Motorola’s negative handset shipment growth last year was exceeded only by Ningbo Bird, Mitsubishi and BenQ-Siemens. The latter two have exited the handset market.
