Market Insight

China’s increased importance among leading handset core IC vendors

November 16, 2015

Wayne Lam Wayne Lam Principal Analyst, Mobile Devices & Networks

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Quarter after quarter, the smartphone market continues to be dominated by Apple and Samsung as the two combined to ship over 35% of the smartphones in the second quarter this year. While this is a considerable portion of the market, the two leaders have seen their collective share drop from a high of almost 50% in the first quarter of 2012. One of the drivers behind the decreasing concentration in the smartphone market is the emergence of Chinese OEMs.

Driven in part by the rapid adoption of LTE in China last year, both global and domestically focused Chinese OEMs increased in prominence.  Huawei, Xiaomi, ZTE, Coolpad, TCL-Alcatel, OPPO, and Gionee shipped almost 26% of smartphones in 2014. This was up from 20% from 2013.  As the transition from ultra-low cost or feature phones to smartphones continues to play out China’s importance is growing.

Although its share decreased slightly, Qualcomm remains the revenue market share leader, even among the major Chinese OEMs above. However, MediaTek is making big strides and saw its revenue share among leading Chinese handset OEMs increase last year; as the company moved from shipping no LTE chipsets in 2013 to shipping over 30 million by the end of the 2014. China’s rapid LTE subscriber growth last year was a major contributor to this progress. With its focus on what it calls the “super-mid” smartphone tier, MediaTek had a leading or significant market share at many Chinese based OEMs last year. The Taiwanese fabless semiconductor supplier held top revenue share positions at TCL-Alcatel and Lenovo in 2014 and significant share at other leading Chinese OEMs such as Xiaomi and ZTE.

Tsinghua (via Spreadtrum and RDA) also participated in the core IC market, competing with MediaTek for baseband and supporting core IC share. Qorvo and Skyworks were the major suppliers of RF front-end content for the brands above. A contributing factor to Qualcomm’s decrease in market share was Huawei’s increased reliance on its own internally produced handset core ICs from its Hisilicon subsidiary including applications processors, baseband, RF transceivers, and power management ICs

Despite their success with major Chinese OEMs, MediaTek made only moderate progress in the overall core handset IC market last year. The Taiwan based semiconductor supplier remained the third largest in the core handset IC market based on revenue, behind Qualcomm and Samsung. 

However, MediaTek did gain ground on Samsung who remained flat as Apple began to lean on TSMC for its applications processors, starting with the A8. MediaTek’s market share in handset core IC revenue grew from 8% to 10% as Samsung’s remained at 13% last year. Other core IC suppliers such as Spreadtrum (Tsinghua) and Leadcore supplied ICs to many entry level smartphones, but due to their low-end focus, held only marginal market share last year among the leading Chinese OEMs above.

While 2014 was a marquee year for smartphone shipments in China, with shipment growth of over 27% annually, 2015 is reflecting a maturing market with shipments expected to grow less than 3%. Suppliers and OEMs who were successful in the Chinese market in 2013 and 2014 are well served looking for growth from other countries in Asia, such as India, as well as the Latin American markets. These are two regions which IHS anticipates will hold a five year CAGR in the double digits. While the internationally successful Chinese OEMs have already achieved momentum outside of the country, chipset suppliers turnkey or reference design programs such as those from Qualcomm, MediaTek, and even Spreadtrum could help the smaller but up-and-coming OEMs achieve traction outside of China as well.     

For more details about the global smartphone market and component supply chain relationships, please subscribe to the “Semiconductor Share & Handset OEMs Report - 2015” topical report.

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