LTE Could Invigorate Sluggish Baseband-Processor Industry
In the first quarter of this year, the global cellular-baseband-processor market registered 2.5% year-to-year growth—reaching $4.7 billion. According to Strategy Analytics’ report “Baseband Market Share Tracker Q1 2014: Spreadtrum Overtakes Intel to Capture Number 3 Revenue Share Spot,” the top five companies in cellular baseband revenue were Qualcomm, Media Tek, Spreadtrum, Marvell, and Intel. While Qualcomm still dominates, taking an approximate 66% slice of the entire pie, Spreadtrum increased its grip on the market by displacing Intel at number three. Despite the market’s slow quarter, Strategy Analytics predicts that significant growth from Long Term Evolution (LTE) baseband should provide a lift.
Qualcomm’s revenue share is partly due to its broad range of top-tier baseband-chip customers—including Apple, LG, Motorola, Samsung, and others. Sravan Kundojjala, senior analyst at Strategy Analytics, says “Qualcomm’s high revenue share in the cellular-baseband market can be attributed to its early-mover advantage in LTE basebands and high level of integration in its baseband chips. This has enabled Qualcomm to gain a significant revenue share.”
Still, Qualcomm saw a drop in LTE revenue, from 95% (Q1 2013) to 91% (Q1 2014). While still holding a high share, increased competition in the market from Intel, Marvell, and others made it unsustainable. In Q1 2014, less than 50% of Qualcomm’s baseband shipments were LTE.
Qualcomm’s LTE competition, Intel and Marvell, both made progress with LTE design. Although Intel is still in the early stages, Samsung is already on board with the company’s XMM7160 LTE platform and its Category 6 LTE baseband XMM7260 is anticipated to ship in Q3 (although late rumors say otherwise).
Intel failed to place in the top three for baseband revenues for the first time in three years due to declines in 2G and 3G shipments, as it continues to transition from 2G/3G to 4G. Spreadtrum leapt to that number three spot thanks to a ramp in 3G baseband shipments coupled with Intel’s sales drop-off.
Coming in at number 2, MediaTek maintained its strength strictly from growth in 2G and 3G; it has no discernable market share in LTE basebands. However, to stay competitive, Strategy Analytics says the company needs to ramp up LTE efforts, with LTE modems and applications processors looming on the horizon. In fact, in the second half of 2014, MediaTek is expected to become a noteworthy player in the Chinese LTE baseband market—aiming to ship over 30 million LTE basebands in 2014.