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The baseband market

The other aspect of the mobile device is the baseband modem. While Qualcomm and others integrate this tightly with the processor, Intel, Marvell, Freescale, Nvidia and Texas Instruments just provide the latter component, alongside third party modems. With its planned acquisition of Infineon's wireless arm, Intel will gain its own baseband business. The jury is very much out on whether it really needs this, or whether it will manage it effectively, but at least it is purchasing the German unit at a time when it is gaining ground, according to new figures from Strategy Analytics.

This study found that non-handset mobile data devices are proving to be the big growth engine for device makers in late 2010 and 2011, and this is reflected in the cellular baseband chip market too. While unit shipments were up 23% in the first half of 2010, compared to the year-ago period, non-handset basebands outperformed this curve, and accounted for 12% of total revenues as of mid-year.

The figures also reflect the price pressures in basebands – while units were up 23%, revenues grew only 15.5% in the same period. However, the vendors will be focusing hard on the main growth generators – data cards, tablets, dongles and machine-to-machine devices.

Among those suppliers, Qualcomm continued to dominate with 39.6% revenue share in the first half of the year. “We believe much of the Qualcomm's growth came from smartphones and non-handsets in 1H 2010,” said analyst Stuart Robinson.

The US giant still has almost 2.5 times the market share of its nearest rival, MediaTek, though this could be squeezed as the Taiwanese supplier moves into higher end markets. Currently, the two firms have very different profiles – Qualcomm, of course, has its CDMA near-monopoly to boost its rankings, but it also shines at the high end with HSPA+ and LTE modems on the horizon.

MediaTek, as Strategy Analytics points out, has only recently launched its first W-CDMA product and focuses on low end handsets, especially those made in China. It had less than 1% market share in 3G but was the leader in GSM/GPRS/EDGE as well as, unsurprisingly, the Chinese 3G standard, TD-SCDMA. However, the report says “MediaTek's baseband shipments to grey handset OEMs showed signs of decline in 1H 2010 in the wake of government-led crackdowns in India and China.”

After the big two came ST-Ericsson, coming out of a transition period with a newly enhanced and rationalized product line for 2G, 3G and LTE, but it still needs to boost its stagnant W-CDMA share. This is being pressurized by Qualcomm and also Infineon, whose wireless business is in the process of being acquired by Intel. The German firm continued to gain share in 2G and W-CDMA markets and is positioning well against Qualcomm in non-handset segments, where it has an estimated 9% share. The Intel purchase should strengthen this hand.

Broadcom remains well behind the top four but its baseband revenue did grow by 245% year-on-year, as it gained new design wins at Nokia and Samsung for EDGE and W-CDMA. Also making progress were Spreadtrum of China, Marvell, the "other CDMA supplier‟ Via Telecom, and the UK's Icera, which has a software defined strategy for LTE. Renesas' baseband revenues were down slightly but this should reverse after its takeover of Nokia's own baseband activities and its LTE design alliance with the Finnish giant.

Copyright © 2010, Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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