Arms race in app processors drives mobile chip market

LONDON – The market for semiconductors in mobile handsets – including processors, RF circuits, power management and wireless connectivity – was worth more than $30 billion in 2011, according to market research firm ABI Research.

ABI did not give a market growth estimate but said that it expects the market to be cumulatively worth $170 billion over the next five years. That would suggest annual market values of between $30 billion and $40 billion over the next five years.

The Revenue growth to date has been spurred by the uptake of smartphones and this category now accounts for almost 60 percent of sales, ABI Research said. That growth has been led by the use of premium priced advanced modems, applications processors, and wireless connectivity ICs.

Applications processor shipments will continue to grow year-on-year through 2016, however, slowing handset shipments, falling average selling prices for ICs, and increased integration will force total revenues to peak in 2014 before beginning a gradual decline.

"OEMs have demanded increasingly powerful processors to help differentiate their products in a crowded market, leading to an arms race among applications processor vendors," said Peter Cooney, practice director for semiconductors, in a statement. "The applications processor market will continue to see significant growth for the next few years, but it will become increasingly competitive and once revenues start to decline after 2014 it will leave one or two vendors thinking twice about their place in the market."


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