In the latest release of its quarterly market tracker for mobile ICs, ABI Research, the leader in transformative technology innovation market intelligence, finds that despite a decent 13% year-on-year growth of mobile processor shipments in 2015, IC suppliers closed out the year with more than 30% loss in share to the top three smartphone vendors. According to report findings, the new development is directly linked to the ongoing smartphone and tablets markets verticalization.
“2015 proved to be a difficult year for mobile processor suppliers, most notably Qualcomm, as its top clients, particularly Samsung and Huawei, increase their reliance on in-house processors to power their own smartphones and tablets,” says Malik Saadi, Managing Director and Vice President at ABI Research. “Qualcomm market share in the mobile processor market dropped from 37% in 2014 to 31% in 2015 as a direct impact of the market verticalization.”
Captive vendors, such as Apple and now Samsung and Huawei, managed to collectively capture more than 30% of the total mobile processor market in 2015, up from just 23% in 2014. This was due to the aggressive verticalization strategy implemented by Samsung and Huawei in recent years, which enabled them to respectively power 32.5% and 64% of smartphones they shipped in 2015 with their own in-house processors. Looking toward the future, other vendors, such as ZTE, LG and Lenovo, may also follow this verticalization, which could lead to even further market share loss by IC vendors in the mobile processor business in the future.
“To prevent verticalization from becoming mainstream, key IC suppliers, including Qualcomm, MediaTek, and Intel, will have to push the differentiation barriers to reach the point at which their chips cannot be rivaled,” concludes Saadi. “To accomplish this, IC suppliers should quickly aim to support innovative features, such as artificial intelligence, immersive graphics, and machine vision, in their processors while offering those features at very competitive price points.”
These findings are part of ABI Research’s Mobile Device Semiconductors Service, which includes research reports, market data, insights, and competitive assessments.
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