The past couple of months saw more news about the smartphone AP segment than has been seen in a long while. This includes a dramatic moment for Huawei’s Kirin processor, having its production forcefully halted just when it has achieved number 2 position in global market share. It also includes the race to acquire ARM, the dominant multi-core CPU architecture used by smartphone APs. In this short article, Digiecon takes stock of the recent developments.
In its latest forecast release, the World Semiconductor Trade Statistics (WSTS) organisation estimates the global semiconductor market to be worth around 426 billion USD in 2020, with growth of 3.3% in relation to previous year and projected growth of 6.2% for 2021. Of this, the amount related to micro is 68 billion USD (i.e., approximately 16% of the total). In WSTS classification, the micro category includes microcontrollers, microprocessors and digital signal processors (DSPs).
Discounting the market size for microcontrollers, estimated by IHS Markit (now OMDIA) to be worth approximately 20 billion USD in 2020, microprocessors and DSPs are jointly worth approximately 48 billion USD.
Analyst and consulting firm Strategy Analytics tracks the shipments of Application Processors (AP) used in mobile devices (smartphones). Their forecast of market size for smartphone APs by 2025 is approximately 36.0 billion USD and they foresee a compounded annual growth rate of 11.2% from 2020, which points to an estimate of market size of 21.2 billion USD in 2020.
Although, at first sight, the above data points all seem a bit of a mumbo jumbo, there are key takeaways which are significant and help to set the context for the sudden movements we are witnessing:
So, what are the recent events stirring the market?
The outcomes of all the activity that is ongoing in this segment will certainly mark a point of inflection with either Qualcomm becoming the absolute dominant player, or Nvidia penetrating a segment and becoming a force to contend also in the mobile CPU segment, or manufacturers such as TSMC and Foxconn expanding their roles in the value chain. There is also the question mark of Huawei’s sustainability as number 2 in the smartphone market. In summary, a lot of interesting developments can be expected for the next months and years.
Sources: wikipedia.org, qualcomm.com, wsj.com, wsts.org, strategyanalytics.com, ihsmarkit.com. All accessed on 15/08/2020