Integrated Modem-Application Processors Market Plateauing Despite Strong Push from the Leading IC Suppliers; Verticalization and Technology Complexity to Blame
May 9, 2016
ABI Research, the leader in transformative technology innovation market intelligence, forecasts that standalone application processor shipments targeting smartphones and tablets will grow from 462 million units to surpass one billion by 2020. Market demand for standalone application processors will ultimately limit opportunities for integrated modem-application processor platforms (MODAPs) that currently enjoy a strong push from key suppliers like Qualcomm, MediaTek, and Spreadtrum.
“Verticalization in the high-end of the mobile phone market is specifically driving growth in standalone application processor shipments for smartphones and tablets,” says Malik Saadi, Managing Director and Vice President at ABI Research. “Apple and Samsung, for instance, use separate app processors and modems in their flagship products.”
MODAPs offer significant advantages, notably cost, small form-factor, and power consumption, compared with separate processor and modem. These advantages are clear differentiators in the low-end and mid-range parts of the market. However, MODAPs offer less flexibility for addressing the high-end segment of the market in which feature-set differentiation and performance are paramount.
To cope with current market conditions, global OEMs are trying to rationalize the number of device models they produce. Many manufacturers use various chipset SKUs for every model launched, and each SKU comes with a different set of features at both the processor and modem levels. Flexibility is paramount, as separating the modem from the application processor is crucial to enable OEMs to mix and match chipsets from various IC suppliers, depending on the segment and region they address.
And for mobile application processor platforms, product differentiation is quickly shifting from CPU cores to the use of advanced GPU, DSPs, and ISPs in order to support innovative features and functionalities. These include immersive graphics, sensor fusion, hardware level security and authentication, machine vision, augmented reality, virtual reality, and artificial intelligence in the future.
“The technology commoditization, the great improvement of ARM Cortex core architectures, and stiff competition saw a number of custom CPU vendors exiting the smartphone market altogether,” continues Saadi. “This left Qualcomm as the sole supplier of these types of processors.”
The market share of custom CPUs, from total smartphone processor shipments, collapsed drastically during the last six years, from a staggering 80% in 2010 to 25% in 2015. ABI Research expects the market for these CPUs to become increasingly wedged between captive vendor processors in the high-end and reference designs that systematically use ARM Cortex in the low-end and mid-range.
“The erosion of the custom CPU market will continue during the coming years to the point that, by 2020, shipments of these processors are not expected to exceed 5% of the total smartphone processor market,” concludes Saadi. “And that is only if they manage to make it to that point.”
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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