Propelled by rising shipments of mobile handsets and tablets, particularly devices supporting the 4G long term evolution (LTE) wireless standard, the market for mobile communications equipment will grow by a robust 13 percent this year, despite soft macroeconomic conditions, according to information and analytics provider firm IHS iSuppli.
According to the IHS data taken from the Wireless Systems Market Tracker report, the total factory revenue from OEMs making mobile communications equipment is projected to reach $376 billion by year-end, up from $334 billion in 2011. Next year, overall revenue for mobile communications equipment is forecast to rise to $444 million.
Driven by mobile broadband, the five-year compound annual growth rate (CAGR) until 2016 will amount to 11 percent.
IHS defines mobile communications equipment factory revenue as what manufacturers earn from the sale of devices into the channel. In this case, mobile communications equipment like smartphones and other handsets. The category also includes wireless infrastructure gear such as routers.
In a statement, Francis Sideco, senior principal analyst for wireless communications at HIS, said, “The wireless equipment market is continuing to grow this year despite facing daunting economic headwinds, including the slowdown in China and the turmoil engulfing the euro zone.” He added, “To be sure, growth this year will be lower than the much more sizable expansion of 29 percent in 2011. However, the market’s double-digit rise in 2012 is a testament to the ongoing appeal of cell phones and tablets to global consumers. The increasing deployment of LTE is also a considerable factor, which will continue to spur the market.”
Also, the study shows that the increasing proportion of handsets being sold as smartphones is driving the semiconductor content positively. Plus, smartphone support for the next-generation LTE wireless standard is further increasing the semiconductor content. As a result, the semiconductor market for mobile communications is set to generate $74 billion at the close of 2012, up five percent from $71 billion in 2011.
Among carriers, spending on wireless infrastructure gear is increasingly being focused on LTE. Expenditures on 4G LTE will exceed $8 billion this year, more than double the $4 billion spent in 2011. And starting next year, LTE will dominate the global wireless infrastructure market over 3.5/3.75G-related investments.
Moving forward, the most successful manufacturers of mobile communications equipment will be those that allow wireless carriers to cost-effectively upgrade their base stations to 4G LTE—an important competitive edge in a tightening market, says the IHS study.