Feature Article

February 23, 2016

Study: Qualcomm Still Tops in LTE Baseband, But Competition Closing

When it comes to the LTE baseband market, a new report from ABI Research brings both the expected and the surprising. ABI Research notes that Qualcomm is still the top of the heap, boasting 65 percent of the market under its umbrella. The surprise, meanwhile, comes from notes that it may not hold that top rank for long, as market competition is firing up to address this clear leader head-on.

ABI Research chalked up Qualcomm's clear win in the field to its “strong LTE product portfolio and roadmap,” which allowed for better access to devices at better prices along the spectrum. That's a combination worth talking about, and considering the growth of the mobile device market in general, a combination that means good news for Qualcomm.

The market for LTE baseband shipments grew 22 percent in the fourth quarter of 2015 as compared to 2014's fourth quarter, and second-place Samsung had just 12 percent of the market to itself. Tied for third were MediaTek and HiSilicon, both with nine percent. MediaTek is something of a newcomer into the field, and one that might worry Qualcomm under the right circumstances. It's only recently started shipping chips in large volumes, and though it's only had a chip in the game since late 2013, it's already become a major force in the Qualcomm-dominated market. Right now, reports suggest MediaTek is lagging in LTE Carrier Aggregation (CA) systems, only shipping about six million of the chips that could allow mobile speeds to reach 100 Mbps.

Interestingly, the biggest challenge isn't from MediaTek, or from HiSilicon, but rather from Qualcomm's current client base. ABI Research pointed out how Huawei and Samsung are currently turning to in-house development, making their own LTE chips for their biggest devices.

For device makers to stop turning to a third party—like Qualcomm—and instead make their own chips has to be a worrying development. If more device makers go in-house on development, that increases the likelihood that they will stop buying chips altogether. This may not ruin Qualcomm—when a business has almost two-thirds of the market to itself it takes a market collapse to kill it outright—but it could mean disaster for the smaller makers. It could also turn LTE baseband chips into a commodity product, with companies only able to compete on price. After all, if it's cheaper to buy it than make your own, many will buy.

Still, there's one other point on which competition is possible: quality. If Qualcomm can bring out a better chip, buyers will likely continue buying. Given the push toward 5G, however, the market may be on borrowed time anyway. The full impact of these developments will take some time to push completely through the market, but we may well not recognize the market as soon as 2017.

 


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