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November 26, 2013

Smartphones and Tablets Drive Strong 2013 Growth in Microprocessor Market

A new report from our good friends at IHS Research brings good news for the microprocessor market - 2013 is going to be a very good year for this key industry segment. IHS is now projecting that the global market for processor microchips can be expected to rise a significant 24 percent in 2013. Why? It is all due to the ongoing strong sales growth of smartphones and tablets.

For 2013 IHS now anticipated that worldwide processor shipments will reach 1.50 billion units, up from 1.21 billion units shipped in 2012. As the chart below outlines, there will be year over year growth in volume shipment numbers for every quarter of 2013 over the same periods in 2012. IHS notes that the first half of the year yielded solid growth, up 27 percent in the first quarter on an annual basis and up 24 percent for the second quarter. Growth for the third quarter will reach at least 19 percent and growth in the fourth-quarter is being forecast by IHS to come in at 24 percent.

The microprocessors that IHS counts for this research include the traditional chips that drive desktop PCs and servers, and their mobile counterparts used in notebook computers, smartphones and tablets. For mobile shipments, both standalone application processors as well as Systems-on-Chip (SoC) processors that combine a baseband processor together with the application processor are counted.

We all know of course that the pure PC market is now officially in a steady state of decline - though that decline will level off over time. Never the less, though this decline clearly leads to decreases in microprocessor shipments in that market segment, the mobile smartphone and tablet market - which is only now beginning to ramp up globally - will not only be sufficient to maintain levels but will in fact drive shipments up significantly.

Gerry Xu, senior analyst, processor research for IHS, underscores this in noting, "The overall processor market would not be all that healthy if it were not for smartphones and tablets. The PC market that traditionally drove the growth of the microprocessor segment has slowed. The new mobile platforms have more than picked up the slack however, delivering both large volumes and fast growth for processor shipments."

The tablet segment is particularly strong, up 40 percent from 38.3 million units in the second quarter of 2012 to 53.5 million for the same period in 2013. Growth in processor shipments to smartphones was only slightly less robust, up 38 percent from 147.9 million to 204.2 million. Total volume shipments clearly are impressive for smartphones.

Chinese processor vendors such as Allwinner and Rockchip certainly benefitted from tablet shipments, the rise of low-cost devices made in China boosted shipments for. These vendors played significant roles not only in the undifferentiated white-box tablet market but also in top-tier levels - both Hewlett-Packard and Lenovo are key customers.

Consumer PC Market - Clearly Declining

To absolutely no one's surprise at this point in time, the PC market segment was the lone area in which microprocessor chip shipments were generally down from the same periods in 2012 for every quarter so far in 2013. For example, for Q2 2013 processor shipments for PCs amounted to 84.3 million units - down from 89.9 million in Q2 2012. Further within the PC segment, shipments for notebook computers were down 2 percent on the year, while shipments to desktop PCs were down a whopping 13 percent.

We should point point out here that the declines in PC sales is generally taking place on the consumer side of things - a hefty market but by no means the only critical market. In fact, the enterprise market is far ore important for PC-level sales and here - especially In the higher-performance sector for servers -processor shipments fared much better in growth. IHS notes that every quarter so far this year has seen an increase. Shipments in Q2 2013 rose to 4.8 million units, up from 4.6 million for the same period in 2012.

Interestingly, of the two major players in the microprocessor space - Intel rival Advanced Micro Devices (AMD) - AMD actually managed to increase its market share in processor shipments for PCs in Q2 2013 as compared to Q1 2013, even though its share of market overall fell on an annual basis. Never the less, Intel remains the dominant force in PC processors, now at 84 percent market share overall.

Intel is placing high hopes on its latest Atom processor and its other new and very low power SoCs to drive the company’s future. Atom chips will be used in PCs, servers, tablets and smartphones - virtually all key segments of the processor market. With the latest Atom, the giant chipmaker is focusing on power efficiency as well as improved computing and graphical processing performance.

Shipments of tablets and smartphones will rise enormously over the next five years. These two market segments really are the keys to microprocessor market growth. Indications are that this growth will likely prove historic in the long run. 

Edited by Cassandra Tucker

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