SAN FRANCISCO—This year is shaping up to be the year of the smartphone, with the total value of semiconductors going into smartphones eclipsing the value of chips going into enhanced cellphone handsets for the first time, according to market research firm IC Insights Inc.
Of the estimated $42.5 billion worth of cellphone ICs that will be sold in 2010, 47 percent is earmarked for smartphones, while 46 percent is headed for enhanced cellphones, according to the market research firm's 2011 Market Drivers report. The remaining 7 percent is ticketed for "basic" cellular handsets which lack advanced features such as camera functions, according to the report.
By 2014, IC Insights (Scottsdale, Ariz.) said it expects smartphones to account for 75 percent of total cellphone ICs. Total chip content in smartphones by that year is expected to be worth $41.6 billion, representing a compound annual growth rate of 20 percent, IC Insights said.
Total handset shipments are expected to increase by 13 percent in 2010, following a 2 percent decline in 2009, IC Insights said. Handset vendors that are expected to register the highest unit shipment growth in 2010—HTC Corp., Apple Inc, and Research in Motion Ltd. (RIM)—all sell smartphones exclusively, IC Insights said. The three top 10 handset vendors that are expected to see unit shipments decline in 2010—LG, Sony Ericsson and Motorola—have all recently increased their focus on the smartphone segment, according to IC Insights.
The average IC value of a handset in 2010 is expected to reach $30 in 2010, IC Insights said. But there is an almost nine to one differential in the amount of IC content in a smartphone versus a basic model, the firm said. Current smartphones also use about 15 times as much memory as basic handsets, including both DRAM and NAND flash, according to the firm. While IC content accounts for only 22 percent of the price of a basic phone, IC content accounts for 31 percent of a smartphone, IC Insights said.
By the close of 2010, there will be an estimated 3.63 billion unique cell phone users in the world, representing about 53 percent of the world's population, IC Insights said. The firm estimates that 63 percent of the world's population is the maximum worldwide penetration rate.