Since there has been greater than originally expected demand for LTE (Long Term Evolution) smartphones (and tablets), international vendors, including Samsung Electronics, LG Electronics and HTC are worried that their shipments are not enough to meet demand due to short supply of LTE solution chips from Qualcomm, currently the only provider of integrated multimode 3G/4G LTE baseband chips.
The main cellular carriers promoting LTE are Verizon Wireless, AT&T and Sprint in the US market, Rogers in Canada, SK Telecom, KT and LG+ in South Korea and NTT DoCoMo in Japan. LTE mobile broadband services are also available in seven countries in Western Europe.
At present, there are 72 commercialized LTE networks in 37 countries, with an expected 134 networks in 57 countries by the end of 2012.
Global demand for LTE smartphones in 2012 is estimated to grow by 275 percent to 26 to 28 million units. LTE Tablets could represent as much as 6 percent of global LTE baseband shipments this year, adding another 5.8 million units. Verizon Wireless, currently the largest LTE smartphone and tablet purveyor, sold 2.9 million units in 1Q12 or 8 million units year- to-date.
Qualcomm's short supply of LTE chips is said to be because of insufficient 28nm foundry capacities and the shortage of LTE chips will not be eased until the fourth quarter of 2012. Samsung, LGE and Motorola are able to supply single-mode LTE basebands used on some LTE smartphones and tablets, but they have to employ separate 3G modems for fallback.
Samsung was the largest vendor of LTE smartphones in the first quarter of 2012 with a global market share of 59 percent, followed by Motorola Mobility with 13 percent, LG with 10.8 percent and HTC with 9.5 percent.
While Android dominates the LTE smartphone segment, Nokia, HTC, and Samsung have launched LTE Windows 7 Mobile Phone models, and Apple and RIM are expected to release comparable models running on their own platforms in the second half of 2012. We do not expect Windows 8 tablets prior to the final quarter of 2012.
In the first quarter, Apple LTE "iPAD3" tablets captured a market share of 30 percent, followed by Samsung with 26 percent, HTC at 19 percent and Motorola Mobility and Fujitsu at 8 percent each. New LTE Tablet entries are expected this year from ASUS, Huawei and ZTE.
Key vendors leading the push into LTE Smartphones include Apple, Samsung, HTC, LG, Nokia, Motorola, Pantech and Fujitsu.
The most likely new suppliers of multimode LTE baseband chips to alleviate the shortage are Broadcom, Nvidia/Icera, Renesas Mobile and ST-Ericsson. However, with the time required for those vendors to sample 28-nm basebands, have terminal vendors select their products, integrate them into new devices and secure regulatory approvals, 2013 will be the earliest that any of them will be shipping in volume. And until then Qualcomm will continue to have an almost exclusive run of the multimode LTE market. Carter L. Horney is the principal wireless analyst for Forward Concepts and is the author of the company's recent report "Cellular Handset, Tablet and Chip Markets '12."
Hi Joe. No, I would say that this is normal in the industry. The component makers are usually at a lower margin than the final product makers for consumer electronics. There may be some exceptions, but it is a supply and demand market. It will stay this way as long as the customer is driving the supplier. Note that the final consumer has little impact.
Howdy stranger! BTW, this is the case in every segment where the semi supplier is fighting for 30 points of margin on components and the end OEM like Apple is making close to 50 points of margin on the end product. Something is wrong here..
All the potential suppliers use TSMC for Foundry capacity. The problem is that TSMC doesn't have enough 28nm capacity for Qualcomm multimode let alone any of the others. This is why TSMC recently hiked their capex plans for 2012.
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