SANTA CLARA, Calif. ó Smartphone and tablet markets are maturing, driving opportunities at the low end, especially for system and chip suppliers in China, said analyst Linley Gwennap in a keynote at the Linley Tech Mobile Conference here.
Smartphones will see 22% growth this year, down 13% from 2013 and a 30% decrease from 2012, said Gwennap. While there will be approximately 1.85 billion smartphones by 2018, Chinese tier one companies such as Huawei, Lenovo, and ZTE will far surpass Apple and Samsung for market share by that time, he predicted.
"At the high end, we see a lot of saturation, which is why Apple's sales are not growing very much," he said, adding that Samsung will take advantage by converting its basic phone customers to smartphone users.
In mobile SoCs "Qualcomm is leading at about 40% share, but we have seen a little bit of share loss for Qualcomm over the past year which we expect to continue over 2014. As the low end market continues to grow rapidly, vendors serving [that area] are benefiting at the expense of Qualcomm," he said.
China has been increasingly served by domestic suppliers, including a diverse group of second and third tier players. The consolidation of Shanghai-based fabless companies Spreadtrum Communications and RDA Microelectronics (both low-end suppliers) suggests "the Chinese hope to build some economies of scale" by creating one larger low-end supplier "to strengthen their position in the smartphone market," he said.
The tablet market is also slowing, with 24% growth this year and 13% compound annual growth expected through 2018, much of that growth in low-end devices. Gwennap predicted sales of 470 million tablets in 2018 with just 30 million of them based on Microsoft Windows.
"The high end seems to be stagnating in part because of saturation in the market, but also there's not a lot of new stuff going on in technology," he said. "Initially there was a burst of growth in tablet market from people replacing or supplementing their PCs, but now a lot of that initial growth is over and people are realizing that you still need a PC for a lot of things," he said.
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