Broadcom challenges Qualcomm, Samsung in LTE modem market

Broadcom announced its intention to enter the LTE modem market with a chip the company boasted as one of the world's smallest, fastest and most capable. The chip, set to ship next year, puts Broadcom on a collision course with LTE modem market leaders Qualcomm (NASDAQ:QCOM) and Samsung. The move will also create more competition for Intel, which has announced its intention to enter into the LTE modem market.

Broadcom said its new 28nm chip, the BCM21892, will support LTE Advanced network technology and will take up 35 percent less space than competing products. Broadcom said the chip will support LTE "Category 4" speeds of up to 150 Mbps as well as wireless transmission technologies ranging from  LTE FDD and TDD to HSPA+, TD-SCDMA and EDGE/GSM.

Will Strauss, an analyst at Forward Concepts, said Qualcomm currently dominates the LTE modem market with 86 percent share in 2012. However, he said the LTE modem market is only a tiny slice of the overall cell phone market--vendors shipped a total of 47 million LTE modems last year out of a total of 1.5 billion units, Strauss said.

"They're kind of late to the party," Strauss said of Broadcom, but he added that "they will be hitting the street at the time when the market is really blooming."

Strauss explained that LTE in Europe and other parts of the world won't get rolling until next year, which positions Broadcom to catch the segment on the upswing.

Strauss said other players in the LTE modem market include Samsung with 9 percent share in 2012, GCT Semiconductor with 3 percent share and Renesas and Nvidia (via its Icera acquisition) each with 1 percent. Further, Intel has said it plans to enter the LTE modem market at some point in the future.

Broadcom CEO Scott McGregor told AllThingsD that the company is aiming for the high end of the smartphone market with its new LTE chip. "The real goal here is to create a product that really is a world chip for the flagship smartphones and tablets," he said.

Forward Concepts' Strauss said Broadcom remains a major player in the 3G modem market, the GPS market and the market for combined chips (those that include GPS, Wi-Fi and modem and application processors). Strauss said Broadcom commanded 56 percent of the market for combined chips in 2012, which he said was worth $3 billion "They're printing money in that market," he said, noting that Texas Instruments was in second place in combined chips in 2012, while Qualcomm was in third.

Thus, Broadcom could use its successes in combined chips and elsewhere to leverage itself into the market for LTE chips.

Although LTE continues to remain a relatively small part of the overall mobile industry, analysts generally predict the space will boom during the next few years. For example, research firm Strategy Analytics predicts LTE smartphone shipments will triple from 90.9 million units in 2012 to 275 million in 2013.

For more:
- see this Broadcom release
- see this WSJ article (sub. req.)
- see this AllThingsD article
- see this Bloomberg article

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