LTE driving growth for equipment vendors
The overall market for mobile communications equipment is expected to enjoy double-digit expansion this year thanks to strong growth 4G wireless technology.
Although growth is expected to be down moderately from the brisk 32% expansion last year, the market as a whole shows no signs of declining anytime soon, IHS iSuppi reported.
Factory revenue for the mobile communications market in 2012 is projected to reach $398 billion, up 17% from $340.8 billion last year, according to IHS. The research firm defines mobile communications equipment factory revenue as what manufacturers earn from the sale of devices into the channel, which includes handsets and wireless infrastructure gear such as routers.
While the market for 4G cellphones this year will account for just $21.7 billion of total mobile market revenue, that figure is up 372% from $4.6 billion last year. In comparison, growth of 3G handset revenue will slow to 17%, but account for $180 billion, IHS said.
The legacy 1G/2G space, which is still active in many developing countries, will see the most production at some 791 million units, but its low average selling price means that segment's revenue will come in below those of 3G and 4G this year.
The push toward LTE
The increasing importance of the 4G market is being driven by the ongoing transition to LTE, especially among vendors that had failed to create a viable presence in 3G through any number of factors, including market tardiness or focus on other technologies.
Those companies are now using the transition to modify the status quo by offering LTE solutions either through organic development or by acquisition, said Francis Sideco, senior principal analyst for wireless systems at IHS.
Such companies include California-based Beceem Communications and French chipmaker Sequans Communication, both of which are moving away from their previous focus on Wimax in favor of LTE. For slightly different reasons, two mobile handset original equipment manufacturers - Samsung Electronics and Motorola - are now producing their own LTE chips. The two had typically turned to Qualcomm for a good portion of their 3G requirements.
Other than mobile handsets, the tablet space in 2012 is forecast to grow by more than 70% from the previous year.
Also benefiting from the transition to 4G is the overall wireless infrastructure space, projected to see a slight revenue up-tick this year to $43 billion. As operators hasten the shift to 4G LTE, IHS says the entire wireless value chain is expected to keep up, with 4G LTE device launches and chipsets anticipated to accelerate in tandem as well.
The move to 4G will involve the deployment by wireless carriers of heterogeneous networking architectures involving a combination of macro and micro base stations, to be coupled with low-powered small cells. Such devices - also known as metro cells - could be mounted on public facilities like mall structures, railways and subway stations to provide augmented coverage for consumers in areas of high data traffic.
While 3G and 3.5G wireless infrastructure accounted for roughly $35 billion in factory revenue during 2011, 4G will start to make up a larger portion beginning in 2013, and will contribute about $36 billion by 2015.
Click here for more details on the report: "2011 Tablets and Smartphones Prime the Pump for 2012 LTE"