Big Changes Rock Global Smartphone Market

Second of two parts: Battle lines are shifting to eight-core processors with prices expected to plummet quickly.

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It’s not just consumers that are benefiting from the proliferation of low-cost mobile multiple-core processors. Chipmakers are reaping the benefits of the booming smartphone market in Asia and around the globe.

In the multicore smartphone applications processor market Qualcomm. leads the way with its Snapdragon processors; it accounted for 43% of the market in the first half of this year, followed by Apple, Samsung, MediaTek and ST-Ericsson, according to market researcher Strategy Analytics.

Apple had been the market share leader coming into 2013. But Qualcomm’s multiple Snapdragon families of chips, covering a range of price points, propelled it to the top spot this year, Sravan Kundojjala, senior analyst with Strategy Analytics, said in statement.

While Qualcomm’s gains came largely from standalone chips—as opposed to multiple-core processors integrated into chipsets, with mobile quad-core processors largely standalone devices—the research firm suggests this is rapidly changing. “We expect Broadcom, Marvell, MediaTek, Qualcomm and Spreadtrum to proliferate the market with low-cost, baseband-integrated quad-core chips,” Stuart Robinson, director of the Strategy Analytics Handset Component Technologies service, said in a statement.

Taiwan’s MediaTek also has benefited greatly, both in terms of its bottom line and its position in the market place. The company reported its Q3 earnings earlier this month. Net profit jumped 25% quarter-over-quarter and 71% year-over-year to $286 million (8.42 billion New Taiwanese dollars).

In a conference call with analysts the company cited smartphone chip demand, namely in China and other emerging markets, as the principal driver behind its recent growth. The fabless chipmaker shipped more than 65 million smartphone chips in Q3, up from 55 million in Q2.

Semiconductor market research firm IC Insights anticipates that for all of 2013 MediaTek will enjoy year over year sales growth of 34%. In 2012 the company posted total sales of $3.37 billion; IC Insights forecasts the company will see 2013 sales of $4.5 billion.

In terms of year-on-year sales growth that would make MediaTek the No. 2 on IC Insights’ forecast list of top-20 chip sales growth leaders for 2013, second only to SK Hynix. Notably, Qualcomm shows up in the No. 4 spot with 30% year-on-year sales growth.

In terms of straight sales for the year, MediaTek’s growth will place it at No. 16 on the list of top semiconductor sales leaders for 2013, IC Insights said.

The research firm stated that MediaTek is “experiencing extremely strong demand for its devices in the booming low-end smartphone business in China and other Asia-Pacific locations. In fact, MediaTek expects its application processor shipments for smartphones to top 200 million units this year, about double the 108 million units the company shipped in 2012.”

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Four cores? Try eight, and China gets it first
MediaTek was the first to market with a mobile quad-core processor ahead of Qualcomm, and it looks to be the first to the market with the first fully-functioning octa-core processor as well.

And, perhaps tellingly of the near future, that octa-core processor won’t debut inside a mainstream brand smartphone released for a mature market. Rather, it will be released by a tier-two Chinese handset maker for the Chinese market.

Samsung already hit the market with its Exynos 5 Octa processors in its S4 and Note 3 smartphones, of course, but these processors functionally are quad-core processors. Not all eight cores are active at the same time. The market was rife with rumors that a firmware upgrade would change this, but so far that hasn’t materialized.

In the meantime smartphones built around MediaTek’s octa-core processor soon will be hitting the Asia-Pacific market. The company first officially acknowledged its octa-core product, the MT6592, last June. Local Taiwanese media report that the company will hold an official unveiling and introduction later this month on the mainland.

Furthermore, last month at the 2013 Hong Kong Electronics Fair Chinese handset maker UMI unveiled what will apparently be the first phone on the market — in this case, in China — built around the MT6592, the Umi X2S.

The successor to UMI’s current X2 handset — built around the 1.2 GHz version of the quad-core MT6589 — will feature MediaTek’s 1.5 GHz octa-core processor and reportedly feature 2 GBytes of RAM, 32 GBbytes of internal memory, a 13-megapixel image sensor and a 5-inch high definition (1920 x 1080 pixel) display. No official pricing has been released, but it will likely retail between 1,500 and 2,000 yuan ($250 to $325).

Undoubtedly other handset makers will soon be following suit, as will rival chipmakers with their own octa-core mobile processors.

To view part one, click here.