Mobile equipment market to achieve double digit growth this year

November 29, 2012 // By Jean-Pierre Joosting
Despite soft macroeconomic conditions, the market for mobile communications equipment will grow by a robust 13 percent this year, propelled by climbing shipments of mobile handsets and tablets, particularly devices supporting the 4G long term evolution (LTE) wireless standard.

Total factory revenue from original equipment manufacturers making mobile communications equipment is projected to reach $376 billion by year-end, up from $334 billion in 2011, according to an IHS iSuppli Wireless Systems Market Tracker report. Next year, overall revenue for mobile communications equipment is forecast to rise to $444 million, as shown in the figure attached.

Driven by mobile broadband, the five-year compound annual growth rate until 2016 will amount to 11 percent.

IHS defines mobile communications equipment factory revenue as what manufacturers earn from the sale of devices into the channel—in this case, mobile communications equipment like smartphones and other handsets. The category also includes wireless infrastructure gear such as routers.

“The wireless equipment market is continuing to grow this year despite facing daunting economic headwinds, including the slowdown in China and the turmoil engulfing the euro zone,” said Francis Sideco, senior principal analyst for wireless communications at IHS. “To be sure, growth this year will be lower than the much more sizable expansion of 29 percent in 2011. However, the market’s double-digit rise in 2012 is a testament to the ongoing appeal of cellphones and tablets to global consumers. The increasing deployment of LTE is also a considerable factor, which will continue to spur the market.”

In particular, the increasing proportion of handsets being sold as smartphones affects semiconductor content positively. When compared with previous handset designs, for instance, smartphones carry increased costs for application processors, memory bits and sensors, favorably impacting the semiconductor suppliers providing those components. Moreover, smartphone support for the next-generation LTE wireless standard also drives semiconductor content, because more capable digital basebands, RF transceivers and power amplifiers are required.

As a result, the semiconductor market for mobile communications is set to generate $74 billion at the close of 2012, up 5 percent from $71 billion in 2011. While wireless semiconductor revenue has been revised down slightly from earlier estimates due to the underperforming global