Global IT Hardware
BNP Paribas Technology Research Team
(886 2) 2175 7059 Technology 2 February 2009
S O W H A T ? T H E B N P P A R I B A S A N G L E
Winners and losers in the wireless
handset food chain
• Global handset and wireless IC sales to contract sharply by 13% and
19% y-y; high-end smartphones and low-cost phones are more
defensive.
• ST and Qualcomm best positioned in high-end IC market; MediaTek a
winner in low-cost solution.
• Nokia losing steam in smartphone market; brand Chinese makers
and Samsung strengthening in low-end market.
Lack of growth, ramp-up in R&D costs to prompt wireless
semi consolidation
Our proprietary model suggests the Wireless semiconductor sector is
now ex growth. Only the WCDMA market will continue to expand.
Coupled with increasing R&D costs, this will lead to a radical change in
the competitive landscape with an acceleration of the consolidation.
STM (upgraded to Outperform), MediaTek emerge as
winners, TI as the big loser – Infineon and Freescale are
clear M&A targets
Thanks to its superior 3G platform and scale, STM should become the
second-largest wireless semiconductor vendor within two or three years,
nearly doubling its market share to roughly 20%. MediaTek should
continue to gain market share in the low end. We believe Infineon’s
wireless division is an attractive target for either Broadcom or TI.
Nokia will continue to rule in entry-level emerging markets
Nokia’s domination of emerging markets (India, China) will remain
undisputed for years to come, but Chinese competition and Samsung
could build sustainable franchises at the expense of Motorola, Sony
Ericsson and, to a lesser extent, Nokia.
Advantage goes to new, nimbler competitors in
smartphone wars
At the quickly expanding high end of the market, Nokia seems to be
losing momentum in the fight for mobile OS domination, a trend that will
not easily be reversed despite its recent decision to throw Symbian into
open source territory as OSX, Android and RIM are gaining share.
This document has been written in conjunction with the Exane BNP
Paribas IT Hardware Research Team (author details on page 2)
BNP Paribas research is available on Thomson Reuters, Bloomberg, and
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Contents
Conclusion and investment cases ................................................................................. 3
Semiconductor market outlook .................................................................................... 13
Wireless semiconductor market: trend analysis .......................................................... 15
A closer look at handset manufacturers’ wireless 3G suppliers strategy..................... 20
The winners of the 3G market ..................................................................................... 24
Consolidation is under way and will accelerate ........................................................... 28
Emerging markets outperformed in the 2G/2.5G handset market ............................... 37
Chinese handset makers and market .......................................................................... 41
Handset / Handset IC market scenario........................................................................ 45
Handsets: from hardware to software wars ................................................................. 49
Mobile computing systems – power to the software .................................................... 69
BNP Paribas Technology Research ............................................................................ 83
Foxconn Int’l Holdings, High Tech Computer, LG Electronics, MediaTek, Samsung Electronics,
Spreadtrum Communications, ZTE Corp
Exane BNP Paribas Company Focuses.................................................................... 107
ARM, CSR, Ericsson, Infineon, Nokia, STMicroelectronics
BNP