LTE fuels double-digit growth for vendors

Staff writer
23 Mar 2012

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.

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