MANHASSET, N.Y. — Spurred by the arrival of feature-rich devices, the number of replacement mobile handsets shipped will grow from 211 million in 2002 to 591 million units in 2008, according to a study by Allied Business Intelligence Inc. (Oyster Bay, N.Y.).
This represents nearly 85 percent of all shipments worldwide at that time and will in turn drive up the market for handset ICs, currently at $8.7 billion, to approximately $12 billion by 2008, according to a second, IC-focused ABI report.
The growth in mobile handsets is a reflection of operators' efforts to drive average revenue per user, said the first study, entitled "Wireless Handsets, Smartphones and Communicators — the Convergence of the Cell Phone & PDA and the Emerging 3G Network." Aided by advanced devices with color screens, operators are adding what the report calls "infotainment" content such as navigation, gaming, multimedia and instant messaging.
ABI analyst Kenil Vora said, "With handset makers and wireless operators developing new devices and compelling services, the replacement cycle will shorten, thereby accelerating growth in the handset market." According to Vora, the key to maintaining this growth is the successful deployment and timing of feature-rich devices and related services.
However, to keep up with this consumer demand IC suppliers and handset manufacturers must offer increasing levels of functionality, while still maintaining the products' sleek looks and longest possible battery life, according to a second study entitled, "Handset Integrated Circuits: High Demands = Inevitable Integration."
"The race is on for IC suppliers to offer manufacturers — as well as the end user-a complete solution," said ABI senior analyst Tim Shelton. Because of this anticipated growth, the market for handset ICs will grow with a compound average annual growth (CAAG) rate of 5 percent, said the report.
Of the core components, the applications processor represents the biggest growth opportunity for handset IC suppliers, with sales to manufacturers expected to reach over $2 billion in 2008 at a CAAG of 120 percent, the report said.
The ABI report outlines the evolution of the handset to a multimedia and data-centric platform and the progression to 2.5G and 3G networks. The study examines trends in the global market for wireless handsets and predicts where the industry is headed. It covers six global regions and the demand within them.
The report also includes market forecasts for wireless subscribers, handset shipments, Bluetooth penetration and Java capability through 2008. Where applicable, forecasts are further segmented by cellular technology platforms.
ABI's handset IC study dissected that market by component, reviewing both regional and air-interface segments. One focus is the continuing integration of functionality and effects on ASPs, as well as revenue trends for the sector.
