Last week we published our smartphone applications processor market share estimates for 2010. By our estimates, the smartphone applications processor market showed an impressive 77 year-over-year revenue growth in 2010 to reach $4.52 billion. Baseband-integrated applications processors accounted for 74 percent of total apps processor revenue in 2010 and we think it will remain relatively stable in the next few years.

Here are some highlights of our smartphone applications processor market share tracker 2010 report:

• Qualcomm led the smartphone applications processor market in 2010 with 41 percent revenue share on the strength of its strong participation in the multiple software ecosystems and its broad range of integrated processors. Qualcomm’s Snapdragon processors MSM8x50 and MSM7x30 gained good traction in the second half of 2010 and featured in multiple popular smartphones. We note that Qualcomm had over 50 percent revenue share lead over its nearest competitor Texas Instruments (TI). We believe that Qualcomm has a two-to-three year advantage over most of its competitors in terms of integration and is well positioned to move further ahead of its competitors with its upcoming MSM8960 LTE apps processor.

• TI ranked number two with 27 percent revenue share in 2010 despite topped the unit shipment rankings. TI’s stand-alone apps processor unit shipment share declined to 20 percent in 2010, by our estimates. We think TI's unit shipment leadership will be challenged by Qualcomm and Samsung in 2010.

• Samsung finished with 19 percent revenue share in 2010 and its unit shipments doubled on a year-over-year basis. Samsung's 1GHz Cortex-A8 Hummingbird apps processors featured in high-volume products such as Samsung Galaxy S, Wave and Wave II.

•  Marvell ranked number four in revenue terms but the company's over-dependency on a single customer is a cause for concern.

With over ten vendors already announced 1GHz dual-core Cortex-A9 processors, we expect 2011 to be highly competitive and ARM-based applications processor vendors should build competitive barriers by investing in graphics processing technologies, integration, micro architecture, multi-core processors, semiconductor process technologies and software expertise as the entry barrier is relatively low for new vendors to enter into the ARM-based ecosystem compared to the x86 chip ecosystem.

Client reading: Smartphone Apps Processor Market Share: Qualcomm’s Revenue Share Reached 41 Percent in 2010

On Thursday February 10, 2011 in a change to its long-standing strategy of developing integrated processors, Qualcomm revealed details of its first stand-alone apps processor, APQ8060.

Also, HP announced new webOS devices including the HP Veer, Pre 3 and TouchPad tablet. All three products feature Qualcomm's Snapdragon processors. What's really interesting is that HP's Wi-Fi-only TouchPad spec sheet listed an apps processor product from Qualcomm, the APQ8060, which appears to be a stand-alone apps processor variant of Qualcomm's 3G/4G version MSM8x60. Qualcomm so far has had limited success in the tablet market with design-wins at Dell, Huawei and Viewsonic. The HP TouchPad raises Qualcomm's profile in the tablet market and makes it a strong contender.

As we noted previously in our reports, the tablet market is both a threat and opportunity for baseband-integrated vendors, especially vendors who rely on baseband-integrated products. It's a near-term threat because it will leave integrated vendors without apps processor products to address the Wi-Fi-only tablet market. It's a long-term opportunity as mobile operators push for 3G / 4G connectivity to increase their mobile broadband subscriptions, a favorable scenario to Qualcomm.

We think Qualcomm's recent Atheros acquisition and the latest APQ8060 stand-alone apps processor product address this near-term tablet market threat as Qualcomm can compete for more semiconductor dollar content in a wide variety of markets where 3G / 4G connectivity is currently not that important. Over time, many of these product categories will feature 3G / 4G connectivity, playing to the strength of baseband vendors such as Qualcomm.

As for smartphones, we continue to believe that integration will continue to win as the smartphone market fragments into different tiers. This week Broadcom announced its first HSPA+ smartphone apps processor BCM28150 which integrates 1.1GHz dual ARM Cortex-A9 cores. This product is similar to Qualcomm's MSM8x60 and ST-Ericsson's U8500 / U5500. We estimate that 70 percent of smartphones will be shipped with a baseband-integrated apps processor in 2015. Qualcomm, ST-Ericsson, Broadcom, Renesas, Intel, MediaTek and Marvell are expected to be leading integrated apps processor vendors by 2015.

Texas Instruments (TI) gave a significant boost to its OMAP applications processor line-up yesterday by announcing the ARM Cortex A-15-based OMAP 5 applications processors, OMAP5430 and OMAP5432. The OMAP5432 is likely to target Microsoft's next generation Windows PC platform-based devices while the OMAP5430 is targeted at smartphones and tablets. The OMAP 5 applications processors, designed in 28 nm,  feature two ARM Cortex-A15 cores (each running at 2GHz) and also integrate Imagination Technologies' PowerVR SGX 544 graphics cores. ARM's Cortex-A15 can support up to eight cores and TI's OMAP 5 has only two cores suggesting that the software ecosystem is not yet ready for that many cores.

Most importantly, the new OMAP 5 applications processors bring two new features including graphics computing and hardware virtualization that are currently not available in the current generation processors. Graphics computing APIs such as OpenCL facilitate GPU computing by enabling GPU access to non-graphics applications. ARM's next generation graphics core Mali T-604 also offers support for graphics computing APIs such as OpenCL.

The mobile industry is in the midst of figuring out killer apps for graphics computing. Apple is a big proponent of OpenCL and is expected to bring it to its future iOS devices which could act as a positive catalyst for OpenCL's  take-off on mobile devices. Features such as hardware virtualization can help enhance security and also preserve the legacy application ecosystem. This could be an important feature for Microsoft as they transition to a new application framework in their next generation Windows platform for SoCs.

As we mentioned on this blog previously, TI is currently facing headwinds in the smartphone market from the baseband-integrated vendors such as Qualcomm. We see the integration trend to continue in smartphones as OEMs demand more and more integration to reduce their BoM costs which could put TI's OMAP processors at a disadvantage, particularly in the low-to-mid range smartphone category. However, Microsoft's upcoming next generation Windows platform for SoCs could create another opportunity for TI to revitalize its OMAP business.

Most recently, TI announced a BlackBerry PlayBook tablet design-win at RIM but hasn't yet announced a smartphone design-win for its OMAP 4 applications processor which is bit of a concern as Qualcomm and ST-Ericsson's baseband-integrated dual-core processors come into the market. Qualcomm's MSM8x60 and ST-Ericsson's U8500 / U5500 products integrate an HSPA+ baseband modem and dual ARM Cortex-A9 cores (or equivalent) which puts them on a par with NVIDIA's Tegra2 and TI's OMAP 4 applications processors. The OMAP 5-based are expected to appear in products in late 2012 but until then TI has to defend itself from the baseband-integrated vendors.

Other publicly announced ARM Cortex-A15 licensees include NVIDIA, Samsung and ST-Ericsson and TI will probably face competing products from these companies in future.   We note that Qualcomm's next generation Snapdragon processors MSM8960 and MSM8270 are also designed in 28 nm and integrate dual Cortex-A15 equivalent processing cores. The MSM8960 also integrates multi-mode LTE baseband modem, Adreno GPU and a variety of connectivity functionality (GPS, WLAN, Bluetooth and FM). TI has to fight highly integrated products like these in future and we are cautiously optimistic about OMAP 5 given the trend towards integration. However, the market is expanding rapidly and an assortment of mobile devices are coming to the market with a variety of operating systems which could be a positive thing for TI.  

Multi-core processors are the name of the game in high-end smartphones and tablets in 2011 and are increasingly becoming an essential marketing and technology strategy for every handset vendor and silicon vendor. We estimate multi-core processor penetration in smartphones will rise from 15 percent in 2011 to 45 percent in 2015, and that ARM's Cortex-A9, Cortex-A5 and Cortex-A15 and Intel's x86 architectures will fuel the multi-core processor growth in smartphones over the next few years. 

In 2010, over 45 percent of Android smartphones shipped with a 1GHz or higher processor, hitting the ceiling on what is possible with a single core processor. Adding a second core is the logical next step to boosting the speed without raising the power consumption in handheld devices such as smartphones.

Samsung, Qualcomm, NVIDIA, ST-Ericsson, Texas Instruments, Marvell, Renesas and Broadcom are well positioned to capture share in the smartphone multi-core processor market. Freescale recently announced its i.MX 6 processor family but the company has less visibility when it comes to smartphone design-wins.

Having largely won the single core smartphone apps processor market, baseband-integrated vendors are now faced with a multi-core processor challenge. We believe the smartphone multi-core processor market will be dominated by stand-alone apps processor vendors in 2011. By our estimates, baseband-integrated multi-core apps processor will account for about one third of total smartphone multi-core apps processor shipments in 2011 with the potential for higher share in future.

Sravan Kundojjala