Today, Ericsson and ST Micro announced the breakup of the ST-Ericsson JV with ST-Ericsson taking over the 4G LTE multi-mode slim modem product line, while STMicro will oversee the existing products including legacy modem business, RF, Power Management and NovaThor integrated apps processors. Earlier, in April 2012, ST-Ericsson announced the transfer of its stand-alone apps processor R&D activity to ST Microelectronics. In addition, ST-Ericsson will put its connectivity business up for sale, but the company hasn’t identified any potential buyer yet for that business. We note that previously, several big names have left the baseband market including Analog Devices, EMP (Ericsson Mobile Platforms), Freescale, Infineon, NXP, and Texas Instruments among others. The baseband market requires intensive R&D for a company to remain competitive.

ST-Ericsson struggled since its formation in February 2009. The JV hasn’t been able to produce a single profitable quarter during its existence so far. Part of the JV’s struggles can be attributed to duplication among legacy products, transition to a new product roadmap and constant management changes. ST-Ericsson was formed by combining the modem assets of ST Microelectronics, EMP, NXP and T3G (TD-SCDMA consortium). Clearly, the JV struggled to integrate multiple companies and execute on its original plan to become a leading mobile chip company both in Europe and globally.

ST-Ericsson failed to establish itself as a true competitor to market leader Qualcomm over the last four years. ST-Ericsson got stuck in continuous product transitions to fill gaps in its product lines while the market moved on rapidly. The company lost momentum in the TD-SCDMA market and later lost significant revenue opportunities at Nokia. In 2012, ST-Ericsson saw some success with its excellent NovaThor U8500 dual-core chip at Sony and Samsung and the company shipped about 25 million NovaThor chips in 2012. However, this late success couldn’t bring ST-Ericsson to profitability, given its growing debt burden and legacy products. Based on our estimates ST-Ericsson ranked number-five in the baseband market in unit terms in 2012.

The latest breakup announcement jeopardises the relatively successful NovaThor “ModAp” product line of ST-Ericsson. Ericsson said it will solely focus on multi-mode 4G LTE slim modems in future, and will pursue licensing opportunities for its NovaThor baseband-integrated apps processor business.

Ericsson said the company wants to be the number three player in the slim modem market, and the company has given a 18-24 month time frame to achieve that. We think this self-imposed target is really aggressive unless the company has un-announced design-wins with Apple and Samsung. Currently, Qualcomm and Intel are the dominant 3G/4G multi-mode baseband players in the market. Ericsson said its LTE-Advanced slim modem M7450 will ramp in 1H 2014 and the successor product M7500 will ramp in 1H 2015.

To achieve the number three position, Ericsson would have to score iPhone or Galaxy S design-wins as the market for slim modems is relatively limited outside of Apple and Samsung. Based on Strategy Analytics estimates, baseband-integrated applications processors dominated the smartphone modem market with 62 percent unit share in Q3 2012. Ericsson could potentially pursue M2M, USB dongles, tablets and other non-handset markets as an opportunity to expand its slim modem business, but this would put it in direct competition with Intel and many small, innovative LTE baseband suppliers such as Sequans, Altair and GCT Semi.

We were somewhat surprised by the lack of buyers for ST-Ericsson’s modem business given ST-Ericsson’s 4G LTE products, which are production-ready. We have been saying for a while in our baseband tracker reports that the JV's concerning financial performance would eventually make it as a takeover target. We feel that the slim modem business is not a long-term fit for Ericsson. In retrospect, we think that Ericsson and ST Micro’s venture to create a European cellular chip powerhouse was always going to be a challenge, one that ultimately ended in failure, not just because of the difficulty of integrating disparate cultures from different companies, but also because the formation of ST-Ericsson coincided with a drastic decline in the joint-venture’s top customers, Nokia and Sony Ericsson (now Sony).

Sravan Kundojjala

Last week we published our cellular baseband processor market share numbers for Q2 2011 and based on our estimates total baseband revenues jumped 17.5 percent to reach $3.63 billion in Q2 2011.

Here are some highlights from our Cellular Baseband Market Share Tracker:

• Qualcomm ranked number one with 42 percent revenue share on the strength of its broad baseband product portfolio, covering various interface technologies including GSM, CDMA, W-CDMA, HSPA+ and LTE. Qualcomm's multi-mode LTE baseband product, MDM9x00, performed well in Q2 2011 and we estimate that Qualcomm had close to one-third unit shipment share in the LTE baseband market in Q2 2011. We expect Qualcomm's upcoming LTE Snapdragon processors will further boost the company's share in LTE basebands. During the quarter Qualcomm's increased sales to smartphone vendors helped the company to sustain its average selling prices (ASPs).

• Intel ranked number two with 17 percent revenue share in Q2 2011 with the help of its relationships with top-tier handset manufacturers. Intel's 3G shipments accounted for over one-third of company's total baseband shipments in Q2 2011 and firmly established the company as a strong number two to Qualcomm. Intel's 21 Mbps HSPA+ platform, XMM6260, performed well and the company ramped up well with high-profile design-wins such as the Samsung Galaxy S II. We believe that the XMM6260 is a strong contender for the Apple iPhone 5 despite competition from Qualcomm.

• MediaTek, Texas Instruments and ST-Ericsson also featured in our top-five revenue share rankings in Q2 2011. MediaTek’s baseband revenues declined 14 percent in Q2 2011 compared to Q2 2010 due to competitive pressures from MStar and Spreadtrum and the company's subdued participation in the W-CDMA market. ST-Ericsson showed signs of improvements with new design-wins for its renewed product portfolio, but the complete recovery is not expected to happen until late 2012, in our view.

• Broadcom and Spreadtrum continue to be the fastest growing baseband companies and showed triple-digit unit shipment growth in Q2 2011. We believe that over the next few years both companies can further their market share by expanding into 3G / 4G markets. Marvell, Icera (NVIDIA) and VIA Telecom also made good progress in Q2 2011.

Overall, the baseband market held up well in Q2 2011 and we believe that powerful secular growth trends such as shifts to new radio technologies (HSPA+ and LTE) will continue to fuel the growth in the next few years.

Global cellular baseband revenue reached $13.2 billion in 2010 showing an impressive 20 percent year-over-year growth while unit shipments grew 25.5 percent.

Here are some highlights from our cellular baseband market share estimates for 2010:

• Qualcomm ranked number one with 40 percent revenue share in 2010 with the hep of its strong market position in CDMA and W-CDMA markets. We believe much of the Qualcomm's growth came from smartphones and data-centric non-handset products. By our estimates, Qualcomm also ranked number one in the smartphone apps processor market in 2010.

• Despite shipping the most cellular baseband units in 2010, MediaTek struggled to increase its revenue share due to intense price competition in the low-end GSM/GPRS/EDGE (GGE) market from MStar and Spreadtrum. By our estimates, MediaTek ranked number one in GGE and TD-SCDMA markets. MediaTek couldn't ramp up its first W-CDMA baseband MT6268 shipments in 2010 and as a result the company had less than 1 percent unit shipment share in the W-CDMA market in 2010. MediaTek's recent MT6573 HSPA smartphone product compares well against competitors' products and should help the company to gain some traction in 2011.

• Through its acquisition of Infineon's wireless business, Intel ranked number four overall in units and revenue and the company's basebands featured in multiple high-volume products in 2011. By our estimates, Infineon ranked number two in the second half of 2010 in revenue terms behind Qualcomm. We think Intel's immediate task is to maintain this momentum and ramp up its HSPA+ platform XMM6260.

• Both Broadcom and Spreadtrum registered triple-digit year-over-year growth in 2010 in their baseband unit volume and revenue. We estimate that Spreadtrum shipped more basebands than Broadcom, Marvell and ST-Ericsson in the second half of 2010. Spreadtrum is well positioned to make further share gains with its upcoming 40 nm TD-SCDMA and GGE products. Broadcom benefited from its ramp ups at Nokia and Samsung while Spreadtrum gained from its international expansion in 2010.

• ST-Ericsson registered relatively flat growth in 2010. Strategy Analytics believes that ST-Ericsson's market share losses are bottoming out and the company is well positioned to improve its share from the second half of 2011 with its upcoming W-CDMA design-wins at tier-one OEMs. We think ST-Ericsson's renewed product portfolio positions the company well to compete in the smartphone market in 2011.

• Icera, a soft modem baseband vendor, also registered impressive growth in 2011 with its momentum in the mobile broadband market. We note that Icera is one of only a few companies to have market-ready HSPA+ and LTE basebands and chipsets. Marvell and VIA Telecom also made progress in 2010.

Looking ahead, we think secular trends such as radio technology shifts (to HSPA+ and LTE), accelerated smartphone adoption, mobile broadband and emerging markets will provide growth opportunities to cellular baseband vendors. We think radio technology shifts will also provide entry points to new vendors in future.

Qualcomm announced the acquisition of Atheros Communications today to strengthen its market presence in the non-handset markets and to unlock the value of its connectivity chip business. Atheros currently supplies WLAN, Bluetooth, GPS and other networking products to notebook and netbook markets. Qualcomm is currently the number one player in the cellular baseband market.

Here are our quick comments and impact on the competition,

• This acquisition will allow Qualcomm to enhance the value of its connectivity chip portfolio. Historically, Qualcomm was not a major player in the stand-alone connectivity IC market. Qualcomm successfully integrated GPS functionality into its basebands but couldn't repeat the same for WLAN, Bluetooth and FM.

• Atheros acquisition will allow Qualcomm to apply pressure on Broadcom which appears to have a broader wireless portfolio than Qualcomm including NFC (Near Field Communications). By our estimates, Broadcom ranked number two in the wireless semiconductor market (excluding memory) in Q3 2010 and is growing rapidly. Although Broadcom is a minor player in the cellular baseband market, the company is still ahead of many wireless companies in terms of wireless revenue, thanks to its connectivity business.

• Qualcomm's upcoming product, the MSM8960, integrates multi-mode LTE baseband modem, ARMv7-compliant dual applications processor cores, Adreno GPU and connectivity (WLAN, GPS, Bluetooth and FM). As far we know, this is the first cellular baseband product that integrates a variety of connectivity functions. We believe products like this could apply pressure on Broadcom's stand-alone connectivity chip business in future.

• This acquisition also increases pressure on Texas Instruments (TI). TI currently draws its wireless revenues from OMAP applications processors, connectivity chips and Nokia's custom basebands. TI is expected to complete its exit from the baseband market by 2012. The lack of baseband products could leave TI without any apparent synergies between its applications processors and connectivity chips and may force TI to divest its remaining wireless business.

Overall, we believe that this acquisition will allow Qualcomm to expand into adjacent markets and also apply more pressure on its key competitors. Qualcomm successfully executed integrating applications processors into its basebands and became the number one player and now the company is trying to further the success by integrating connectivity chips.

Sravan Kundojjala

Broadcom announced today that it will acquire privately held 4G chipset vendor Beceem Communications for $316 million. Beceem, founded in 2003, is the leading provider of WiMAX basebands and RF chips for portable and handheld WiMAX devices. The company also supplies WiMAX radio chipsets for gateways, routers and other fixed WiMAX customer premise equipment. Recently Beceem started to shift its emphasis to LTE with the announcement of its BCSM500 baseband, which will support both LTE and WiMAX. Broadcom so far hasn't announced its LTE plans publicly, and this acquisition signals that the company is looking to the future in the wake of growing competition and consolidation in the cellular baseband supplier base. Broadcom acquired GSM/GPRS/EDGE and W-CDMA technology through acquisitions, and these are now paying off, so it appears that Broadcom is repeating this strategy for LTE.

Beceem supplies basebands for all of the WiMAX USB dongles and data cards sold by Clearwire, the largest WiMAX operators in terms of subscribers. Beceem generated $43.7 million in revenue in 2009 with net loss of $17 million, but with shipments surpassing 1 million chips per quarter in Q3 '09 and sales having tripled since 2008, the company appeared headed for profitability by late 2010. Buoyed by this success, Beceem filed for an IPO initially thought to be worth more than $100 million in April '10. This would have made a nice down-payment to investors, which include Intel Capital, DoCoMo Capital, Samsung Venture Investment and NEC. Investment by all VCs in Beceem totals close to $200 million to date.

By August 2010, announcements of support for LTE by operators around the world made it clear that Beceem faced a weakening, or at best slower growth WiMAX market, cutting the value of its proposed IPO. With its new LTE-WiMAX baseband, Beceem could benefit from the launch of LTE by Verizon Wireless, AT&T Mobility, and MetroPCS in North America, however, Beceem will not ship samples of its WiMAX-LTE baseband before Q1 ’11. After shipping its first samples and getting them designed into products, Beceem would still have to go through interoperability testing (IOT) with infrastructure vendors and demonstrate support for FDD and TDD in multiple channel bandwidths. The IOT process could take 18 months or longer, pushing LTE chip production out to mid-2012 or later for Beceem. In light of this, investors evidently saw risks in continuing to support Beceem, and decided to take Broadcom’s offer.

From Broadcom's perspective, the acquisition will allow Broadcom to offer home gateway / router platforms that incorporate 4G, Wi-Fi, cable, DSL and / or fiber optics, which would allow multiple users in a household to share a single wired or wireless broadband connection, cutting the monthly price per user. Of even more potential significance, the acquisition will allow Broadcom to eventually expand into LTE mobile devices. Until then, Broadcom can draw on Beceem’s success in WiMAX USB dongles, PC data cards and handsets to help fund development of LTE chipsets.

It seems likely that merchant baseband suppliers Qualcomm, ST-Ericsson, Altair Semi, Icera, Renesas and Intel / Infineon will beat Broadcom to market in LTE, particularly in the rapidly growing “non-handset” (our term) segment of the mobile market consisting of USB dongles, PC data cards, M2M modules and related data-centric wireless modem devices. By our estimates, basebands for the non-handset mobile market accounted for about 12 percent of the total baseband market in revenue terms in 1H 2010. Currently Qualcomm, Icera, Infineon and ST-Ericsson have the leading market share in basebands for non-handsets, a market today dominated by 3G. An increasing proportion of future non-handset WWAN data modems will support LTE plus 3G, making LTE capability essential for firms to continue supplying basebands into this important segment. Note that compared to LTE + 3G, it appears that LTE + WiMAX mobile devices will at best represent a small niche market.

When Broadcom enters the LTE baseband market, we expect the company to offer chipsets with comprehensive support for legacy GSM air interfaces through W-CDMA / HSPA+, multi-mode / multi-band RF transceivers, plus optional Wi-Fi / Bluetooth / GPS, and optional ancillary chips for mobile TV and advanced video processing. Broadcom had only about 3.3 percent share of the cellular baseband market in unit terms in 1H 2010, but the company's market share in basebands is growing rapidly with design wins at top-tier OEMs.

Broadcom's acquisition of Beceem leaves other baseband start-ups Icera, Altair Semiconductor, Sequans and Wavesat as potential acquisition targets for established baseband / chipset vendors looking to expand into LTE. Of these start-ups, Altair Semiconductor, which sampled its first LTE baseband in September ’09, appears to be in the lead with LTE basebands now reaching early production status. Another firm to watch in LTE is Intel, which recently acquired WiMAX / LTE chipset start-up Comsys and announced its intention to acquire the cellular chipset product lines of Infineon. Intel Capital has a 20 percent stake in Beceem, so we can only speculate that Intel decided that acquiring Comsys and Infineon would offer better synergies and returns on investment given that Intel already ships WiMAX chipsets into the embedded laptop market.

Aside from LTE chipsets, Broadcom also has to solve is its smartphone applications processor challenges; by our estimates, Broadcom had no share in smartphone applications processors in 1H 2010. Broadcom scored design-wins in Nokia's Symbian^3 smartphones recently with its BCM2727 co-processor, but we believe that Broadcom has to integrate BCM2727 functionality into its basebands to score significant smartphone design-wins in the future.

Last week we published our cellular baseband market share estimates for 1H 2010. By our estimates, cellular baseband unit shipments grew 23 percent and revenues grew 15.5 percent from 1H 2009 to 1H 2010. The non-handset segment, which includes PC data cards, PNDs, netbooks, tablets wireless USB dongles and M2M, accounted for 12 percent of total baseband revenues in 1H 2010 and grew faster than the handset baseband market.

Here are some highlights of our cellular baseband market share estimates:

• Qualcomm continued its revenue share lead with 39.6 percent share in 1H 2010. Qualcomm ranked number one in CDMA and W-CDMA baseband markets. We believe much of the Qualcomm's growth came from smartphones and non-handsets in 1H 2010.

• MediaTek ranked number two in revenue share behind Qualcomm with 16.3 percent share in 1H 2010. Contrary to popular perception, MediaTek currently doesn't compete head-to-head with Qualcomm and only recently launched its first W-CDMA baseband. By our estimates MediaTek had less than 1 percent W-CDMA share in 1H 2010 but the company ranked number one in GSM/GPRS/EDGE (GGE) and TD-SCDMA baseband markets in revenue terms. MediaTek’s baseband shipments to grey handset OEMs showed signs of decline in 1H 2010 in the wake of government-led crackdowns in India and China.

• ST-Ericsson finally showed signs of recovery in 1H 2010 after a difficult 2009 with its improved and rationalized product line up for GGE, TD-SCDMA, W-CDMA and LTE markets. However, the company has to shift its focus to its stagnant W-CDMA market share to compete against Qualcomm and Infineon.

• Infineon continued to gain share in GGE and W-CDMA markets with the help of its top-tier handset OEM relationships. By our estimates Infineon is emerging as a strong competitor to Qualcomm in the non-handset market also with 9 percent unit shipment share in the non-handset segment of the W-CDMA market. Infineon is expected to improve its non-handset baseband share further once Intel completes its acquisition in 2011. Texas Instruments' exit from the baseband market creating opportunities for Infineon and Broadcom at Nokia.

• Broadcom's baseband revenue grew 245 percent in 1H 2010 compared to same period the year before thanks to its design-wins at Nokia and Samsung. By our estimates W-CDMA revenues accounted for 17 percent of Broadcom's total baseband revenues in 1H 2010 and the company continued to improve its product-mix.

• Spreadtrum, Marvell, Icera, and Via Telecom also made progress in 1H 2010. Renesas' baseband revenues were down slightly but the company is expected to emerge as strong player by 2012 with LTE chipset design-wins at Nokia.

Looking forward, we believe that the non-handset market and new radio technologies (HSPA+, LTE and TD-SCDMA) to create growth opportunities for baseband vendors.

Consolidation in the baseband market continued with Intel acquiring Infineon's wireless business on Monday for $1.4 billion. Infineon's takeover is the fourth high-profile announcement in the last two years. Previously NXP, Freescale and Texas Instruments announced their exits from the merchant baseband market. This signals that the entry barrier is now too high for new entrants and raises pressure on smaller players such as Marvell, Spreadtrum and Icera. Intel's acquisition of Infineon's wireless business leaves Qualcomm, MediaTek, ST-Ericsson, Intel, Broadcom and Renesas as long-term players in the cellular baseband market.

We analyzed this back in May when the original rumour of the Intel/Infineon wireless deal surfaced. Infineon's wireless business is definitely an attractive target for Intel as it gives immediate access to valuable IP and an established customer base. Infineon is a rising star in the W-CDMA baseband market and ranked number two in the W-CDMA baseband market behind Qualcomm (excluding Texas Instruments’ custom baseband business with Nokia). Infineon has so far focused on slim modems and has stayed away from developing ARM-based applications processors. So far Infineon’s niche strategy has paid off, but the time has come for the company to expand its portfolio by offering a wider range of processors to address smartphones, tablets and other connected consumer devices. Although 3G and smartphones are of most interest to Intel, the company is likely to keep Infineon’s 2G business as it provides scale which is crucial to play in the cellular baseband segment.

It will be another year or two before Intel's applications processors are smartphone-ready. Meanwhile, in the next 12 - 18 months Intel can bundle Infineon's 3G platform with all of its notebook and netbook chipsets and gain significant 3G share to undercut Qualcomm and ST-Ericsson's non-handset offerings. But both Qualcomm and ST-Ericsson appear to have a two year technology lead over Infineon in chipsets for HSPA+ and LTE; Infineon is expected to introduce its first HSPA+ chipset in 2011 and an LTE chipset in 2012. MediaTek’s grey handset chip business may come under pressure from Infineon in the future if Intel expands its field application engineering force in China. Likewise, Broadcom is expected to come under pressure from this deal but should survive with help from its other businesses such as connectivity and digital home. This acquisition will also likely affect stand-alone application processor vendors such as Texas Instruments and NVIDIA that currently lack their own 3G / 4G modems. But we believe that it will take another 4-5 years for Intel to integrate basebands into its Atom CPU, if at all.

Infineon's acquisition still doesn’t guarantee Intel's success in the wireless handset market and the company's ultimate success in this market hinges on how soon Intel can come up with power-efficient processors that can stand-up and compete against a host of ARM-based processor vendors. On a positive note, Intel appears to be moving ahead of its other chip competitors in the software area which positions it well against ARM-based processor vendors. The company’s strong software expertise could help it to gain some OEM mindshare. Intel’s uninspiring track record in the wireless market during the last decade suggests that the company has to execute flawlessly this time to make it successful and keep Infineon’s wireless business as independent as possible. Clients can read our eight page analysis of the Intel/Infineon deal here.

Nokia announced today that Renesas will acquire its wireless modem technologies business for $200 million and the transaction is expected to close before the end of 2010. Renesas has offered GSM PAs and transceivers for the mainstream GSM market for more than a decade but lacked basebands. More recently, Renesas entered the baseband market with W-CDMA basebands for Japan and plans to provide complete chipsets and PAs for the global market. Renesas merged with NEC Electronics in April 2010 and most recently joined the Symbian Foundation.

Previously Nokia transferred its 3G IC design operations to ST-Ericsson, licensed its W-CDMA/HSPA modem technology to Intel and collaborated with Infineon for LTE RF transceivers development. This announcement raises a question whether Nokia will continue to own the IP and earn royalties for legacy basebands, GSM through W-CDMA / HSPA+?

This is a significant development considering Renesas' lack of baseband design-wins outside Japan. Strategy Analytics estimates that Renesas and NEC Electronics cumulatively held just 1.3 percent of the baseband market (in revenue terms) in 2009. Renesas originally licensed baseband technology from Japanese network operator NTT docomo to produce the SH-Mobile G series baseband processors, which also integrate Renesas' application processing technology. Most recently Renesas sampled a fourth generation of SH-Mobile G baseband processors, the SH-G4, which supports the HSPA air interface.

This partnership with Nokia provides Renesas with three different sources for fundamental 3G modem IP, NTT docomo, NEC Electronics and Nokia. This situation is similar to ST-Ericsson's, which also has three different 3G modem IP sources, EMP, NXP and Nokia. It appears that Renesas will use Nokia's 3G modem technology to compete for design-wins outside Japan. The combined entity of Renesas and NEC Electronics now boasts Fujitsu, Sharp, NEC, Sony Ericsson and Panasonic as its baseband customers . Renesas' expansion into the global baseband market would increase competition in the marketplace.

This move comes at a time when the 3G market is growing, accounting for close to one third of global cellular baseband revenues in 2009. Nokia's existing 3G chipset suppliers include Texas Instruments, Qualcomm, Broadcom, ST-Ericsson and Icera. It is worth noting that the first Nokia 3G phones based on Qualcomm, Broadcom and ST-Ericsson's basebands are expected to debut in late 2010 or early 2011. Infineon is noticeably absent in this list although Infineon is a key GSM/GPRS/EDGE baseband supplier to Nokia.

We don't expect the first products based on this partnership to debut until late 2012, the time when Texas Instruments completes its baseband exit. In 2013 Nokia's 3G chipset suppliers list would include Qualcomm, ST-Ericsson, Broadcom, Icera, Renesas and potentially Infineon and Intel. While Nokia can afford to have multiple suppliers considering its scale we could see some further acquisitions and mergers among these baseband suppliers.

Today’s announcement is likely to affect several companies...

• ST-Ericsson: ST-E will probably be worst hit by this announcement as it brings into doubt the strong relationship ST-E has had with Nokia over the past 3 years. ST-E has spent the last couple of years consolidating the 3G technologies it acquired from EMP and NXP with Nokia's 3G IP into its flagship processor the U8500 which is expected to appear in handsets at the end of 2010. Nokia will obviously be working with Renesas in future HSPA/LTE projects, thus potentially diluting the relationship with ST-E.

• Qualcomm: Qualcomm has enjoyed a much more positive relationship with Nokia during 2009/2010 since the companies resolved their long-standing IPR legal battles. Qualcomm is expected to supply chipsets to Nokia for its upcoming W-CDMA/LTE products. Nokia's stronger relationship with Renesas may now affect that.

• Infineon: Why did Nokia not choose Infineon? Nokia and Infineon already have a close relationship around LTE RF transceivers, but Nokia may have considered Infineon's expertise in HSPA and LTE modems to be too weak.

• NTT docomo: Renesas currently licenses 3G modem IP from NTT docomo for use in its SH-Mobile G processors which are desgined into handsets from Sharp and Fujitsu. Renesas' strong relationship with Nokia now makes it more likely that Renesas will use NTT docomo's IP for products aimed at the Japanese market, and will employ Nokia's HSPA/LTE IP in new chipsets for us in Nokia handsets. It will also allow Renesas to expand its client base beyond Japanese waters.

We have just finished up our Q4 2009 update to our baseband market share model. This gives us full year 2009 market share as well. It's the combined work of myself, Chris Taylor and Stuart Robinson with support from our wireless service colleagues. Cellular baseband market revenues reached $11.04 billion in 2009, down about 0.7% from 2008. In 2009, the cellular baseband market faced ASP challenges due to the global economic recession and increased competition in the market.

Here are some highlights based on the data from Strategy Analytics Baseband Quarterly Metrics service module:

* Qualcomm led the the market with close to 40% share of total global baseband revenues in 2009. Qualcomm improved its revenue share in both the CDMA and W-CDMA markets.

* Despite being absent in the important W-CDMA market, MediaTek managed second position in terms of baseband revenue share in 2009. Strategy Analytics estimates that the W-CDMA market represented close to one third of total cellular baseband revenues in 2009. MediaTek is expected to take a minor W-CDMA share in 2010 with its new W-CDMA baseband processor, MT6268.

* ST-Ericsson had a difficult year in 2009 as the company continued to restructure its product lines and also lost share at its important tier-1 handset OEM customers. TD-SCDMA was the only bright spot for ST-Ericsson.

* Both Infineon and Broadcom benefitted from multi-sourcing strategies at tier-1 handset OEMs which significantly improved their baseband revenues in 2009. Both companies are expected to make further gains in 2010 by expanding at their respective customers.

* Marvell had just 1.4% share of baseband revenues in 2009 but is expected to play an important role in the Chinese TD-SCDMA baseband market with its highly integrated TD-SCDMA baseband processor, Pantheon 920.

Strategy Analytics provisionally estimates that total global cellular baseband revenues reached $2.8 billion in Q1 2010. Looking forward to the end of 2010, new radio technologies (LTE, TD-SCDMA), multi-sourcing strategies and mobile broadband will provide growth opportunities for baseband processor vendors.

- Sravan Kundojjala

Strategy Analytics Exclusive Presentations at MWC 2010

Strategy Analytics is delighted to announce our presence at Mobile World Congress, the premier event for the wireless industry. We will be hosting our annual exclusive breakfast presentations, and invite you to attend one of our sessions that will showcase our latest research into the dynamics of the wireless market. This invitation-only breakfast event will provide insights into the critical threats and opportunities facing the wireless industry in 2010.

Mobile Broadband Traffic, Revenue & New Connected Devices  

Date

Tuesday 16th and Wednesday 17th February 2010*

Location

Expo Hotel, Calle Mallorca 1-23, Barcelona (same as last year)

(10min walking distance from the Fira de Barcelona where the MWC is taking place)

Registration Breakfast

08:00

Session 08:30 - 10:00

* Please note that this year the sessions on the two days will be identical, giving you the choice to select the more convenient time for you.

Managing the Traffic: Revenue Imbalance Notebooks/Netbooks, Feature Phones, Smart phones & Other Connected Devices

• Presentation One: A brave new world of connected devices. Which devices? Which OS? Which Brands for connected netbooks, notebooks, MIDs, ebooks?
• Presentation Two: The future of Apps: On/Off Portal & Managing the Tsunami of choices facing consumers
• Presentation Three: Managing the traffic explosion from over 1.3B broadband accounts
• SpecTRAX Global Handset Specification Database Demonstration

Each presentation is a unique opportunity to hear an objective market view from some of our senior analysts. Our events are free of charge but as we have limited space we ask you to register in advance by going to our website at: www.strategyanalytics.com/MWC2010.html

Please remember to indicate on which date you would like to attend. Please also note that copies of our presentation will only be made available to attendees and clients.

You will have the opportunity to meet our analysts after each presentation and/or can arrange a separate meeting during the Congress. Please feel free to forward this invitation to any of your colleagues if you think they would be interested.

If you are not going to be in Barcelona or if the timing is inconvenient, we would be happy to meet you at another time, just let us know! If you have any questions, please do not hesitate to contact us, otherwise we look forward to seeing you at the MWC in Barcelona!