Peter Clarke EE Times (01/07/2010 11:00 AM EST)

LONDON — Connectivity chips showed the greatest growth within the mobile phone semiconductor market, according to ABI Research. The total revenue for handset Bluetooth, GPS, and WLAN in 2009 is forecast to grow 16 percent compared to 2008, exceeding $1.9 billion, and to show a CAGR of 11 percent between 2009 and 2014, the market researcher said.

Major semiconductor components such as baseband processors, which account for over 50 percent of the revenue in this segment, declined 9.6 percent compared to 2008; due to declines in mobile phone shipments as well as declines in their ASPs. Application processors managed a moderate gain, while radio frequency products declined in line with the overall market.

Signs of a rebound in worldwide handset shipments in the fourth quarter of 2009 indicate that the handset semiconductor market started its recovery in the third quarter, and the total revenue is expected to increase between 3 and 8 percent per annum over the next three year. Rising demand for advanced functions is driving connectivity chip penetration in mobile handsets.

Bluetooth has the highest attach rate compared to other connectivity types: the average penetration rate is expected to be 60 percent in 2014. GPS devices have secured a solid position in the automotive segment and are gaining traction in mobile phones too; the penetration rate is expected to be 21 percent in 2010 and 47 percent in 2011. The revenue increase for Wi-Fi chips is shown be the highest among the three connectivity chips types over the next five years, with a 23.7 percent CAGR.