Supply chain
Digitimes Research: China smartphone AP shipments growth to be driven by LTE solutions in 4Q14
Eric Lin, DIGITIMES Research, Taipei

China's smartphone application processor (AP) shipments are expected to grow 33.8% on year and 9.5% sequentially in the fourth quarter. The on-year growth will be 8.7pp more than that recorded in the third quarter. But on a quarterly basis, the sequential growth for the fourth quarter will be 2.2pp less than that seen in the previous quarter. The transition to LTE networks is expected to accelerate in the quarter, while 3G chips' shipment share will also decline more rapidly.

Most smartphone vendors are expected to shift their flagship products to support LTE networks in the fourth quarter of 2014 as MediaTek's and Qualcomm's LTE chips will become more mature. However, since the two chipmakers will devote more of their efforts to producing LTE products, their 3G solutions are expected to see from shortages, allowing Spreadtrum to fill in the space and snatch their market shares from the 3G segment, according to Digitimes Research's latest report on China smartphone APs.

Qualcomm's 64-bit solutions are expected to become its key products for the fourth quarter. The MSM8916 will be Qualcomm's mainstream LTE solution, while its MSM8936/9839 are also expected to attract some orders. Qualcomm is expected to enjoy a sequential shipment growth of 13% in the fourth quarter (down 9.7pp from that of the third quarter) and a 90% on-year growth. The company's 32-bit LTE solutions' shipments will turn weak and gradually phase out from the market, but this will not affect the company's shipment performance.

MediaTek's fourth-quarter shipments will see slower growth, which will reduce the company's market share. The company has shifted capacity support to the LTE product line, and its 3G chips' shipment proportion will drop faster than its competitors' and the company's shipments for its baseband plus AP combination will also have an obvious decline.

Digitimes Research expects MediaTek to see a sequential shipment growth of 6.7% in the fourth quarter, down 4.4pp from that of the previous quarter. It will enjoy an on-year shipment growth of 30.6%. The company's market share in the quarter will drop to 50.8%, the lowest since the third quarter of 2013.

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