Samsung's acquisition of part of CSR has established it as a new player in the connectivity market, specifically in the key battleground of the smartphone. Whilst Broadcom has been growing its market share in this sector since 2008, the Samsung-CSR deal introduces a significant threat to Broadcom's market-leading business of Bluetooth in handsets, according to IMS Research.
Samsung recently announced plans to acquire the handset connectivity and handset location business of CSR for US$310 million, as well as to invest US$34.4 million in return for 4.9% stake in the remaining CSR business. The completion of this acquisition is expected to be in the fourth quarter of 2012.
As well as picking up the benefit of CSR's patent portfolio, this acquisition also adds the R&D and marketing support for Samsung's Bluetooth and GPS technology for handsets, IMS Research said. This activity follows on from Samsung's acquisition in June of Nanoradio, a developer of ultra-low power WLAN for chipsets for devices such as smartphones and tablets; and provides Samsung with the connectivity technologies with which to make an entrance into the wireless connectivity market, IMS Research noted.
Samsung already has a strong presence in supplying components, such as processors and memory, to many of its own broad range of handsets, as well as fabricating processors for the Apple iPhone 4S and new iPad, IMS Research said.
In addition, IMS Research indicated that interest in the further integration of technologies onto the mobile application processor (SoC) has been increasing. Qualcomm announced the integration of Bluetooth and Wi-Fi on its Snapdragon S4 for the first time and, although there are arguments against full integration, IMS Research forecasts that this is the direction the market will increasingly take. Whilst it is not yet clear whether Samsung will go down this route, there are indications that this may be a part of its roadmap; particularly as one of the key conditions placed on CSR, as part of the acquisition, is a 10-year restriction on providing connectivity solutions combined with an application processor to the handset market.
"This acquisition will have a significant impact on the competitive landscape of the connectivity market," said IMS Research analyst Liam Quirke. "Whilst CSR's Automotive and Home divisions have continued to grow, its handset connectivity business has struggled, with revenues dropping 30% from 2009 to 2011. In contrast, Broadcom has been gaining market share, driven by the success of its mobile and wireless group, which has more than doubled over the same period."
"Broadcom has established a market-leading position for connectivity in handsets, through its solutions combining Wi-Fi and Bluetooth, accounting for approximately half of the market in 2011; and has design wins with the two leading smartphone suppliers, Samsung and Apple," Quirke continued. "According to the IHS Mobile Handset Market Share Database, these two companies combined accounted for 51 percent of smartphone shipments in first-quarter 2012."
Samsung is expected to begin to standardize on the use of its own connectivity technology within its handsets and this, combined with the resources available to Samsung to further develop the acquired technology, will enable it to capture a double-digit market share of the Bluetooth market, according to IMS Research. "Whilst the likely loss of Samsung's business will hit Broadcom, the real question is will future smartphone connectivity on the handset be provided as part of a SoC? If so, it is likely to mean even more competition for Broadcom from Samsung and others," Quirke concluded.
Article translated by Jessie Shen
