Mobile: China Rising

The mobile numbers for Q1 are now published. At #1 as always is Samsung, who shipped 86M phones for 30% market share. At #2, with almost half as much volume, is Apple who shipped 44M phones. Round here in silicon valley pretty much everyone has either a Samsung Galaxy or an iPhone so you don’t get any sense of who the other major players are, because the action is mostly in China. Just as a datapoint, China Mobile has over 750M subscribers. Yes, twice the size of the entire US population.

Number 3 is Huawei with 18M units giving them 6% market share. Of course Huawei also purchased (apparently) Broadcom’s baseband business as Broadcom joined TI, ST, Freescale and others and got out of mobile. Qualcomm, Mediatek and Marvell are the key remaining players (and struggling to get a foothold, Intel).

The top 10 is rounded out with Lenovo (China), LG (Korea), ZTE (China), Coolpad (China), Xiaomi (China), Sony (Japan) and Nokia/Microsoft (Finland).

The fall of Nokia is something that business schools will be studying for years I’m sure. It is not that long ago that Nokia had 30% market share and shipped over 1M phones every day. In first quarter they shipped just 7M smartphones. Of course they are now part of Microsoft, and with a new CEO who has his eye firmly on mobile, it will be interesting to see if they manage to claw their way back. This is a business where relationships with the operators are the key, since they decide which phones get sold and which do not. Obviously if a company like China Mobile decides to push a brand hard, it makes a huge difference.

For semiconductor, mobile is really important. Baseband chips and modems make up a lot of the volume especially at the most advanced process nodes. Qualcomm is shipping 20nm silicon out of TSMC and will be the first volume for 16nm when it is available (along with Xilinx but they don’t need that many wafers, especially early in the process life-cycle). Of course Samsung manufactures most of its own silicon (maybe all, I’m not sure). Apple designs its own application processors (those Ax chips) but uses Qualcomm for modems. That covers roughly 50% of the market which is why other companies struggle since the rest of the market is fragmented and Samsung and Apple make a huge percentage of the profits of the mobile industry. In the middle of last year it was over 100%, meaning the rest of the suppliers in aggregate lost money.

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