Global Baseband Processor Market will Flourish Following the Rising Demand for 4G-based Mobile Devices Through 2020: Technavio

LONDON--()--Technavio analysts forecast the global baseband processor market to grow at a CAGR of close to 14% during the forecast period, according to their latest report.

The research study covers the present scenario and growth prospects of the global baseband processor market for 2016-2020. To calculate the market size, the report considers revenue generated from the baseband processors. The revenue includes both discrete baseband processor and integrated processor (application processor+baseband processor).

Baseband processors are highly dependent on the mobile handset manufacturers. If mobile handset manufacturers such as Apple integrates in-house manufactured baseband processors into their handsets, it will affect the demand for baseband processors from vendors such as MediaTek and Qualcomm. Xiaomi, one of the prominent vendors of smartphone, has already planned to start manufacturing its own processors from Q4, 2016.

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Technavio analysts highlight the following three factors that are contributing to the growth of the global baseband processor market:

  • Growing demand for LTE-based mobile devices
  • Issue of 4G licenses by Chinese government
  • Growing mobile data traffic

Growing demand for LTE-based mobile devices

On an average, the 4G connection is 10 times faster data speed than that of a 3G connection. Many countries are opting for 3G and 4G connectivity, resulting in the shutdown of the 2G mobile network, by the end of 2016, and its bandwidth will be allocated to the 3G and 4G mobile network,” says Sunil Kumar Singh, a lead analyst at Technavio for research on embedded systems.

By the end of 2015, Telstra, Australia's largest telecommunications and media company, is expected to shut down its 2G mobile network in Australia. SingTel and Star Hub is likely to cease their 2G network on April 1, 2017, in Singapore. AT&T, a US-based telecommunication service provider, declared that it will cease its 2G services by January 1, 2017. Shutting down of 2G services will force the 2G users to move to 3G or 4G services, boosting the sales of devices that are capable of supporting 3G or 4G capable mobile devices. This, in turn, propels the demand for baseband processors.

Issue of 4G licenses by Chinese government

At the end of 2013, Chinese government issued 4G licenses to three major telecom operators, namely China Mobile with frequency spectrum of 1880MHz-1900MHz, 2320MHz-2370MHz, and 2575MHz-2635MHz bands; China Telecom with frequency spectrum of 2370MHz-2390MHz and 2635MHz-2655MHz; and China Unicom with frequency spectrum of 2300MHz-2320MHz, marking the beginning of China's high-speed mobile network. The purpose of issuance of a 4G license by the Ministry of Industrial Information Technology (MIIT) is to increase consumer spending on information technology.

Sunil adds, “The launch of 4G is also likely to drive the retail sales of smartphones. As a result, many smartphone manufacturers are launching 4G smartphones to grab this opportunity. This has also led to a decline in the prices of 3G smartphones, which in turn, propelled the sales of 3G smartphones in China, driving the demand for baseband processors.”

Growing mobile data traffic

Global mobile data traffic increased by 74% in 2015. Fifty-five percent of mobile traffic data was from mobile video traffic. 4G data traffic was higher when compared to 3G data traffic in 2015. Though only 14% of the connections were 4G, they accounted for 47% of total data traffic in 2015. Meanwhile, 3G had 34% connections and accounted for 43% of the total traffic in 2015.

Global mobile data traffic by different networks 2015

         
4G       47%
3G       43%
2G       10%
     

Source: Technavio

In terms of region, the global mobile data traffic increased by 74% in 2015 when compared to 2014. The Middle East and Africa showed the highest growth rate with 117%, followed by APAC with 83%, Latin America with 73%, and Central and Eastern Europe with 71%. North America grew by 55%. Western Europe showed a growth rate of 52% in 2015. Based on country, Indonesia, China, and India had the highest growth rates, accounting for 129%, 111%, and 89%, respectively, in 2015.

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Technavio Research
Jesse Maida
Media & Marketing Executive
US: +1 630 333 9501
UK: +44 208 123 1770
www.technavio.com

Release Summary

Technavio analysts forecast the global baseband processor market to grow at a CAGR of close to 14% during the forecast period, according to their latest report.

Contacts

Technavio Research
Jesse Maida
Media & Marketing Executive
US: +1 630 333 9501
UK: +44 208 123 1770
www.technavio.com