New Features Help Drive Cell Phone Chip Revenues

Cellular handsets, one of the largest product categories of semiconductor consumption in the world, continue to enjoy significant sales growth and add new features, reports In-Stat. In 2007, total revenue from handset semiconductors will exceed $31 billion worldwide, the high-tech market research firm says. According to an In-Stat consumer survey, one of the more popular cell phone features is Bluetooth, with users from wireless operators across the board requesting it.

"The features that appear in cellular handsets are an interesting mix of consumer wants, cellular operator revenue opportunities, and semiconductor manufacturing abilities," says Allen Nogee, In-Stat analyst. "If a feature is fairly expensive to produce, a handset manufacturer may include it in a few high-end models to test the market. At the other end of the spectrum, some features are so cheap, such as digital cameras, that cell phone manufacturers include them in many models at the operator's request. These features enable more consumers to use more revenue-generating services such sending digital photos over wireless networks."

Recent research by In-Stat found the following:

• Handset semiconductor revenue will reach $32.2 billion by 2012.
• Add-on semiconductors, like Bluetooth and GPS, are growing at a faster rate than core handset components.
• The average selling price (ASP) of core semiconductors in an HSPA handset will drop from $60.72 in 2006 to $14.61 in 2012.

Posted to the site on 7th November 2007