Mobile devices serve our increasing desire to access anyone and anything at anytime. Smartphones provide ubiquitous voice and Internet connectivity as well as useful apps. Tablet computers provide a bigger screen for interacting with mobile content.
These devices require an advanced processor that supports a sophisticated user interface and various applications. Many of them must decode multiple audio and video formats, displaying high-resolution images at smooth frame rates. To extend battery life, these functions must be performed at minimum power levels. The cost of the processor must be low as well: often less than $10.
These processors, like the mobile devices they serve, are evolving rapidly. To enable faster web browsing, many of the newest models provide eight or more CPUs operating at up to 2.5GHz. Most can display and record high-definition (HD) video; a growing number can handle 4K video content as well. To support console-like games, they include powerful 3D-graphics accelerators (GPUs).
We divide mobile processors into two types. Standalone application processors act as the main CPU in a mobile device, running the operating system and application software; they accelerate multimedia tasks and connect to displays and cameras. Integrated smartphone processors combine the application processor and cellular baseband on a single chip. We estimate that 1.95 billion mobile processors will ship in 2015, up 11% from 2014. The vast majority of these products ship into smartphones, with most of the remainder going into tablets. Nearly all non-Apple smartphones integrate the application processor (AP) and baseband (BB) into a single chip, although the Galaxy S6 uses a standalone Exynos AP. Only a few of these AP+BB chips are internally sourced.
Apple is the largest consumer of standalone application processors, relying solely on its own designs. Excluding these in-house chips, a total of 290 million merchant standalone AP devices shipped in 2014, a number we expect to decline 5% in 2015. Even in the tablet market, we see a shift toward cellular tablets that use integrated AP+BB chips, eating into the standalone-AP market. Merchant AP revenue peaked at $4.6 billion in 2013 and will fall more than 40% by 2017 as high-end smartphones continue to shift to AP+BB products.
After a strong 2014, Qualcomm has regressed in 2015, losing share at both the high end and midrange of the smartphone market. Samsung chose Exynos for the Galaxy S6 after using Qualcomm in nearly all Galaxy S5 models. At the midrange, MediaTek leapt into the LTE market and gained share. Qualcomm remains the technology leader and hopes to win back share with an impressive lineup of new processors.
MediaTek is the leader in low-cost smartphones and is working its way up the price stack. The company continues to innovate, delivering the industry’s first 10-core processor and the first Cortex-A72 chip. It has also become the leading supplier to the white-box tablet market. The Asian supplier benefits from its strong relations with leading Chinese smartphone makers.
Spreadtrum also targets low-cost smartphones, ranking third in overall unit shipments of mobile processors. Unlike MediaTek, the company continues to lag in technology, relying mainly on 40nm single- and dual-core processors. Now a Chinese state-owned enterprise, Spreadtrum may be able to invest more in product development.
Intel has spent billions of dollars in subsidies to gain a solid share of the tablet market, shipping 46 million tablet processors in 2014, but we expect many of these customers will switch back to ARM once Intel stops giving away its chips. The company’s smartphone hopes rest with Sofia, its first integrated AP+BB processor. The initial 3G Sofia has few design wins, but the forthcoming LTE version may do better.
Having only 2% share in mobile processors, Marvell is well behind the leaders. Its AP+BB chips appear in some phones that sell into China, but they have yet to catch on elsewhere. The company’s lagging technology forces it to target low-end smartphones, where it competes against low-cost vendors such as Spreadtrum.
Samsung was first to market with a 14nm mobile processor, Exynos 7, which appears in the Galaxy S6. The company has also developed its own LTE baseband processor, and we expect it to deploy an AP+BB chip in the next year. Although Samsung sells Exynos to a few outside companies, it consumes the bulk of these processors in house.
Nvidia continues to deliver high-performance Tegra processors for tablets and automotive. The recent Tegra X1, however, has yet to win a single tablet design. Automobiles generate a quarter of all Tegra revenue.
Several Chinese vendors offer low-cost standalone AP chips for tablets, mainly white-box and off-brand models. In the past year, Intel’s subsidies and MediaTek’s advances have left little room for these suppliers. Former leaders Allwinner and Rockchip have lost share, and smaller vendors such as Actions and Amlogic are abandoning the tablet market.
Despite these exits, the application-processor market remains crowded; this report covers more than a dozen suppliers plus internal designs. Although an application processor can easily be assembled by licensing an ARM CPU and some multimedia accelerators, vendors are differentiating on the basis of CPU performance, GPU performance, video capabilities, solution size, power efficiency, and software support. This report examines announced products using these metrics to determine the best choices for each type of mobile device.