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5G Supercharges the Baseband Industry in Q3 2020

by Sravan Kundojjala | Feb 02, 2021

The baseband market has seen sluggish growth in recent years as rapid price erosion in 4G and stagnant smartphone market affected the industry. That is beginning to change as 5G brings a much-needed growth, thanks to 5G basebands' above average selling prices (ASPs).

Strategy Analytics has long tracked the baseband industry developments. Our latest research suggests that the industry entered a growth cycle, driven by increasing 5G penetration in smartphones and other device categories.

3Q20 Baseband Market Share - Strategy Analytics
Here are some highlights from our latest Q3 2020 baseband research.

  • Thanks to increasing traction for 5G, the baseband market grew 27 percent in revenue terms to reach $7.1 billion in Q3 2020.
  • Qualcomm, MediaTek, HiSilicon, Samsung LSI and Intel captured the top-five baseband revenue share rankings.
  • Qualcomm maintained its lead with 40 percent revenue share and 5G basebands accounted for over 60 percent of Qualcomm's total baseband shipments in Q3 2020.
  • Driven by iPhone 12 design-wins, Qualcomm's baseband shipments returned to growth after experiencing seven consecutive quarters of decline. We expect this momentum to continue in Q4 2020 and 2021.
  • In the 5G baseband market, Qualcomm led with 56 percent unit share despite intense competition from MediaTek, HiSilicon and Samsung LSI.
  • MediaTek made significant progress in 5G and more than doubled its 5G shipments on a sequential basis in Q3 2020. On the other hand, MediaTek captured the top spot in the 4G baseband market as the company's Helio range of 4G chips featured in multiple high-volume smartphones from Samsung, Oppo, Vivo and Xiaomi.
  • Though MediaTek looks well set in 5G, Strategy Analytics cautions that MediaTek should not repeat its 4G mistakes, which resulted in rapid price and margin erosion.
  • HiSilicon and Samsung LSI both continued their 5G momentum and improved their shipments year-on-year in Q3 2020.
  • HiSilicon, however, saw its 4G shipments decline sharply in Q3 2020. HiSilicon is facing trade restrictions from the US Commerce Department and the company's manufacturing partner TSMC has stopped taking new orders after September 2020.
  • Unisoc saw signs of recovery with significant improvements in 4G and 3G baseband shipments. But, Strategy Analytics thinks that Unisoc has so far failed to take advantage of longtail 4G demand in India and other emerging markets. Unisoc's latest Tiger 6-series and 7-series products look competitive versus MediaTek's Helio P range.
  • Non-handset specialists Altair, Sequans and Nordic Semi also made good progress in Q3 2020 with their IoT-centric LTE basebands.

We expect the momentum to continue in Q4 2020 too. However, the industry faces some challenges in 2021, especially on 5G price erosion and increased competition. The highly consolidated baseband industry needs to prioritize margins to continue to invest further in R&D.

Please let us know if you would like to explore this topic in detail. Strategy Analytics can help you understand the baseband industry in multiple ways with our research and advisory services.

Sravan Kundojjala
@Skundojjala
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