The global cellular baseband processor market grew 11 percent to $8.7 billion in Q3 2022. According to our latest research, Qualcomm, MediaTek, Samsung LSI, Unisoc and Intel captured the top-five revenue share rankings in the baseband market in Q3 2022. However, the baseband shipments declined 15 percent year-on-year, thanks to reduced smartphone demand and a weak IoT market.

• Qualcomm widened its baseband revenue share lead with a 62 percent revenue share, followed by MediaTek with 26 percent and Samsung LSI with 6 percent.
• Baseband average selling prices (ASP) rose 30 percent, driven by a higher mix of premium tier 5G chips.
• 5G baseband shipments stayed flat year-on-year, but 5G revenue grew 24 percent in Q3 2022, driven by a better mix. 
• Xiaomi, Oppo and Vivo amassed significant mid-range 5G inventory and have struggled to clear that from the last 3 quarters. 4G baseband shipments declined 18 percent during the quarter due to reduced shipments from Chinese OEMs. 
• TSMC saw reduced traction from baseband clients and even experienced underutilization on leading-edge nodes 7nm/6nm. On the other hand, Samsung Foundry saw traction with the new Qualcomm slim modem X65, which was featured in iPhone 14 line up and supports satellite communications.
• Qualcomm increased its revenue share lead, driven by iPhone 14 design wins and traction in Android premium tier. Qualcomm posted a 24 percent revenue growth, despite 14 percent unit decline. The company experienced weakness in both the handset and non-handset markets in terms of units. Furthermore, the company saw a slowdown in the premium tier due to customer inventory adjustments.
• Samsung LSI's Exynos baseband shipments declined year-on-year, but the company's mid-range 4G/5G basebands gained good traction. In addition, the company benefitted from supplying 5G chips to Google's Pixel line of smartphones, which saw a significant shipment jump during the quarter. Samsung shifted focus to mid-range after losing to Qualcomm in the premium tier.
• MediaTek's baseband revenue declined 4 percent year-on-year as its 5G shipments took a hit.  In addition, the company's 5G baseband shipments declined 24 percent sequentially in Q3 2022, driven by its Chinese customers' adjustments. As a result, the company lost 5G market share in 2H 2022. MediaTek, however, saw good traction for its Dimensity 9000/8000 series chips.
• Unisoc saw a 19 percent shipment decline but posted solid double-digit growth in its LTE baseband shipments. Tier-one design wins and non-handset traction drove the company's LTE growth. Unisoc, however, has yet to make its mark in 5G.
• Non-handset specialists Sequans, Nordic Semi, ASR Micro, GCT, Altair (Sony) etc., saw mixed success during the quarter. While Nordic semi saw sequential shipment growth, ASR Micro took a hit. Non-handsets account for a double-digit percentage of overall baseband shipments and offer a growth opportunity driven by automotive, IoT, fixed wireless access, cellular tablets, wearables, notebook PCs etc.

In summary, the baseband market held up well despite weak unit growth, driven by a better mix. We note that even 5G shipment growth has decelerated. However, new markets like India offer a growth opportunity. The baseband market will see a challenging 1H before seeing some reprieve in 2H, driven by reduced inventories and demand resumption.

Sravan Kundojjala

@SKundojjala