Mobile pushes Qualcomm to third place in shaky chip market

Qualcomm moves up from ninth place two years ago while many chip makers struggle

Qualcomm Inc. showed a double-digit increase in sales this year that will make it the world's third-largest chip maker in 2012, according to analytics firm IHS iSuppli. With a 27.2% growth in semiconductor revenue, Qualcomm is booming while seven of the top 10 semiconductor suppliers declined.

Only two years ago, Qualcomm was in ninth place among worldwide chip makers. This is the first time that Qualcomm has ranked as high as third in the chip market, behind Intel, in the top spot, with Samsung second.

"This year has been terrible for most semiconductor application markets, with the sole exception of the wireless segment, which is expected to generate robust revenue growth this year," said Dale Ford, a senior director at iSuppli. "Consumers are continuing to buy more smartphones and media tablets, even as sales of other once-hot products like PCs and flat-panel TVs decelerate or decline."

Qualcomm's rise in the chip maker rankings reflects the growth in importance of the mobile market. The company's revenue is expected to jump to $12.9 billion in 2012, compared with $10.1 billion in 2011.

Intel, the top chip maker, is expected to show $47.5 billion in revenue for 2012, a 2.4% drop from nearly $49 billion in 2011. Second-place Samsung, meanwhile, is expected to have 6.7% revenue growth in 2012, increasing to a $30.4 billion this year, compared with $28.5 billion last year.

"With its chips at the heart of countless cellphones, including Apple Inc.'s marquee iPhone 5, Qualcomm has discovered an oasis of growth in the desert that is the semiconductor market in 2012," added Ford.

Tuesday's announcement about Qualcomm's rise comes on the heels of iSuppli's report Monday downgrading the chip market for the third time since August.

The analyst firm now expects worldwide chip sales to decline 2.3% in 2012, from $310 billion in 2011 to $303 billion this year. It would be the first annual decline for the global chip industry since 2009.

While the wireless market still is predicted to continue to grow in 2012, iSuppli noted that five of the six major markets for semiconductors, including the key computer segment, are expected to decline this year.

"It's not a surprise that Qualcomm has moved up in the ranks of chip producers when you consider the sheer volume of chips that are being produced to go into mobile devices worldwide," said Dan Olds, an analyst with The Gabriel Consulting Group.

One question is how the growth in mobile and the decline in traditional PCs will affect top semiconductor players like Intel and AMD. Intel has been taking major steps to branch out into the mobile market.

According to Patrick Moorhead, an analyst with Moor Insights & Strategy, Intel's effort could help the chip maker retain its top position.

"Wireless and mobility is a very hot market and will continue to be for the foreseeable future," Moorhead said. "Intel will benefit, too, as they shift their guns on mobility... Intel is four times larger than Qualcomm today, but they must turn the corner on wireless and mobility. Intel made a good start but they must get into business mode and make that business relevant."

While Intel works to holds its top position, iSuppli noted that seven companies among the top 20 semiconductor suppliers are expected to suffer double-digit percentage declines in revenue in 2012. Those companies include AMD, Freescale Semiconductor, Texas Instruments, Toshiba, STMicroelectronics, Elpida Memory and Renesas Electronics. These companies are expected to have revenue drops ranging from 11.4% to 17.7%.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed. Her email address is sgaudin@computerworld.com.

See more by Sharon Gaudin on Computerworld.com.

Read more about processors in Computerworld's Processors Topic Center.

Tags IT industryMobile/WirelessiSuppliNetworkingqualcommwirelessIHSComponentsintelmobileprocessorsIHS iSuppli

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