Fueled by spectacular growth in the next-generation 4G wireless technology known as Long Term Evolution (LTE), the overall market for mobile communications equipment and wireless infrastructure gear is set to enjoy strong double-digit expansion this year while continuing to bask in solid albeit slowing revenues from the dominant 3G space, according to an IHS iSuppli Wireless Systems market tracker report from information and analysis provider IHS.
Factory revenue for the mobile communications market in 2012 is projected to reach $398.0 billion, up 17 percent from $340.8 billion last year. Though growth this year has somewhat moderated from the brisk 32 percent expansion of 2011, the market as a whole shows no signs of impending decline anytime soon. Another year of double-digit increase is predicted for next year, and factory revenue will exceed the half-trillion-dollar mark by 2015. Factory revenue is what manufacturers earn from the sale of devices into the channel in this case, mobile communications equipment like smartphones and other handsets, or wireless infrastructure items such as routers.
LTE provides much faster access speeds and lower latencies than those of current 3G technologies, making real-time applications like video streaming and multiperson gaming not only possible but, more importantly, usable.
Within the space, mobile 4G handsets this year will account for just $21.7 billion of total mobile market revenue, but its growth in 2012 represents an astonishing 372 percent increase from 2011 revenue of $4.6 billion. In comparison, expansion this year by the dominant mobile 3G handset field will slow to 17 percent, even though revenue stands at a still outsized $180.l billion.
A third mobile handset segment, the legacy 1G/2G space still active in many developing countries around the world, will see the most production at some 791 million units, but its low average selling price means that segment’s revenue will come in below those of 3G and 4G in 2012.
The Push Toward LTE and How the Market is Growing
The increasing importance of the 4G market is being driven by the ongoing transition to LTE, especially among companies that had failed to create a viable presence in 3G through any number of factors, including market tardiness or focus on other technologies. Those companies are now utilizing the transition to modify the status quo by offering LTE chipsets either through organic development or by acquisition.
Such companies include California-based Beceem Communications Inc. and French chipmaker Sequans Communications S.A., both of which are now moving away from previous focus on a rival 4G technology called WiMAX, in favor of LTE. For slightly different reasons, two mobile handset original equipment manufacturers South Korea’s Samsung Electronics Co. Ltd. and Illinois-based Motorola Inc. are now in the process of producing their own LTE chips. The two were unsuccessful in creating 3G chipsets and had to turn to Qualcomm of San Diego, Calif., for the effort.
Other than mobile handsets, media tablets will be the other device this year to spur the continued growth of the mobile communications market. Led by principal player Apple Inc. with its market crushing iPad device, the tablet space in 2012 is forecast to produce $61.0 billion in revenue, up a remarkable 71 percent from $35.7 billion last year, based on 2012 production of 129.1 million tablet units, up from 64.7 million units.
Also benefiting from the market’s transition to 4G is the overall wireless infrastructure space, projected to see a slight revenue uptick this year to $43.0 billion. While growth in the segment during 2011 was stimulated by carriers around the world investing in 3.5G and 3.75G network upgrades, some carriers in the developed world including those in Japan, Europe, the United States and South Korea have started to migrate networks to 4G LTE. As operators hasten the shift to 4G LTE, the entire wireless value chain is expected to keep up, with 4G LTE device launches and chipsets anticipated to accelerate in tandem as well.
The move to 4G will involve the deployment by wireless carriers of heterogeneous networking architectures involving a combination of macro and micro base stations, to be coupled with low-powered small cells. Such devices also known as metro cells could be mounted on public facilities like mall structures, railways and subway stations to provide augmented coverage for consumers in areas of high data traffic when they access their smartphones or tablets.
While 3G and 3.5G wireless infrastructure accounted for roughly $35 billion in factory revenue during 2011, 4G will start to make up a larger portion beginning in 2013, and will contribute about $36 billion by 2015.
Learn More > 2011 Tablets and Smartphones Prime the Pump for 2012 LTE