"At the high end, we see a lot of saturation, which is why Apple's sales are not growing very much," he said, adding that Samsung will take advantage by converting its basic phone customers to smartphone users.

In mobile SoCs "Qualcomm is leading at about 40% share, but we have seen a little bit of share loss for Qualcomm over the past year which we expect to continue over 2014. As the low end market continues to grow rapidly, vendors serving [that area] are benefiting at the expense of Qualcomm," he said.

China has been increasingly served by domestic suppliers, including a diverse group of second and third tier players. The consolidation of Shanghai-based fabless companies Spreadtrum Communications and RDA Microelectronics (both low-end suppliers) suggests "the Chinese hope to build some economies of scale" by creating one larger low-end supplier "to strengthen their position in the smartphone market," he said.

The tablet market is also slowing, with 24% growth this year and 13% compound annual growth expected through 2018, much of that growth in low-end devices. Gwennap predicted sales of 470 million tablets in 2018 with just 30 million of them based on Microsoft Windows.

"The high end seems to be stagnating in part because of saturation in the market, but also there's not a lot of new stuff going on in technology," he said. "Initially there was a burst of growth in tablet market from people replacing or supplementing their PCs, but now a lot of that initial growth is over and people are realizing that you still need a PC for a lot of things," he said.

With the exception of sub-$50 phones, single core processor designs are disappearing from the smartphone market in 2014. Dual core will become "entry stakes" in lower-tier phones, Gwennap said.

Quad- and octa-core processors will continue to command the high end, despite a lack of optimized software. ARM's Big.LITTLE octa-core architecture is popular today, but Gwennap expects a 2+4 design with two big cores and four small cores will become the new mainstream.

"Most apps using a lot of performance won't use more than two cores," he said. Chips with eight little cores "actually benchmark really well because they can spawn off as many threads as you need [and although] they don't have that big core to give you single thread performance for apps... it's popular in Chinese cultures where eight is lucky number."

LTE will not be a differentiator for chip vendors in coming years with nearly a dozen suppliers. Although the industry is currently seeing an increase in SoCs integrated with WiFi, a move to smaller transistor sizes will push connectivity features back to separate chips, he predicted.

"For first time next generation transistors [at 20nm] will be more expensive than the previous generation," Gwennap said. "Today it makes as much sense to put everything on 28nm transistors; next year we'll be starting to move things off because it's cheaper to leave connectivity off."

The 64-bit era has come on surprisingly fast, but Gwennap expressed skepticism of the architecture's value to end-users beyond name recognition. Phones with Cortex A53 cores, which are faster than Cortex A7s on 32-bit code, will debut by the end of 2014 in phones under $200, he predicted. High-end smartphones with Cortex-A57 cores will ship next spring, with Qualcomm leading the charge, he added.

"There's still not a lot of software out there that's going to use 64 bit... and it won't need it until we get to 4 Gbits of memory,” Gwennap said. "So 64-bit is more of a marketing thing, but still pretty popular among end-users."

Sensor hubs, such as Apple's A7, will also increase in popularity as sensors proliferate both high- and low-tier handsets. Offloading power to a sensor hub decreases strain on the CPU but increases the risk of leakage.

Indeed, all OEMs should be concerned with battery power in all levels of mobile devices. Cloud services, navigation, and voice activation create an “always on” culture that drains power, he said.

"Differentiation will come from features supplied in the chip…but we're kind of running out of ways to differentiate," Linley concluded. "I think what people are really looking for in the high-end market is a new use case. It's really up to the device makers to find a new way to differentiate, otherwise they're just chasing cost."

By: DocMemory
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