Just as mobile-phone makers Nokia Corp. and Motorola Inc. lost market share in 2003 due to intensifying competition from Asian competitors, the same occurred for their major semiconductor suppliers including Texas Instruments, STMicroelectronics and Freescale Semiconductor, according to the latest research from iSuppli Corp.

While TI, STMicro and Freescale retained their respective first, third and fifth place rankings among semiconductors suppliers for mobile handsets in 2003, all suffered declines in market share compared to 2002. While TI’s global semiconductor market share for mobile handsets fell to 20.7 percent in 2003, down from 21.2 percent in 2002, the company’s revenue increased to $2.6 billion in 2003, up from $2.2 billion in 2002, due to an expansion of the overall market. On the other hand, STMicro suffered a steeper decline, with its market share dipping to 9 percent, down from 11.2 percent in 2002 and its revenue for mobile handset chips declined to $1.137 billion in 2003, from $1.14 billion in 2002. Freescale saw its market share fall to 6.6 percent in 2003, down from 8 percent in 2002, but like TI, the company’s revenues for these segment shipments rose to $831 million in 2003, up from $818 million in 2002.

Overall, the market for mobile handset semiconductors rose to $12.7 billion in 2003, up 24.6 percent from $10.2 billion in 2002. TI sells digital basebands to Nokia, while STMicro provides analog basebands and RF transceivers. Freescale is heavily reliant on internal sales to its mobile handset brother, Motorola.

Gains from OEMs Samsung and LG Electronics accounted for market share declines for Nokia and Motorola, with the Koreans companies seeing market shares rise 2.2 and 0.9 percentage points respectively in 2003.

Further, up and coming Chinese OEMs such as Ningbo Bird and TCL expanded market shares from zero in 2001 to 2.3 percent and 1.9 percent respectively in 2003.

The rise of Asian manufacturers and the shift of the mobile phone market to the Far East remains a major challenge to the established industry leaders, with the level of competition only expected to intensify in the coming years, said iSuppli, based in El Segundo, Calif.

The shift to the East also presents a challenge to wireless chip providers that have tied their fortunes to Nokia and Motorola. The semiconductor suppliers that posted the best performances in 2003 were the ones that have a diversified customer base, worked to address Asian phone makers and were focused on the merchant market, including Infineon, RF Micro Devices, Agere, Analog Devices and Silicon Labs, each of which increased its market share and boosted its revenue in mobile handsets by more than 30 percent in 2003.

By: DocMemory
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