Chips Don’t Lie: Mobile Is Hot

Rising demand for mobile devices like smartphones, tablets and handheld gaming devices will push mobile processor sales past the 4 billion mark by 2014. Research firm In-Stat made the estimate today and notes that the even with the current growth rate in tablets, the continued rise of phones (smartphones in particular) will be the largest driver of sales for mobile silicon.

In-Stat’s data suggests that tablets, such as Apple’s (s aapl) iPad and Samsung’s Galaxy Tab, currently represent the fastest growing mobile device segment with a compound annual growth rate of 123.6 percent expected through 2014. But in many markets, a tablet device is an expensive add-on, especially in regions where smartphones haven’t yet taken hold and even inexpensive feature phones are still considered scarce. With roughly 5 billion mobile subscribers on the planet, smartphones don’t account for more than 10 percent of global handset sales, so there’s still plenty of growth potential. As mobile broadband networks proliferate, so too, will smartphones and the need for improved mobile processors to power them.

This means that by 2014, three out of four mobile CPUs will have multiple cores, and In-Stat notes that integrated connectivity — where the radio and CPU are one package — will account for an even higher percentage of such chips. Growing demand for mobile devices could be a tremendous boon for companies that successfully combine processors with baseband radios and other chips. Qualcomm (s qcom) chips, for example, were primarily used as the radio component of early smartphones, but the company has successfully added a complete solution with its Snapdragon line of mobile processors, which are used in many of the latest high-end Google (s goog) Android phones.

The world will see an estimated 50 billion Internet-connected devices by 2020, Ericsson (s eric) President and CEO Hans Vestberg suggested back in April. That’s a huge number of mobile processors, but the ones device makers will use won’t be standalone CPUs; consumers want to connect their devices to the web, so chips with integrated radios will be in the big sellers.

The huge need for mobile processors isn’t lost on companies like Intel (s intc), which until only a few years ago focused its x86 chip architecture on fast CPUs for desktops and laptops. With the mobile revolution underway, Intel is attempting to gain a foothold with lower-power Atom chips that sip power from the smaller batteries of mobile devices. But chips based on ARM’s (s armh) architecture have always been power-efficient, and with each new iteration, gain faster performance. As a result, handset makers continue to use ARM-based CPUs from Qualcomm, Samsung and Texas Instruments (s txn), or, as with Apple and its A4 CPU for iOS devices, are creating their own processors. Intel’s late to the table, and Om thinks the company will be a mobile loser. I tend to agree.

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