Do Semiconductors Dream of Android?

July 8, 2011
4
34
9 22 3

For those of you who follow the financial markets, you will have seen the craziest trends over the past few years.  Economic downturns and sporadic hints of upturns have both been a result of uncertainty, and the fuel for further uncertainty.

The UK dropped Value Added Tax from 17.5% to 15%, then brought it back up to 17.5%, and has now increased this to 20%.  Inflation is rising and there is no sign of an increase in interest rates for relief! I won’t go into this any more, as sticking to this subject would be an exercise in madness in itself.

Indeed one area which suffered badly was the global semiconductor market.  Pre-recession wasn’t even a great time for the industry anyway, and the recession really sorted out the men from the boys. With recent news of Apple leapfrogging Dell and HP to the top spot for semiconductor buying, it has been apparent to many that the industry is on the rebound.

BUT – that doesn’t mean Apple is responsible for the bounce back of the industry. Of course it doesn’t.

According to market research firm GBI Research, in 2010, the market value for smartphone integrated circuits was $32billion (USD), up from almost $18 billion in 2009.  GBI continued to forecast an increase in revenue to over $96 billion by 2015; that’s a lot of silicon! With HP and Dell being traditionally high up in terms of purchasing chips, Apple have done well to boost the industry of late.

However, it is Android OS-based devices that have provided a relatively stealthy boost, but an altogether more significant one.

This is the gift and the curse multiple manufacturers producing units for a single OS can bring.

With companies such as Samsung, HTC, LG, Sony Ericsson and Motorola having a large chunk of their smartphone offerings now Android-based, it is clear to see that diversified hardware brings about a hard-to-quantify sum of units.
And players in niche markets have moved toward Android with phones such as the NEC Casio’s G’Zone Shock-Resistant Phone.

Oh, wait, did we forget about tablets? iPad 2 has been a storming success, and understandably so; Apple’s marketing is top notch, in terms of effectiveness at least. In addition, there are some very creative developers out there who gravitate towards Apple products. Undeniably an interesting prospect.

However, the iPad is not a cheap toy, and Android tablets have been shown to start as low as $35. Again, a flurry of manufacturers are catering for the non-Apple tablet market. You will be familiar with these by now: Samsung, Acer, Archos, Asus, Dell amongst a growing number of smaller players. And, let’s not forget, for the masses’ beloved iPod there is an alternative also. Samsung Galaxy Player, Cowon D3 and other units have come out boasting the latest audio technology, and all use Android.

However, dedicated Android-based media players have some way to go yet (Cowon’s own OS suited the hardware better, as seen on the J3).

GBI Research said that smartphones accounted for only 19% of the 2010 mobile phone market, and suggests the full potential of the market here has been restrained by a lack of components available now. Yes, cameras, displays, and other chips are in short supply.  The recession led to production cut-backs and a bit more caution going forward. Sony Ericsson claimed $400 million in lost revenue due to such shortages in 2010 say GBI.  The use of the same chips in smartphones and other hardware such as tablet PCs means spreading a short supply of chips across millions of units of different devices in a deeply interconnected supply chain.

I felt the pain of this. Samsung can NOT ship their products fast enough to demand.  This is why it took three weeks instead of 7-10 days to get my Samsung Galaxy S 2 from T-Mobile UK; they couldn’t get the phones themselves.

Yes, all figures and all the talk of how many Android devices are now selling are a simple correlation of “more smartphones selling = more semiconductors sold”.

However, the key to the growth of the industry is seen in the current trends. Shorter development cycles between phone releases, mid-release updates and more advanced technology in each release is what we see.

Why do we see it?

Nokia stagnated with Symbian. The OS was dated, iPhone blew everyone out of the water. Android came along.  If it hadn’t, what are the chances Apple would have slowed down innovation even further than it usually does?

Right now, Apple has to up its game, not really because of Windows Phone yet, certainly not due to Symbian, and BlackBerry’s OS is still playing catch up to smartphones as a whole.

Android has spurred on new ideas to provide something to keep Apple’s dominance at bay. Google as a whole has done this.  Apple has had to bring out their fair share of ideas to the table to avoid Android domination. Competition – a beautiful thing.

With great ideas comes the need to make sure they’re executed well. With this comes the need to have great power. The responsibility for this lies with awesome new hardware and the semiconductors that make up our wonderful new devices.

Any thoughts?

Comments