How the past year has affected the largest smartphone processor manufacturers

If you ask users what is the most important part of a smartphone, many will answer that the screen. This answer is logical only because it is constantly in sight. In fact, the second most popular answer – processor – would be much more logical. It is the processor that distinguishes the flagship from the public sector. Of course, the rest of the components are also different, but few people know which manufacturer's memory or screen is installed in their gadget. With the processor, the picture is completely different and the manufacturer is indicated almost in the first line of characteristics. Who would have thought, but the pandemic has greatly changed the balance of power in the processor market. The leaders remained where they were, but the changes were more than significant.


A processor for a smartphone is like an engine for a car.

Who makes processors for smartphones

As smartphone sales have been hit hard by the COVID-19 pandemic, the processor market for them has sagged a lot, according to a new report from Counterpoint Research. The decline was 26% year on year in the second quarter of 2020. Qualcomm continued to lead the market, but MediaTek closed the gap with the American giant. Now they not only occupy the first two positions, but also almost divide the first.

The Taiwanese company's market share grew from 24 percent in the second quarter of 2019 to 26 percent in the second quarter of 2020. On the other hand, Qualcomm's share fell from 33 percent to 29 percent over the same period. This is logical, because this is just a redistribution of the market.

While all vendors faced a drop in shipments due to sluggish demand for smartphones, Qualcomm's decline in market share was partly the result of US government trade restrictions on Huawei. The Chinese company was forced to expand its use of its own products developed by HiSilicon following US restrictions.


The position of manufacturers on the market has slightly changed.

The rise in demand for smartphones in China in the last quarter led to the fact that it was Huawei that sold smartphones very, very well. Huawei even surpassed Samsung to become the number one smartphone supplier in Q2 2020. And since most of its smartphones are equipped with HiSilicon Kirin chipsets, Qualcomm has failed.

Huawei with Qualcomm processor

The US chipmaker's share in smartphones Huawei and HONOR fell from 12 percent in Q2 2019 to just 3 percent in Q2 2020. HiSilicon's global market share in the second quarter of 2020 jumped to 16 percent from 12 percent a year earlier. It may seem that this is “only” 4 percent, but given that such a bias was only possible at the expense of one manufacturer, this is respectable.

However, the situation is now much worse for Huawei, Qualcomm and other global chipmakers. The latest amendments to trade restrictions on Huawei took effect this week. Qualcomm and other companies can no longer supply chips to the Chinese company unless they receive a special license from the US government. I have already said that such a permit was requested by almost all now former partners Huawei. Let's see if it affects anything.

Against the background of the market gradually recovering from the fall, and while analysts' forecasts are quite optimistic, Qualcomm may slightly regain its positions in the third quarter. An additional factor is that Huawei at least in the near future will not produce their own Kirins and their share will tend to zero.


Distribution of processor manufacturers by market.

Competitors Huawei

When Huawei starts to lose ground, buyers will look for alternatives among other manufacturers. Here you will find Xiaomi, OPPO, Realme and even Vivo. What processors do they use? That's right, for the most part, they install solutions from Qualcomm. As a result, the chipsets of the American manufacturer in the middle and top segment will start to sell better.

Apparently, growth is also expected MediaTek. True, its chipsets will add to the low and mid-end segment. Will benefit from problems Huawei and Samsung with its Exynos, because former fans Huawei will switch to its smartphones too.

As for the mobile processor market in general and its growth prospects, according to analysts, positive dynamics will be observed for at least another three years. According to the report, smartphone sales 5G in the second quarter of 2020 more than doubled from the previous quarter. And as next-generation wireless networks roll out in more countries, demand for gaming phones is likely to grow.

Qualcomm processor

Such a crumb can change literally everything in a smartphone.

Counterpoint Research estimates the massive growth in the number of gaming-focused phones. In their opinion, the popularity of this type of device has grown by about 10 times in 2020. Recently, mobile chipset manufacturers have also been offering more specialized gaming solutions. This trend is likely to continue along with the expansion of deployments 5G.

Mobile processor vendors are taking advantage of this opportunity by launching solutions with higher clock speeds and higher refresh rates – 90Hz, 120Hz, and even 144Hz. Thus, they improve the gaming experience for users of low-cost devices – said research analyst Shobhit Srivastava – With the arrival of 5G in lower price segments, further growth in mobile games is expected due to low-latency connectivity.

Simply put, we are again on the verge of great change. But it is only necessary that analysts' forecasts come true, it is necessary that there is no second wave of the pandemic and other serious shocks. Then mobile gaming will definitely jump to the next level. And at the same time, game controllers for smartphones will become more and more popular.

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