HiSilicon’s Loss is Qualcomm’s Gain in High-end Segment

The smartphone application processor market is dominated by Qualcomm. The company maintains its lead in the market by catering to all smartphone segments — from the low-end Snapdragon 200 to mid-end Snapdragon 400 and 600, and the high-end Snapdragon 700 and 800. The lead will increase due to the sanctions on Huawei (HiSilicon), which restrict the Chinese company from using TSMC’s advanced 7nm and 5nm process technology for future chipset manufacturing.

Four in ten smartphones sold in the high-end segment in 2020 will sport a Qualcomm Snapdragon 800 series application processor.

In the high-end Android smartphone segment ($400 and above*), Qualcomm’s Snapdragon 800 series chipset is leading (Exhibit 1). The only competition Qualcomm has in the segment is from in-house application processors from HiSilicon (Huawei) and Samsung, with little to no competition from other application processor companies like Mediatek and Unisoc. Qualcomm has maintained its lead through new launches and by updating its flagship offerings. It has also strengthened its offerings with an end-to-end solution for the complete 5G system (sub-6 GHz and mmWave) and will be the default choice for OEMs looking to implement mmWave.

High-end smartphone AP market share

Exhibit 1: Android smartphone application market share for high-end segment ($400 and above)

The US sanctions on Huawei will lead to the decline of HiSilicon chipsets. This will mainly affect the high-end HiSilicon chipsets using 7nm and 5nm process technologies. The sanctions will help Qualcomm gain market share in China in the high-end segment, aided by OPPO and vivo. MediaTek and Unisoc will be the gainers in the mid-segment smartphone market as Huawei looks for other sources to get chipset supplies.

The use of Qualcomm chipset by Samsung in the Galaxy S20 series in its home country South Korea (Samsung already uses Qualcomm in US, Canada, China, Japan, and South America) will add to the American company’s gains in China.

The dominant position in the high-end segment and an end-to-end 5G solution will also help Qualcomm gain a larger share of the bill of material (BoM) in 5G smartphones, which will further increase with the implementation of mmWave. Though overall smartphone shipments will decrease in 2020, leading to a decline in smartphone AP shipment, Qualcomm is set to gain market share in the high-end smartphone segment.

*Average wholesale price in $

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