Friday, March 6, 2015

China tablet processor market declines in Q1

According to a recent article published by DigiTimes Research, tablet applications processor unit shipments to Chinese manufacturers grew by 4.7% in Q4 2014 to reach 34.7 million units. However, shipments are estimated to decline by 24% in Q1 2015 when compared to Q4 2104. Year-over-year, shipments are expected to drop by about 8%, which marks the first time quarterly tablet processor shipments in China experience a year-over-year decline. Excess inventory from Q4 2014 is given as a cause for the decline in shipments.

MediaTek leads Chinese tablet market in Q1 2015


Based on information published by DigiTimes Research, MediaTek, Rockchip, Allwinner and Intel were the top four providers of tablet processors in China, in that order, in Q4 2014. For Q1 2015, MediaTek is estimated to expand it market share by about 1% to reach 28.5%, although absolute shipments will decline significantly due to the overall market decline.

Rockchip, who was the market share leader for most of 2014, is estimated to see its market share remain stable in Q1 2015, registering a 0.6% increase according to DigiTimes Research, who did not supply a market share figure for Rockchip, although it is probably in the region of 25%. DigiTimes mentioned that Rockchip's new chips launched at the end of 2014 (which includes the Cortex-A7-based RK3126 and RK3128) have not yet reached strong shipments.

Meanwhile, Allwinner continues the trend of a steady decline a market share, being expected to have a share of 15.6% compared to 17.6% in Q4 2014. This allows it to be passed by Intel in terms of market share, with Intel's market share estimated to rise from 15% to 16.3% in Q1 2015.

Intel's global market share has increased and is significant, especially revenue share


It should be noted that in terms of global market share, Intel has a stronger position than what would be inferred just from the Chinese market due to a strong position at brand-name tablet manufacturers outside of China, such as Asus and Acer. The other chip players in the Chinese tablet processor market, especially Rockchip and Allwinner, have a weak position outside of China. Due to the higher-end nature of Intel's product mix, Intel also has a higher revenue share, whereas the sales of companies such as Allwinner are mostly concentrated in low-end processors. It has been reported that Intel is abandoning its "contra-revenue" strategy of subsidizing tablet processor sales, which it probably can afford to do because its chip solutions are fairly competitive on their own.

Global brand names gain share, use different chip suppliers


In the global tablet marker, brand name manufacturers are gaining share and dominate the dollar value of the market, also for semiconductor content. Apple and Samsung, who lead the global tablet market, use a lot of in-house chip solutions (100% in the case of Apple). Samsung also uses suppliers like Qualcomm and Marvell, who otherwise do not have a strong position in the Chinese tablet market.

MediaTek used to have strong market share among Taiwanese tablet manufacturers such as Asus and Acer. However, its market share their seems to have been eroded significantly by strong adoption of Intel's Atom SoCs at these manufacturers (who have strong ties with Intel through PC manufacturing).

Popular tablet SoCs as of Q1 2015


By analyzing the tablet models offered on Chinese e-commerce portals, one can get some idea of what SoCs are currently used the most in tablets from China. I took a look at the tablet offerings on Banggood.com.

Rockchip's RK3188 (which probably means the RK3188T variant in most cases) is still widely used. Originally a mid-range performance segment SoC, there are indications that Rockchip built a significant inventory of this SoC (which is not particularly cheap in terms of manufactuing cost) last year, and the chip has been used in cheaper models as well. Rockchip's RK3126, which is more cost-effective than RK3188, is slowly starting to appear in new tablet models.

Meanwhile, Rockchip's high-end RK3288 is used in several models from Pipo, Teclast and FNF, and these seem to be reasonably popular for a high-end product. I have some concerns about power consumption and battery life regarding these products due to the processor cores used in the SoC.

The most popular MediaTek chips used in tablets are SoCs with 3G connectivity such as the low-end dual-core MT8312 and quad-core MT8382 (the equivalent of the MT6572 and MT6582 smartphone SoCs), as well as the more performance oriented octa-core MT6592/MT8392, which provides good performance and battery-life and has moved down to lower-priced tablet models. Additionally, the new 64-bit MT8752 with 4G (equivalent to the MT6752 smartphone SoC) is starting to appear in new models (Cube, Teclast). For WiFi-only tablets, the MT8127 (which has a relatively powerful GPU for a cheap SoC) is used in some low-to-mid-range tablets.

Allwinner's A31s, which was released in 2013 but perhaps its last successful product introduction, appears to be still used for production. Low-end tablets are available with the A23 and A33 SoCs, although the A33 does not seem to have been very successful and has been affected by weakness in the low-end segment of the tablet market.

Allwinner's new octa-core A83T has started to appear in a few new models, and is probably replacing the high-end A80 Octa which is likely to have had low profit margins.

Finally, Intel's Z3735F, Z3735G and Z3736F Atom SoCs are widely used in tablets, although most prominently in higher-prices models that come equipped with Microsoft Windows.

Update (15 March): 3G smartphone chip inventory unloaded onto Chinese tablet market


In an article published on 13 March 2015, DigiTimes Research reported that due to a high inventory level of 3G smartphone solutions in China, such chips will be unloaded onto the Chinese tablet market by players such as MediaTek, Qualcomm and Spreadtrum.

3G-enabled chip solutions for tablets are usually very similar to similar solutions for smartphones. For example, MediaTek's smartphone solutions have commonly been used in tablets, while MediaTek's official 3G-enabled tablet solutions most likely consist of a chip virtually identical to the smartphone version, with the main difference being a different model number (e.g. MT6582 vs MT8382). That MediaTek would target any excess inventory of 3G smartphone chipsets at the tablet market is not surprising.

However, I am little sceptical about the volume that may be involved. The Chinese tablet market is clearly contracting in the near term, and the volumes in the tablet market are considerably smaller than the smartphone market, even the declining 3G part of the smartphone SoC market. To put things into perspective, MediaTek's quarterly 3G smartphone chip shipments were on the order of 70 million in Q4 2014, while its 3G tablet chip shipments were probably in the range of 5 to 10 million.

The article also mentions Qualcomm, which in the past has not been a major player in the Chinese white-box tablet market. It mentions rumours that Qualcomm may form a partnership with Allwinner (which has been consistently losing market share) to penetrate the tablet market in China. The article also states that while Intel has introduced 3G tablet solutions, Intel's solutions are unlikely to be widely adopted until Intel introduces the 4G version of its Atom x3 (formerly SoFIA) platform.

Sources: DigiTimes (Q1 2015 China tablet AP market article)DigiTimes Research (smartphone chips inventory unloaded to tablet market)

Updated 15 March 2015.