Spreadtrum takes market share in Chinese smartphone market in Q1 2015

DigiTimes Research recently posted a report about smartphone AP (application processor) shipments in China in Q1 2015, indicating that Chinese fabless semiconductor company Spreadtrum gained market share in Q1, mainly based on strength for low-end 3G solutions. According to the report, Spreadtrum's market share reached 17.4% in Q1 2015, while MediaTek continues to lead the Chinese market with 46.8% share, followed by Qualcomm, which increased its share to 23.6%.

In terms of overall shipments, according to DigiTimes unit sales of smartphones by Chinese manufacturers declined significantly by about 30% in Q1 2015 compared to Q4 2014, with manufacturers focusing on export sales suffering the largest declines. Huawei, which is moving towards a strategy of using mainly in-house chip solutions from its HiSilicon division, was relatively unaffected and took market share in the quarter.

Spreadtrum's product line

Spreadtrum's increase in 3G smartphone solution shipments most likely reflects the 28 nm SoC it announced in June 2014, the SC883XG. This SoC features a quad-core Cortex-A7 CPU running up to 1.4 GHz, an ARM Mali-400 MP2 GPU, modem support for TD-SCDMA/HSPA(+) and GSM/GPRS/EDGE with dual-SIM capability, and integration of Spreadtrum's Wi-Fi/Bluetooth/GPS/FM chip technology.

The features of the SoC are extremely similar to MediaTek's successful MT6582 platform, which has been on the market for more than one and a half years. The combination of quad-core Cortex-A7 CPU, Mali-400 MP2 GPU and a high level of integration of other functionality on a 28 nm process appears to deliver good performance and very good power efficiency for cost-sensitive devices.

Spreadtrum also recently announced volume shipments of the SC7731G with 3G modem and the SC9830A with LTE modem. Rather than using Cortex-A53 CPU cores, the new chips continue to use efficient Cortex-A7 cores with Mali-400 MP2 GPU with support for Android 5.

MediaTek's 3G market share impacted by Spreadtrum

The DigiTimes report attributes MediaTek's loss of market share in China in Q1 2015 mainly to Spreadtrum's gains for 3G smartphone SoCs, where MediaTek has had a strong position. However, Qualcomm is likely to be a significant factor as well, with indications from new model announcement by companies such as TCL (Alcatel), ZTE, Lenovo/Motorola and others that MediaTek's late introduction of low-cost 4G solution has hurt the company. The resolution of the Chinese monopoly investigation into Qualcomm is also likely to be a factor.

Additionally, a trend has been noticed whereby second and third-tier Chinese smartphone manufacturers have lost share to the largest first-tier manufacturers in China. Since MediaTek's share among second and third-tier manufacturers has been the strongest, this has hurt MediaTek's shipments.

Projections for Q2 2015

For Q2 2015, DigiTimes expects overall AP shipments in China to increase 17.6% sequentially from the low base set in Q1 2015, although that still amounts to an increase of 18% over the same quarter last year (Q2 2014). DigiTimes expects MediaTek to recover some share to reach 48.4%, with Qualcomm seeing a small decline to 21.3% and Spreadtrum's share declining to 15.2%. DigiTimes attributes Spreadtrum's loss of momentum to pressure from MediaTek's 3G solutions, which probably reflects price reductions implemented by MediaTek after it saw shipments decrease and inventories build.

Sources: DigiTimes Research (smartphone AP shipments in China in Q1 2015), (DigiTimes Research (Chinese smartphone shipments in Q1 2015), Spreadtrum (2014 smartphone chip announcement), Spreadtrum (2015 smartphone chips announcement)